-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B10cNWBeZTuBA+zm2eq1RijoK6nDiPKGHfba7Y3KevRfTofLUjxsuQ7ChnPUXxRx JgdzDxOp1H6i471zdiZv8g== 0000950123-98-010155.txt : 19981123 0000950123-98-010155.hdr.sgml : 19981123 ACCESSION NUMBER: 0000950123-98-010155 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SECURITIES RESOLUTION ADVISORS INC CENTRAL INDEX KEY: 0001017655 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 731479833 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-28720 FILM NUMBER: 98755852 BUSINESS ADDRESS: STREET 1: 80 SEAVIEW BLVD STREET 2: SUITE 220 CITY: PORT WASHINGTON STATE: NY ZIP: 11050 BUSINESS PHONE: 5166254040 MAIL ADDRESS: STREET 1: 7633 EAST 63RD PL STREET 2: SUITE 220 CITY: TULSA STATE: OK ZIP: 74133 FORMER COMPANY: FORMER CONFORMED NAME: ROSE INTERNATIONAL LTD DATE OF NAME CHANGE: 19960627 10QSB 1 SECURITIES RESOLUTION ADVISORS, INC. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: SEPTEMBER 30, 1998 Commission File Number: 0-28720 SECURITIES RESOLUTION ADVISORS, INC. (Exact name of small business issuer as specified in its charter) ROSE INTERNATIONAL LTD. (Former name of small business issuer) DELAWARE 73-1479833 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 80 SEAVIEW BLVD., PORT WASHINGTON, NY 11050 (Address of principal executive office) 7633 E. 63RD PLACE, SUITE 220, TULSA, OKLAHOMA 74133 (Former address of principal executive office) (516) 625-4040 (Issuer's telephone number, including area code) Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes...X.... No........ State the number of shares outstanding of each of the issuer's classes of common equity, as of the close of the period covered by this report. COMMON STOCK $0.01 PAR VALUE 14,525,000 ---------------------------- ---------- Class Outstanding at September 30, 1998 Transitional Small Business Disclosure Format: Yes ; No X 2 SECURITIES RESOLUTION ADVISORS, INC. INDEX Page No. ---- PART I. Financial Information Item 1. Condensed Balance Sheets - 3 September 30, 1998 and December 31, 1997 Condensed Statements of Operations - 4 Three and Nine Months Ended September 30, 1998 and 1997 Condensed Consolidated Statement of Stockholders' Equity - 5 Nine Months Ended September 30, 1998 Condensed Consolidated Statements of Cash Flows - 6-7 Nine Months Ended September 30, 1998 and 1997 Notes to Condensed Consolidated Financial Statements - 8-11 Nine Months Ended September 30, 1998 and 1997 Item 2. Management's Discussion and Analysis 12 PART II. Other information 13 2 3 SECURITIES RESOLUTION ADVISORS, INC. BALANCE SHEET
September 30, December 31, 1998 1997 ------------- ------------ (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 176,872 $ 226,300 Marketable equity securities 2,516 -- Receivables, net 518,446 512,662 ----------- ----------- Total current assets 697,834 738,962 Property and equipment, net 86,226 98,045 Equity securities held for investment 690,000 -- Other 18,906 20,433 ----------- ----------- $ 1,492,966 $ 857,440 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 17,112 $ 18,586 Taxes payable -- 5,200 ----------- ----------- 17,112 23,786 Due to shareholder 23,697 50,000 Minority interest 142,405 2,037 STOCKHOLDERS' EQUITY Common stock 145,250 9,753 Paid-in capital 1,843,329 657,396 Retained earnings (deficit) 119,173 114,468 ----------- ----------- 2,107,752 781,617 Stock subscription receivable (798,000) -- ----------- ----------- Total stockholders' equity 1,309,752 781,617 ----------- ----------- $ 1,492,966 $ 857,440 =========== ===========
