SCHEDULE 14C
(RULE 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
_________________
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
[X] Preliminary Information Statement [ ] Confidential, for Use of
[ ] Definitive Information Statement the Commission Only (as
permitted by Rule 14c-5(d)(2))
RETURN ASSURED INCORPORATED
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
RETURN ASSURED INCORPORATED
5962 La Place Court, Suite 230
Carlsbad, CA 92008
INFORMATION STATEMENT AND NOTICE
OF ACTION TAKEN WITHOUT A MEETING
This Information Statement and Notice of Action Taken Without a Meeting is being
furnished by the Board of Directors of Return Assured Incorporated (the
"Company") to the Company's stockholders to advise them of the following
corporate actions (the "Corporate Actions") taken by the Board of Directors and
the holders of a majority of the Company's voting stock ("Majority
Stockholders") by written consent:
- Amendments to the Company's Certificate of Incorporation to:
- increase the number of authorized shares of the Company's
capital stock from 51,000,000 shares to 105,000,000 shares,
of which 100,000,000 shares shall be Common Stock, par value
$0.001 per share, and 5,000,000 shares shall be preferred
stock, par value $0.001 per share;
- reverse split the outstanding shares of the Company's Common
Stock on a one-for-sixty basis, so that every sixty issued
and outstanding shares of Common Stock before the split
shall represent one share of Common Stock after the split
with all fractional shares equal to or greater than .50
rounded up to the next whole share and those less than .50
eliminated and paid for in cash;
- change the name of the Company to "EliteJet Holdings, Inc.";
and
- Acquisition of all of the issued and outstanding capital stock of
EliteJet, Inc., a Nevada corporation.
The Corporate Actions for the increase in the number of authorized shares of the
Company's capital stock and the reverse stock split were approved by our Board
of Directors by written consent on March 15, 2002 and the Majority Stockholders
by written consent on April 23, 2002. The Corporate Actions for the acquisition
of EliteJet, Inc. and the change in name of the Company to "EliteJet Holdings,
Inc." were approved by our Board of Directors and the Majority Stockholders by
written consent on April 25, 2002. The Corporate Action for the amendment to the
terms of the acquisition of EliteJet, Inc. was approved by our Board of
Directors and the Majority Stockholders by written consent on April 27, 2002. In
accordance with the regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Corporate Actions will not become effective
until 20 days after we have mailed this Information Statement to our
stockholders. Promptly following the expiration of this 20-day period, we intend
to file the amendment to our Certificate of Incorporation with the Delaware
Department of State. A copy of the form of Certificate of Amendment of the
Certificate of Incorporation is attached to
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this Information Statement. The increase in our authorized number of shares, the
reverse stock split and the change of our name to EliteJet Holdings, Inc. will
become effective at the time of such filing. The acquisition of EliteJet, Inc.
will become effective promptly following the expiration of the 20-day period.
Approval of the Corporate Actions requires the affirmative vote of a majority of
the outstanding shares of our voting capital stock. Our Common Stock is our only
voting stock. Holders of our Common Stock are entitled to one vote for each
share of Common Stock held. The total number of shares of our Common Stock
outstanding on each of April 23, 2002, April 25, 2002 and April 27, 2002 was
35,834,012. The Majority Stockholders held 18,894,860 shares (approximately
52.8%) of our Common Stock on each of April 23, 2002, April 25, 2002 and April
27, 2002.
The names and the number of shares of Common Stock held by each of the Majority
Stockholders is as follows:
Name Number of Shares Held
---- ---------------------
Matthew J. Sebal 14,300,000
Todd Cusolle 900,000
Peter Coker, Sr. 1,624,460
Michael Sweatman 5,400
Darren Lozinik 300,000
KGL Investments Ltd. 1,765,000
----------
Total 18,894,860
==========
Section 228 of the Delaware General Corporation Law ("Delaware GCL")
permits stockholder action by written consent in lieu of a meeting of
stockholders if holders of a sufficient number of voting shares consent to the
actions in writing. Accordingly, all corporate actions necessary to authorize
and approve the Corporate Actions have been taken.
Your consent is not required and is not being solicited in connection with the
approval of the Corporate Actions. Stockholders have no right under Delaware law
or the Company's Certificate of Incorporation or Bylaws to dissent from any of
the Corporate Actions. This Information Statement is furnished solely for the
purpose of informing you of these Corporate Actions before they take effect in
the manner required under the Exchange Act.
Only stockholders of record of the Company's voting stock outstanding at the
close of business on May 24, 2002 (the "Record Date") are entitled to receive
this Information Statement and Notice of Action Taken Without a Meeting. This
Information Statement is first being mailed to such stockholders on or about
____________, 2002.
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Our principal executive office is located at 5962 La Place Court, Suite 230,
Carlsbad, CA 92008.
PLEASE BE ADVISED THAT THIS IS ONLY AN INFORMATION STATEMENT AND NOTICE OF
ACTION TAKEN WITHOUT A MEETING. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
1. REVERSE STOCK SPLIT
On March 15, 2002, our Board of Directors approved an amendment to our
Certificate of Incorporation to effect a one-for-sixty reverse stock split (the
"Reverse Stock Split") of the Company's issued and outstanding Common Stock. The
Majority Stockholders approved the Reverse Stock Split on April 23, 2002 by
written consent. The approval by our Board of Directors and the Majority
Stockholders is adequate under Delaware law to effect the Reverse Stock Split.
The Reverse Stock Split will become effective (the "Reverse Stock Split
Effective Date") upon the filing of the amendment to our Certificate of
Incorporation with the Delaware Department of State. The Corporate Action
approving the amendment to our Certificate of Incorporation for the Reverse
Stock Split will not become effective until 20 days after we have mailed this
Information Statement to our stockholders. We intend to file the amendment
promptly following the expiration of this 20-day period. A copy of the form of
Certificate of Amendment of the Certificate of Incorporation is attached to this
Information Statement. Stockholders have no right under Delaware law or the
Company's Certificate of Incorporation or Bylaws to dissent from the Reverse
Stock Split.
On the Reverse Stock Split Effective Date, each sixty shares of our Common Stock
issued and outstanding immediately prior to the Reverse Stock Split Effective
Date (the "Old Common Stock") will automatically and without any action on the
part of the stockholders be converted into one share of our Common Stock (the
"New Common Stock"). From and after the Reverse Stock Split Effective Date, all
fractional shares resulting from the Reverse Stock Split equal to or greater
than .50 shall be rounded up to the next whole share and those less than .50
shall be eliminated and paid for in cash. Accordingly, any stockholder who has
less than 30 shares of Old Common Stock will be paid in cash for such shares and
shall no longer be a stockholder of the Company upon the Reverse Stock Split
Effective Date. The Reverse Stock Split will not materially affect the
proportionate equity interest in the Company of any holder of Old Common Stock
or the relative rights, preferences, privileges or priorities of any such
stockholder.
EXCHANGE OF STOCK CERTIFICATES; PAYMENT FOR FRACTIONAL SHARES
Shortly after the Reverse Stock Split Effective Date, stockholders will be asked
to surrender their certificates representing shares of Old Common Stock in
accordance with the procedures set forth in a letter of transmittal to be sent
by the Company. Upon such surrender, a certificate representing shares of New
Common Stock will be issued and forwarded to the stockholders; however, each
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certificate representing shares of Old Common Stock will continue to be valid
and represent the number of shares of New Common Stock equal to the number of
shares of Old Common Stock adjusted for the Reverse Stock Split. Cash payments
to be made in lieu of fractional shares will not be made until a stockholder's
certificate representing shares of Old Common Stock are surrendered pursuant to
the letter of transmittal. The price payable by the Company for shares of Old
Common Stock which cannot be exchanged for a whole share of New Common Stock
will be equal to the product of (a) the number of shares of Old Common Stock
which cannot be exchanged for a whole share of New Common Stock and (b) the
average of the closing price of one share of Old Common Stock as reported on the
OTC Bulletin Board for the 10 business days immediately preceding the Reverse
Split Effective Date for which transactions in the Existing Common are reported.
STOCKHOLDERS SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A
LETTER OF TRANSMITTAL.
SOURCE OF FUNDS; NUMBER OF HOLDERS
The funds required to purchase the fractional shares are available and will be
paid from our current cash reserves. We cannot predict with certainty the number
of fractional shares or the total amount that we will be required to pay for
fractional share interests. As a result of the Reverse Stock Split, we do not
anticipate that the funds necessary to effect the cancellation of fractional
shares will be material or that the number of holders of record or beneficial
owners of Old Common Stock or New Common Stock will change significantly.
PURPOSE OF THE REVERSE SPLIT
The Board believes that the Reverse Stock Split is desirable for several
reasons. The Reverse Stock Split should enhance the acceptability of the Common
Stock by the financial community and the investing public. The reduction in the
number of issued and outstanding shares of Common Stock caused by the Reverse
Stock Split is anticipated initially to increase proportionally the per share
market price of the Common Stock. The Board also believes that the Reverse Stock
Split may result in a broader market for the Common Stock than that which
currently exists. The expected increased price level may encourage interest and
trading in the Common Stock and possibly promote greater liquidity for the
Company's stockholders, although such liquidity could be adversely affected by
the reduced number of shares of Common Stock outstanding after the Reverse Stock
Split Effective Date.
Additionally, a variety of brokerage house policies and practices tend to
discourage individual brokers within those firms from dealing with lower-priced
stocks. Some of those policies and practices pertain to the payment of broker's
commissions and to time consuming procedures that function to make the handling
of lower-priced stocks economically unattractive to brokers. In addition, the
structure of trading commissions tends to have an adverse impact upon holders of
lower-priced stock because the brokerage commission on a sale of lower-priced
stock generally represents a higher percentage of the sales price than the
commission on a relatively higher-priced issue. The proposed Reverse Stock Split
could result in a price level for the Common Stock that will reduce, to some
extent, the effect of the above-referenced policies and practices of brokerage
firms and diminish the adverse impact of trading commissions on the market for
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the Common Stock. Any reduction in brokerage commissions resulting from the
Reverse Stock Split may be offset, however, in whole or in part, by increased
brokerage commissions required to be paid by stockholders selling "odd lots"
created by such Reverse Stock Split.
However, there can be no assurance that any or all of these effects will occur;
including, without limitation, that the market price per share of New Common
Stock after the Reverse Stock Split will be equal to the applicable multiple of
the market price per share of Old Common Stock before the Reverse Stock Split,
or that such price will either exceed or remain in excess of the current market
price. Further, there is no assurance that the market for the Common Stock will
be improved. Stockholders should be aware that we cannot predict what effect the
Reverse Stock Split will have on the market price of the Common Stock.
EFFECT OF THE REVERSE STOCK SPLIT
Consummation of the Reverse Stock Split will not alter the number of authorized
shares of Common Stock. Separate action is being taken to increase the number of
authorized shares of Common Stock from 50,000,000 shares to 100,000,000 shares
(see the section below entitled "Increase in the Number of Authorized Shares of
Capital Stock"). The Reverse Stock Split will not materially affect the
proportionate equity interest in the Company of any holder of Old Common Stock
or the relative rights, preferences, privileges or priorities of any such
stockholder.
Stockholders should note that certain disadvantages may result from the adoption
of the Reverse Stock Split. The number of outstanding shares of Common Stock
will be decreased as a result of the Reverse Stock Split, but the number of
authorized shares of Common Stock will not be decreased. The Company will
therefore have the authority to issue a greater number of shares of Common Stock
following the Reverse Stock Split without the need to obtain stockholder
approval to authorize additional shares. Any such additional issuance may have
the effect of significantly reducing the interest of the existing stockholders
of the Company with respect to earnings per share, voting, liquidation value and
book and market value per share.