See accompanying notes to financial statements. 3 4 SECURITIES RESOLUTION ADVISORS, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended September 30, September 30, 1998 1997 1998 1997 ------------ ------------ ------------ ------------ REVENUES $ 110,375 $ 133,025 $ 358,147 $ 313,847 DIRECT COSTS 37,820 30,350 114,855 91,370 ------------ ------------ ------------ ------------ GROSS PROFIT 72,555 102,675 243,292 222,477 OTHER EXPENSE (INCOME) Selling, general and administrative expense 83,513 103,578 244,137 218,333 Interest expense -- 1,000 -- 3,000 Unrealized loss (gain) on marketable equity securities (397) -- (380) -- Interest and other income (2) -- (4) -- ------------ ------------ ------------ ------------ 83,114 104,578 243,753 221,333 ------------ ------------ ------------ ------------ EARNINGS BEFORE INCOME TAXES AND MINORITY INTEREST (10,559) (1,903) (461) 1,144 INCOME TAX EXPENSE (BENEFIT) (979) -- -- -- ------------ ------------ ------------ ------------ EARNINGS BEFORE MINORITY INTEREST (9,580) (1,903) (461) 1,144 MINORITY INTEREST 1,813 -- 5,166 -- ------------ ------------ ------------ ------------ NET EARNINGS (LOSS) $ (7,767) $ (1,903) $ 4,705 $ 1,144 ============ ============ ============ ============ NET EARNINGS (LOSS) PER SHARE $ (0.001) $ (0.000) $ 0.000 $ 0.000 ============ ============ ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING 14,525,000 14,525,000 14,525,000 14,525,000 ============ ============ ============ ============
See accompanying notes to consolidated financial statements. 4 5 SECURITIES RESOLUTION ADVISORS, INC. STATEMENT OF STOCKHOLDERS' EQUITY SEPTEMBER 30, 1998 (UNAUDITED)
Stock Common Stock Paid-in Subscription Retained Shares Par Value Capital Receivable Earnings Total ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, January 1, 1998 9,753,000 $ 9,753 $ 657,396 $ -- $ 114,468 $ 781,617 Recapitalization (1,753,000) $ 70,247 $ (215,781) $ (145,534) ------------ ------------ ------------ ------------ ------------ ------------ 8,000,000 $ 80,000 $ 441,615 $ -- $ 114,468 $ 636,083 Acquire Rose International Ltd 6,525,000 $ 65,250 $ 1,401,714 $ (798,000) $ -- $ 668,964 Net earnings (loss) $ 4,705 $ 4,705 ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, September 30, 1998 14,525,000 $ 145,250 $ 1,843,329 $ (798,000) $ 119,173 $ 1,309,752 ============ ============ ============ ============ ============ ============
See accompanying notes to consolidated financial statements. 5 6 SECURITIES RESOLUTION ADVISORS, INC. STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 1998 1997 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ 4,705 $ 1,144 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 14,865 11,080 Minority interest (5,166) -- Changes in assets and liabilities: Marketable equity securities (380) -- Receivables (534) (212,278) Other assets (3,626) Accounts payable and accrued liabilities (36,131) 15,721 --------- --------- Net cash provided by (used in) operating activities (22,641) (187,959) --------- --------- CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES Capital expenditures (1,519) (63,451) Acquisition of Rose International Ltd. 1,035 -- --------- --------- Net cash provided by (used in) investing activities (484) (63,451) --------- --------- CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES Sale of common stock -- 570,775 Obligations paid by shareholder 23,697 -- Repayment of stockholder loan (50,000) -- --------- --------- Net cash provided by (used in) financing activities (26,303) 570,775 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (49,428) 319,365 CASH AND CASH EQUIVALENTS, beginning of period 226,300 27,800 --------- --------- CASH AND CASH EQUIVALENTS, end of period $ 176,872 $ 347,165 ========= =========
See accompanying notes to consolidated financial statements. 6 7 SECURITIES RESOLUTION ADVISORS, INC. STATEMENTS OF CASH FLOWS, CONTINUED (UNAUDITED)
Nine Months Ended September 30, 1998 1997 --------- --------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid None $ 3,000 ========= ========= Income taxes paid $ 5,200 None ========= ========= SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES The acquisition of the Accord Group, Inc. was accounted for as a reverse acquisition, utilizing the purchase method of accounting. The assets of Rose International Ltd. were recorded at their fair value as follows: Marketable equity securities $ 2,136 Accounts receivable 5,250 Marketable equity securities held for investment 690,000 Liabilities assumed (29,457) Minority shareholders (668,964) --------- Cash received in acquisition $ 1,035 =========