The par value of the Common Stock will remain at $.001 per share following the
Reverse Stock Split, and the number of shares of Common Stock outstanding will
be reduced. As a consequence, the aggregate par value of the outstanding Common
Stock will be reduced, while the aggregate capital in excess of par value
attributable to the outstanding Common Stock for statutory and accounting
purposes will be correspondingly increased. The Reverse Stock Split will not
materially affect the Company's total stockholders' equity. All share and per
share information would be retroactively adjusted following the Reverse Stock
Split Effective Date to reflect the Reverse Stock Split for all periods
presented in future filings.
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The Common Stock is currently registered under Section 12(g) of the Securities
Exchange Act of 1934 (the "Exchange Act") and, as a result, the Company is
subject to the periodic reporting and other requirements of the Exchange Act.
The Reverse Stock Split will not effect the registration of the Common Stock
under the Exchange Act. After the Reverse Stock Split Effective Date, trades of
the New Common Stock will be reported on the Nasdaq electronic "Bulletin Board"
under the Company's current symbol RTRN, which will be changed in connection
with our name change (see item below entitled "Corporate Name Change").
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
We have not sought and will not seek an opinion of counsel or a ruling from the
Internal Revenue Service regarding the federal income tax consequences of the
Reverse Stock Split. We believe that because the Reverse Stock Split is not part
of a plan to increase any stockholder's proportionate interest in the assets or
earnings and profits of the Company, the Reverse Stock Split will have the
federal income tax effects set forth below.
Except as described below with respect to cash received in lieu of fractional
share interests, the receipt of New Common Stock in the Reverse Stock Split
should not result in any taxable gain or loss to stockholders for federal income
tax purposes. The tax basis of New Common Stock received as a result of the
Reverse Stock Split (when added to the basis for any fractional share interest
to which a stockholder is entitled) will be equal, in the aggregate, to the
basis of the Old Common Stock exchanged for New Common Stock. The per share tax
basis of the New Common Stock is based on the tax basis of the Old Common Stock
for which the New Common Stock is exchanged. For the purposes of determining
whether short-term or long-term capital gains treatment will be applied to a
stockholder's disposition of New Common Stock subsequent to the Reverse Stock
Split, a stockholder's holding period for the shares of Old Common Stock will be
included in the holding period for the New Common Stock received as a result of
the Reverse Stock Split.
A stockholder who receives cash in lieu of fractional shares of New Common Stock
will be treated as first receiving such fractional shares and then receiving
cash as payment in exchange for such fractional shares of New Common Stock and,
except for dealers, will recognize capital gain or loss in an amount equal to
the difference between the amount of cash received and the adjusted basis of
such fractional shares.
The Reverse Stock Split will constitute a reorganization within the meaning of
Section 368(a)(1)(E) of the Internal Revenue Code or will otherwise qualify for
general nonrecognition treatment, and the Company will not recognize any gain or
loss as a result of the Reverse Stock Split.
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THE DISCUSSION SET FORTH ABOVE RELATES TO THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE REVERSE STOCK SPLIT. STOCKHOLDERS ARE URGED TO CONSULT THEIR
TAX ADVISERS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE REVERSE STOCK
SPLIT, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES
TO THEM OF THE REVERSE STOCK SPLIT.
2. INCREASE IN NUMBER OF AUTHORIZED SHARES OF CAPITAL STOCK
On March 15, 2002, our Board of Directors approved an amendment to our
Certificate of Incorporation to increase the number of authorized shares of
capital stock from 51,000,000 shares to 105,000,000 shares, of which 100,000,000
shares shall be Common Stock, par value $.001 per share, and 5,000,000 shares
shall be Preferred Stock, par value $.001 per share (the "Stock Increase"). The
Majority Stockholders approved the Stock Increase on April 23, 2002 by written
consent. The approval by our Board of Directors and by the Majority Stockholders
is adequate under Delaware law to effect the Stock Increase. The Stock Increase
will become effective upon the filing of the amendment to our Certificate of
Incorporation with the Delaware Department of State. The Corporate Action
approving the amendment to our Certificate of Incorporation for the Stock
Increase will not become effective until 20 days after we have mailed this
Information Statement to our stockholders. We intend to file the amendment
promptly following the expiration of this 20-day period. A copy of the form of
Certificate of Amendment of the Certificate of Incorporation is attached to this
Information Statement. Stockholders have no right under Delaware law or the
Company's Certificate of Incorporation or Bylaws to dissent from the Stock
Increase.
The Board believes that the Stock Increase is desirable in order to provide the
Company with a greater degree of flexibility to issue shares of Common Stock,
without the expense and delay of a special stockholders' meeting, in connection
with possible future stock dividends or stock splits, equity financings, future
opportunities for expanding the business through investments or acquisitions,
management incentive and employee benefit plans and for other general corporate
purposes.
Authorized but unissued shares of Common Stock may be issued at such times, for
such purposes and for such consideration as the Board of Directors may determine
to be appropriate without further authority from the Company's stockholders,
except as otherwise required by applicable law or stock exchange policies.
The Stock Increase will not have any immediate effect on the rights of existing
stockholders. However, the Board will have the authority to issue authorized
Common Stock without requiring future stockholder approval of such issuances,
except as may be required by applicable law or exchange regulations. To the
extent that additional authorized shares are issued in the future, they will
decrease the existing stockholders' percentage equity ownership and, depending
upon the price at which they are issued, could be dilutive to the existing
stockholders. The holders of Common Stock have no preemptive rights.
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The Stock Increase with respect to the authorized number of shares of Common
Stock and the subsequent issuance of such shares could have the effect of
delaying or preventing a change in control of the Company without further action
by the stockholders. Shares of authorized and unissued Common Stock could be
issued (within the limits imposed by applicable law) in one or more
transactions. Any such issuance of additional stock could have the effect of
diluting the earnings per share and book value per share of outstanding shares
of Common Stock, and such additional shares could be used to dilute the stock
ownership or voting rights of a person seeking to obtain control of the Company.
The Company has previously adopted certain measures that may have the effect of
helping to resist an unsolicited takeover attempt.
3. ACQUISITION OF ELITEJET, INC.
On April 25, 2002 our Board of Directors and Majority Stockholders approved the
acquisition of all of the issued and outstanding capital stock of EliteJet,
Inc., a Nevada corporation ("EliteJet"), by written consent (the "EliteJet
Acquisition"). On April 27, 2002, our Board of Directors and Majority
Stockholders approved an amendment to the terms of the EliteJet Acquisition (the
"Amended EliteJet Acquisition") by written consent. The approval by our Board of
Directors and by the Majority Stockholders is adequate under Delaware law to
effect both the EliteJet Acquisition and the Amended EliteJet Acquisition. The
Corporate Actions approving the EliteJet Acquisition and the Amended EliteJet
Acquisition will not become effective until 20 days after we have mailed this
Information Statement to our stockholders. A copy of the amended agreement is
attached to this Information Statement. Stockholders have no right under
Delaware law or the Company's Certificate of Incorporation or Bylaws to dissent
from either the EliteJet Acquisition or the Amended EliteJet Acquisition.
In connection with the EliteJet Acquisition, we have agreed to acquire all of
the issued and outstanding capital stock of EliteJet in exchange for the
issuance of 7,000,000 shares of Common Stock to the sole stockholder of
EliteJet. The transaction and the contemplated issuance of Common Stock to the
EliteJet stockholder will be effectuated pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933. The issuance of
the 7,000,000 shares of Common Stock to the EliteJet stockholder will result in
a change in control of the Company and will dilute the value of current
shareholders' existing shares of Common Stock.
In connection with the Amended EliteJet Acquisition, the acquisition agreement
pursuant to which we agreed to acquire EliteJet was amended to clarify that the
shares of Common Stock to be issued to the EliteJet stockholder represent shares
of Common Stock after taking into account the contemplated change in the
Company's capitalization pursuant to the 1 for 60 reverse stock split of the
Common Stock approved by the Board of Directors of the Company on March 15, 2002
and the Majority Stockholders by written consent on April 23, 2002 and described
in the Section of this Information Statement entitled "Reverse Stock Split."
9
EliteJet was incorporated on November 16, 1999. EliteJet is in the business of
owning, managing, operating and chartering aircraft in connection with providing
private and corporate aviation services to individuals and businesses through
its fractional share aircraft ownership program.
EliteJet's fractional ownership program permits customers to acquire a specific
percentage of a limited liability company which entitles them to utilize
EliteJet aircraft for a specified number of flight hours per annum. In addition,
EliteJet provides management, ground support and flight operation services to
customers after the sale. EliteJet's revenues derive from the management and
usage fees charged to clients in connection with flight operations.
See below for EliteJet's financial statements for the year ended December 31,
2001 and the quarter ended March 31, 2002 and management's discussion and
analysis of financial condition and results of operations for these periods.
4. CORPORATE NAME CHANGE
On April 25, 2002, our Board of Directors approved an amendment to our
Certificate of Incorporation to change our name to EliteJet Holdings, Inc. The
Majority Stockholders approved the name change on April 23, 2002 by written
consent. The approval by our Board of Directors and by the Majority Stockholders
is adequate under Delaware law to effect the name change. The name change will
become effective upon the filing of the amendment to our Certificate of
Incorporation with the Delaware Department of State. The Corporate Action
approving the amendment to our Certificate of Incorporation for the name change
will not become effective until 20 days after we have mailed this Information
Statement to our stockholders. We intend to file the amendment promptly
following the expiration of this 20-day period. A copy of the form of
Certificate of Amendment of the Certificate of Incorporation is attached to this
Information Statement. Stockholders have no right under Delaware law or the
Company's Certificate of Incorporation or Bylaws to dissent from the name
change.
We believe that it is in the best interest of the Company and our stockholders
to continue our operations under a new name. We recently acquired EliteJet,
Inc., a Nevada corporation engaged in the business of owning, managing,
operating and chartering aircraft in connection with providing private and
corporate aviation services to individuals and businesses. At this time, our
operations consist solely of the operations of EliteJet, Inc. Our board believes
that the Company would benefit from a name that reflects our current business.
See the section above entitled "ACQUISITION OF ELITEJET, INC." for further
details on this acquisition.
Upon the filing of the Certificate of Amendment, Common Stock certificates that
previously represented stock of the Company in the name of Return Assured
Incorporated shall be deemed
to represent shares of EliteJet Holdings, Inc. without any further action by the
Common Stockholders of the Company or any other party. Notwithstanding the
foregoing, it is requested that stockholders exchange their existing
certificates for certificates bearing the name EliteJet Holdings, Inc. In
connection with the name change, we will obtain a new trading symbol and CUSIP
number.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of
our Common Stock as of May 24, 2002. The information in this table provides the
ownership information for:
- each person known by us to be the beneficial owner of more
that 5% of our Common Stock,
- each of our directors,
- each of our executive officers, and
- our executive officers and directors as a group.
Beneficial ownership has been determined in accordance with the rules and
regulations of the SEC and includes voting or investment power with respect to
the shares. Unless otherwise indicated, the persons named in the table below
have sole voting and investment power with respect to the number of shares
indicated as beneficially owned by them.
Amount of
Beneficial Percentage
Name and Address of Beneficial Owner Position Ownership Owned
- - ------------------------------------ -------- --------- -----
Scott Walker Director, Chairman of the 0 0%
c/o Return Assured Incorporated Board, and President
5962 La Place Court, Suite 230
Carlsbad, CA 92008
Matthew Sebal Director and Secretary 14,300,000 39.90%
c/o Return Assured Incorporated
5962 La Place Court, Suite 230
Carlsbad, CA 92008
David Rector Director 0 0%
c/o Return Assured Incorporated
5962 La Place Court, Suite 230
Carlsbad, CA 92008
Todd Cusolle Director 900,000 .97%
c/o Return Assured Incorporated
5962 La Place Court, Suite 230
Carlsbad, CA 92008
All officers and directors as a group 15,200,000 40.87%
We have contacted stock brokerage firms holding shares of our Common Stock in
"street name" to determine whether there are additional substantial holders of
our Common Stock.
11
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
FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL STATEMENTS
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-15
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.
G-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
=========== =========== ===========
G-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.
G-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
========= ========== ===========
G-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.
G-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
============ =========== ============== ===========
G-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.
G-7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF ELITEJET, INC.
Overview
We are in the business of operating a fractional aircraft ownership program. We
sell ownership interests in a limited liability company which entitles the
purchaser to utilize our aircraft for a specified number of flight hours per
annum. In addition, we provide management, ground support and flight operation
services to customers after the sale. Our revenues derive from the sale of
management and usage fees charged to clients in connection with flight
operations. We place great emphasis on customer service. Our programs are
designed to offer customers guaranteed availability of aircraft, lower and
predictable operating costs and liquidity.
We were incorporated during the fourth quarter of 1999 and commenced operations
in 2000. We did not realize operating income from our charter services during
calendar year 2000. We began to realize income from our charter services during
2001. We derive our revenue primarily from the charter of our aircraft.
Interests in our controlled LLC are sold to customers who pay our management and
hourly fees.
We derive revenue from charging our owner-customers three types of fees:
- Monthly management fees which are a portion of monthly shared fixed
expenses;
- Hourly fees for actual flight time; and
- Miscellaneous fees, such as catering. .
Our management fees were $92,500 during calendar year 2001 and $135,675 during
the first quarter of 2002. Hourly flight charges were $1,181,778 during calendar
year 2001 and $307,454 during the first quarter of 2002. Miscellaneous fees were
not significant during these periods.
We have low operating expenses because we operate a single type of aircraft,
have a highly productive workforce and use advanced technologies. The largest
components of our cost of sales are aircraft fuel and pilot costs. The largest
components of our operating expenses are salaries, wages and benefits provided
to our employees. Sales and marketing expenses include advertising, promotion
and client entertainment. Maintenance materials and repairs are expensed when
incurred. Because the average age of our aircraft is about twenty-two years, all
of our aircraft require less maintenance now than they will in the future. Our
maintenance costs will increase, both on an absolute basis and as a percentage
of our unit costs, as our fleet ages. Other costs of sale and operating expenses
consist of depreciation, certain purchased services, insurance, passenger
refreshments, personnel expenses, communication costs, supplies and taxes other
than payroll taxes.
Recent Developments
On April 26, 2002 Return Assured Incorporated, agreed
to acquire all of the stock of EliteJet, Inc. This transaction gave us access to
all of the cash on hand of Return Assured to continue our aircraft charter
business. Return Assured had approximately $2, 808,000 in cash as of March 31,
2002, less reserves for known and unknown liabilities.
12
Results of Operations
The following discussion of our results of operations, and liquidity and capital
resources, concerns our fractional aircraft ownership program. Our discussion of
liquidity and capital resources relates to our financial condition following the
acquisition of all of the outstanding shares of EliteJet by Return Assured.
Fiscal Year 2001 Compared to Fiscal Year 2000
Operating Income
Operating income increased from $0 during the year ended December 31, 2000 to
$1,328,980 during the year ended December 31, 2001. The increase was due to the
commencement of charter operations during 2001 while 2000 was devoted to gearing
up the business for future operations. Cost of sales increased from $87,048 in
the period ending December 31, 2000 to $901,688 in the period ending December
31, 2001. This increase corresponded to our commencement of charter operations
during 2001. Cost of sales during the 2000 period related to income that was not
realized until the 2001 period.
Operating Expenses
Operating expenses consist of selling expenses, general and administrative
expenses, and depreciation expense. Selling expenses were $110,647 during the
year ended December 31, 2000 and $78,851 during the year ended December 31,
2001. The slight decrease was based on a decision to conserve cash for equipment
and other hard costs. General and administrative expenses increased from
$174,236 during the 2000 period to $258,791 during the 2001 period. This
increase of approximately 64% was due to the increased hiring of staff and
professional development, and the establishment of our executive offices during
the 2001 period. Depreciation expenses increased from $581,261 during the 2000
period to $785,232 during the 2001 period. This increase was due to the
inclusion of a full year of depreciation expense for our aircraft during the
2001 period and only a partial year of depreciation during 2000.
Loss From Operations
During the years ended December 31, 2000 and 2001, our losses from operations
were $953,192 and $695,582, respectively. The loss in the 2000 period was due to
our start-up of operations during that period without any corresponding income
from charter services. During 2001, we realized income from operations of
approximately $1,329,000 but corresponding increases in cost of sales and
operating expenses resulted in our loss during this period.
Other Expenses
During the year ended December 31, 2001, other expenses increased slightly to
$176,172 from $151,143 during the period ended December 31, 2000. These other
expenses consist primarily of interest.
13
Quarterly Results of Operations
Operating Revenues
Operating income increased from $0 during the three month period ended March 31,
2001 to $446,967 during the three month period ended March 31, 2002. The
increase was due to the commencement of charter operations during the 2001
period, while during the 2002 period we were fully operational. Cost of sales
increased from $69,865 in the period ending March 31, 2001 to $667,397 in the
period ending March 31, 2001. This increase corresponded to our commencement of
charter operations during 2001. Cost of sales during the 2000 period related to
aircraft repairs, maintenance and fuel.
Operating Expenses
Operating expenses consist of selling expenses, general and administrative
expenses, and depreciation expense. Selling expenses were $7,974 during the
quarter ended March 31, 2001 and $25,190 during the quarter ended March 31,
2002. The slight increase was due to increased promotional activities during the
2002 period. General and administrative expenses increased from $41,064 during
the 2001 period to $139,951 during the 2002 period. This increase was due to the
increased hiring of staff and other employment expenses during the 2002 period.
Depreciation expenses increased slightly from $196,308 during the 2001 period to
$217,415 during the 2002 period. We incurred rent expenses during 2002 that were
not incurred during 2001.
Loss From Operations
During the quarters ended March 31, 2001 and 2002, our losses from operations
were $315,211 and $602,956, respectively. The loss in the 2001 period was due to
our start-up of operations during that period without any corresponding income
from charter services. During the 2002 period, we realized income from
operations of approximately $447,000 but corresponding increases in cost of
sales and operating expenses resulted in our loss during this period.
Other Expenses
During the quarter ended March 31, 2002, other expenses increased slightly to
$44,264, from $42,530 during the quarter ended March 31, 2001. These other
expenses consist primarily of interest.
14
Liquidity and Capital Resources
Working Capital
As of December 31, 2001, we had cash of $341,899 and accounts receivable of
$220,053. At the end of our first quarter during our current fiscal year, on
March 31, 2002, we had a cash overdraft of $1,882 and accounts receivable of
$42,116. We recognized the need for immediate capital in order to continue
operations. After exploring all of our alternatives, we entered into the
transaction with Return Assured under which Return Assured acquired all of our
outstanding stock. On a pro forma basis, combining our assets with those of
Return Assured as of March 31, 2002, our cash was $2,808,056 and our accounts
receivable were $42,116. These amounts represented substantially all of our
current assets. Our current liabilities were $917,326 and $536,860 as of the
quarter ended March 31, 2002 and the year ended December 31, 2001, respectively.
Our cash on hand should be adequate to pay all current liabilities as they
become due.
We believe that our cash on hand will allow us to continue with our planned
operations for a period of two years. Cash will be used to pay all of our
operating expenses. Aircraft will in all likelihood not be acquired unless they
can be leased or obtained with seller or third party financing. Acquisition of
aircraft by these methods, as compared to being purchased for cash, allows us to
pay for the cost of aircraft over time as income from charter operations is
earned.
Investing Activities
During the fiscal years ended December 31, 2000 and 2001 our income from
investing activities was negligible. Commencing with the completion of the
transaction with Return Assured we intend to invest our cash in certificates of
deposit, money market funds and other insured investments paying a fixed rate of
interest. We do not intend to use our cash to make investments in other
businesses.
Financing Activities
Our financing activities have consisted primarily of issuances of common stock,
sale of limited liability company interests in our controlled limited liability
company and long term debt.
During the year ended December 31, 2000, we received $2,114,882 from the
issuance of common stock and $2,449,073 from long term loans. All of the stock
issuances and loans came from our founder, Scott Walker. We do not anticipate
that Mr. Walker will purchase any more of our stock or make any loans to the
company in the next two years.
15
During the year ended December 31, 2001, we received $300,000 from the sale of
limited liability company units. We expect to realize substantial financing from
the sale of these units in the remainder of 2002 and thereafter. It is through
the sale of these units that customers join our fractional share ownership
program.
Capital Resources
Our primary capital resource is our cash on hand. Additional aircraft will not
be obtained unless they are available on terms which will allow us to finance
their acquisition. If necessary we believe we can raise additional funds through
the sale of common or preferred stock in one or more private placements. We do
not anticipate that we will be able to obtain debt financing except for secured
debt incurred in acquiring aircraft.
New Accounting Standards
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 for us on July 1, 2001 for Statement
No. 141 and January 1, 2002 for Statement No. 142.
In June 2001, the Financial Accounting Standards Board also issued Statement No.
143 "Accounting For Asset Retirement Obligations" and in August, 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 August 2001, the FASB issued SFAS No. 144 Accounting for the Impairment of
Long-Lived Assets. SFAS No. 144 addresses financial accounting and reporting for
the impairment or disposal of long-lived assets. SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001, and interim periods within those
fiscal years, with early application encouraged.
In May 2002, the Financial Accounting Standards Board issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB No. 13, and
Technical Corrections (SFAS No. 145). SFAS No. 145 eliminates Statement 4 (and
Statement 64, as it amends Statement 4, which requires gains and losses from the
extinguishment of debt to be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. The criteria in APB
Opinion No. 30 will now be used to classify those gains and losses. SFAS No. 145
amends FASB Statement No. 13 to require that certain lease modifications that
have economic effects similar to sale-leaseback transactions be accounted for in
the same manner as sale-leaseback transactions.
We are in the process of analyzing SFAS No. 141 through 145. Management cannot
currently assess what effect the adoption of these pronouncements will have on
our financial position or results of operations.
16
PROPOSALS FOR 2002 ANNUAL MEETING
Stockholder proposals intended to be presented at the 2002 Annual Meeting of
Stockholders must be received by the Company at its principal offices no later
than ____________, 2002 for inclusion in the 2002 Proxy Statement and form of
proxy. All proposals should be sent to Scott Walker, President, Return Assured
Incorporated, 5962 La Place Court, Suite 230, Carlsbad, CA 92008.
MATERIAL INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act") are incorporated in this
Information Statement by reference:
(1) The audited balance sheets of the Company as of August 31, 2001 and August
31, 2000 and the related statements of operations, stockholders' equity and
cash flows for the years ended August 31, 2001 and August 31, 2000 are
incorporated herein by reference to the Company's Annual Reports on Form
10-KSB and Form 10-KSB/A, as amended, for the fiscal years ended August 31,
2001 and August 31, 2000 (the "Annual Reports"), respectively.
(2) The Company's unaudited balance sheet as of November 30, 2001 and the
related statements of operations and cash flows for the three month period
ended November 30, 2001 are incorporated herein by reference to the
Company's Quarterly Report on Form 10-QSB for that period.
(3) The Company's unaudited balance sheet as of February 28, 2002 and the
related statements of operations for the three and six-month periods ended
February 28, 2002 and cash flows for the six month period ended February
28, 2002 are incorporated herein by reference to the Company's Quarterly
Report on Form 10-QSB for that period.
(4) Current Report on Form 8-K dated April 26, 2002.
(5) Current Report on Form 8-K dated June 10, 2002.
17
(6) Current Report on Form 8-K dated July 15, 2002.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company is hereby incorporated by reference to the Annual
Reports listed above.
ADDITIONAL INFORMATION
The Company's Annual Report on Form 10-KSB for the fiscal year ended August 31,
2001, Quarterly Reports on Form 10-QSB for the quarters ended November 30, 2001
and February 28, 2002, Current Report on Form 8-K dated April 26, 2002 and
Current Report on Form 8K/A dated July 15, 2002 are being delivered to you with
this Information Statement. The Company will furnish a copy of any exhibit
thereto or other information upon request by a stockholder to Scott Walker,
President, Return Assured Incorporated, 5962 La Place Court, Suite 230,
Carlsbad, CA 92008, telephone (760) 438-7245.
By Order of the Board of Directors
/s/Scott Walker
President, Chairman & Director
Carlsbad, California
July 19, 2002
18
EXHIBIT LIST
EXHIBIT A Certificate of Amendment of the Certificate of Incorporation
EXHIBIT B Amendment Agreement dated as of April 27, 2002 by and between
Return Assured Incorporated, EliteJet Inc. and Scott Walker
EXHIBIT C Awareness Letter of Goldstein Golub Kessler LLP
EXHIBIT D Awareness Letter of Goldstein Golub Kessler LLP
EXHIBIT E Consent of Goldstein Golub Kessler LLP
EXHIBIT F Consent of Goldstein Golub Kessler LLP
EXHIBIT G Consent of Pannell Kerr Forster
EXHIBIT H Consent of Rogoff & Company P.C.
19
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF
RETURN ASSURED INCORPORATED
Under Section 242
of the
Delaware General Corporation Law
The undersigned, President and Chairman of Return Assured Incorporated, a
corporation existing under the laws of the state of Delaware, does hereby
certify as follows:
First: That the name of the corporation (the "Corporation") is Return Assured
Incorporated.
Second: That the certificate of incorporation of the Corporation was filed with
the Delaware Secretary of State on June 18, 1996.
Third: That the board of directors of the Corporation adopted resolutions
setting forth proposed amendments to the certificate of incorporation of the
Corporation, declaring said amendments to the certificate of incorporation to be
advisable and requesting the consent of the stockholders of the Corporation for
consideration thereof. The resolutions setting forth the proposed amendments are
as follows:
RESOLVED, that it is deemed advisable and in the best interests of the
Corporation that the Certificate of Incorporation of the Corporation be amended
as follows:
20
1. Article FIRST, which sets forth the name of the Corporation, is amended to
read as follows:
"FIRST: The name of the corporation (hereinafter called the "Corporation")
is EliteJet Holdings, Inc."
2. The first paragraph of Article FOURTH, which sets forth the total
number of shares of stock which the Corporation shall have authority to issue,
is amended to read as follows:
"FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is 105,000,000 shares of which 100,000,000
shares shall be Common Stock, par value $.001 per share, and 5,000,000
shares shall be Preferred Stock, par value $.001 per share."
3. By adding the following subsection to Article IV:
"All issued and outstanding shares of Common Stock, par value $.001 per
share ("Old Common Stock"), outstanding as of the close of business on the
date this Certificate of Amendment to the Certificate of Incorporation is
filed with the Secretary of State of the State of Delaware (the "Effective
Date") shall automatically without any action on the part of the holder of
the Old Common Stock be converted into one sixtieth (1/60) of the number of
shares of Common Stock, par value $.001 per share ("New Common Stock").
Each holder of a certificate or certificates which immediately prior to the
Effective Date represented outstanding shares of Old Common Stock (the "Old
Certificates") shall, from and after the Effective Date, be entitled to
receive a certificate or certificates (the "New Certificates") representing
the shares of New Common Stock into which the shares of Old Common Stock
formerly represented by such Old Certificates are converted under the terms
hereof. Prior to the Effective Date, there are 35,834,012 shares of issued
and outstanding shares of Old Common Stock and 14,165,988 shares of
authorized but unissued shares of Old Common Stock. On the Effective
21
Date, there will be approximately 597,234 issued and outstanding shares of
New Common Stock and 99,402,766 shares of authorized but unissued shares of
New Common Stock. The 35,834,012 shares of Old Common Stock are hereby
changed into approximately 597,234 shares of New Common Stock at the rate
of one share of New Common Stock for every sixty shares of Old Common Stock
with all fractional shares equal to or greater than .50 rounded up to the
next whole share and those less than .50 eliminated and paid for in cash.
Fourth: That thereafter, pursuant to resolutions of the board of directors, the
amendments were authorized by resolutions adopted by the affirmative vote of the
stockholders holding not less than the necessary number of shares required by
written consent to so authorize, all in accordance with Section 228 of the
General Corporation Law of the State of Delaware.
Fifth: That said amendments to the Certificate of Incorporation were duly
adopted in accordance with Section 242 of the General Corporation Law of the
State of Delaware.
Sixth: That the capital of the corporation shall not be reduced under or by
reason of said amendments.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the ____
day of July, 2002.
--------------------------------------------
Scott Walker, President and Chairman
22
EXHIBIT B
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (the "Amendment") is made and entered into as
of this 27th day of April, 2002, by and among Return Assured Incorporated, a
Delaware corporation with its principal place of business at 1901 Avenue of the
Stars, Suite 1710, Los Angeles, California 90067 (the "Company"), EliteJet,
Inc., a Nevada corporation with its principal place of business at 5962 La Place
Court, Suite 230, Carlsbad, California 92008 ("Elite"), and Scott Walker, an
individual and the sole shareholder of Elite (the "Shareholder" and together
with the Company and Elite, the "Parties").
WHEREAS, the Parties entered into an Acquisition Agreement dated April
26, 2002 (the "Agreement") pursuant to which Elite and the Shareholder agreed to
transfer and deliver to the Company all of the issued and outstanding capital
stock of Elite in exchange for an aggregate of 7,000,000 shares of the Company's
common stock, par value $.001 per share ("Common Stock"); and
WHEREAS, the Parties desire to make certain amendments to the
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the promises,
covenants and conditions contained herein, the Parties intending to be legally
bound hereby agree as follows:
1. Number of Shares of Common Stock to be Issued. Each of (i) the
Fourth Whereas clause, (ii) Article 1 and (iii) Article 2(b)
of the Agreement is hereby amended to replace the words "seven
million (7,000,000)" contained therein in their entirety with
the words "four hundred twenty million (420,000,000)", it
being the absolute and unequivocal intention of each of the
Parties that the number of shares of Common Stock to be issued
to the Shareholder in connection with the transactions
contemplated by the Agreement be an amount equal to four
hundred twenty million (420,000,000) before giving effect to
any change in capitalization of the Company or seven million
(7,000,000) after taking into account the contemplated change
in the Company's capitalization pursuant to a pending 1 for 60
reverse split of the Common Stock, but not both. For purposes
of clarity, the following table sets forth the proper issuance
of Common Stock to the Shareholder pursuant to the Agreement
either pre- or post-reverse split:
CAPITALIZATION NO. OF SHARES OF COMMON STOCK
Pre-Split 420,000,000
or
Post-1 for 60 Reverse Split 7,000,000
23
2. Condition Subsequent to Closing. Article 6 is hereby amended
to add a second paragraph as follows:
"Furthermore, the obligations of each party to this
Agreement are expressly subject to a condition
subsequent to the Closing that both a (i)
one-for-sixty (1-60) reverse split of the Common
Stock and (ii) change in the Company's authorized
Common Stock to an amount no less than 100,000,000
shares of Common Stock shall have been approved by
the shareholders of the Company and shall have taken
effect."
3. Terms of Agreement. Any term or condition contained in the
Agreement and not otherwise amended pursuant to this Amendment
shall remain in full force and effect in each and every
respect.
4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York
without giving effect to principles of conflicts or choice of
laws thereof.
5. Counterparts. This Amendment may be executed in counterparts,
each of which shall be deemed an original, and all of which,
when taken together, shall constitute one and the same
instrument.
24
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first written above.
RETURN ASSURED INCORPORATED
By:
----------------------------------
Name:
Title:
ELITEJET, INC.
By:
----------------------------------
Name:
Title:
Shareholder
-----------------------------------
Scott Walker
25
Exhibit C
ACCOUNTANT'S AWARENESS LETTER
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated April 4, 2002 on our review of the interim
financial statements of Return Assured Incorporated and Subsidiaries as of
February 28, 2002 and for the three-month and six-month periods ended February
28, 2002 included in the Form 10-QSB for the quarter ended February 28, 2002 is
being incorporated by reference in the Company's Preliminary Information
Statement on Schedule 14C. Pursuant to Rule 436(c) under the Securities Act of
1933, this report should not be considered as part of the Registration Statement
prepared or certified by us within the meaning of Sections 7 and 11 of that Act.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
July 18, 2002
26
EXHIBIT D
ACCOUNTANT'S AWARENESS LETTER
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated January 14, 2002, on our review of the
interim financial statements of Return Assured Incorporated and Subsidiaries as
of November 30, 2001 and for the three month period ended November 30, 2001
included in the Form 10-QSB for the quarter ended November 30, 2001 is being
incorporated by reference in the Company's Preliminary Information Statement on
Schedule 14C. Pursuant to Rule 436(c) under the Securities Act of 1933, this
report should not be considered as part of the Information Statement prepared or
certified by us within the meaning of Sections 7 and 11 of that Act.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
July 18, 2002
27
EXHIBIT E
CONSENT OF INDEPENDENT AUDITORS
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors
Return Assured Incorporated
We hereby consent to the incorporation by reference in this Preliminary
Information Statement on Schedule 14C of our report dated November 30, 2001 on
the consolidated financial statements of Return Assured Incorporated and
Subsidiaries appearing in the Annual Report on Form 10- KSB of Return Assured
Incorporated, for the year ended August 31, 2001.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
July 18, 2002
28
EXHIBIT F
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors
Return Assured Incorporated
We hereby consent to the incorporation by reference in this Preliminary
Information Statement on Schedule 14C of Return Assured Incorporated, formerly
known as Hertz Technology Group, Inc., of our report dated October 26, 2000 on
the consolidated financial statements of Hertz Technology Group, Inc and
Subsidiaries appearing in the Annual Report on Form 10-KSB, as amended, of
Return Assured Incorporated for the year ended August 31, 2000.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
July 18, 2002
29
EXHIBIT G
CONSENT OF INDEPENDENT AUDITORS
July 18, 2002
Board of Directors
Return Assured Incorporated
5962 La Place Court, Suite 230
Carlsbad, CA 92008
Dear Sirs,
We consent to the incorporation by reference in this Preliminary Information
Statement on Schedule 14C of Return Assured Incorporated, formerly known as
Hertz Technology Inc., of our report dated September 27, 2000 and October 17,
2000 relating to the audited financial statements for the period ending August
31, 2000 of Return Assured Incorporated (formerly A Sure eCommerce, Inc.)
appearing in the Annual Report on Form 10-KSB, as amended, of Return Assured
Incorporated, formerly known as Hertz Technology Group, Inc., for the year ended
August 31, 2000.
Pannell Kerr Forster
CHARTERED ACCOUNTANTS
VANCOUVER, CANADA
30
EXHIBIT H
EXHIBIT H
CONSENT OF INDEPENDENT AUDITORS
INDEPENDENT AUDITOR'S CONSENT
To the Board Of Directors
Return Assured Incorporated
We hereby consent to the incorporation by reference in Amendment No. 2 to the
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934, as amended of Return Assured Incorporated on Schedule 14C of our report
dated July 10, 2002 relating to our audit of the consolidated financial
statements of EliteJet, Inc. and Subsidiary (a Nevada corporation formerly known
as ExecJet, Inc.) as of December 31, 2001, and the related consolidated
statements of operations, stockholder's equity, and cash flows for the two-year
period ended December 31, 2001 which appear in such Schedule 14C.
Rogoff & Company, P.C.
New York, New York
July 19, 2002
31