See accompanying notes to consolidated financial statements. 7 8 SECURITIES RESOLUTION ADVISORS, INC. NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND PRINCIPLES OF CONSOLIDATION - On July 8, 1998, Rose International Ltd. ("Rose"), a Delaware corporation, changed their name to Securities Resolution Advisors, Inc. ("SRAD") as a result of the acquisition of The Accord Group, Inc. ("Accord"), a Delaware corporation, on June 5, 1998. The acquisition was accounted for utilizing the purchase method of accounting as a reverse acquisition, with Accord being the survivor for accounting purposes. The consolidated financial statements of SRAD include the accounts of SRAD since its acquisition effective June 1, 1998, its 82.02% subsidiary Accord and the majority owned subsidiaries of Accord, which include Securities Resolution Advisors, Inc. ("SRA"), a wholly owned subsidiary and Kurel, an eighty percent owned subsidiary, (collectively referred to as the "Company"). All material intercompany accounts and transactions have been eliminated. Minority interest includes the 17.98% of Accord and the 20% of Kurel owned by minority shareholders. The financial statements included in this report have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and include all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation. These financial statements have not been audited. The balance sheet at December 31, 1997 included in this report has been derived from the audited balance sheet of The Accord Group, Inc. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. However, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report for the year ended December 31, 1997, which is included in the Company's Form 10-KSB. The audited financial statement of Accord is included in the Company's Form 8-K/A dated June 5, 1998. The financial data for the interim periods presented may not necessarily reflect the results to be anticipated for the complete year. Certain reclassifications of the amounts presented for the comparative period have been made to conform to the current presentation. NATURE OF BUSINESS - The Company, through SRA, services the investing community who have lost money due to the advice, lack of fiduciary responsibility or fraudulent practices of brokers and broker dealers. Such practices include unauthorized trading, churning, unsuitable investments, stock manipulation, misrepresentation of a company's financial status, etc. SRA advises its customers as to an appropriate course of action in regard to arbitration, as well as, settlement with brokers and brokerage firms. If an action is warranted, SRA will prepare all necessary documentation in order to file an arbitration action with the appropriate regulatory agency. All services are rendered on a contingency basis. CASH EQUIVALENTS - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. 8 9 MARKETABLE EQUITY SECURITIES - Marketable equity securities are comprised of trading securities held for short-term investment purposes and equity securities available for sale. These securities are stated at fair value, with the change in fair value during the period included in earnings for trading securities and as a component of stockholders' equity for equity securities available for sale. Realized gains or losses on marketable securities are calculated based on the first-in, first-out method of accounting. DEPRECIATION AND AMORTIZATION - Depreciation and amortization are calculated using the straight-line method over the estimated useful life or remaining lease term for leasehold improvements. Renewals and betterments are capitalized to the related asset. Repairs and maintenance are charged to expense as incurred. INCOME TAXES - Deferred income taxes are recognized for income and expense items that are reported for financial reporting purposes in different years than for income tax purposes. USE OF ESTIMATES AND FAIR VALUE DETERMINATION - The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. NET EARNINGS PER SHARE - Net earnings per share amounts are computed using the weighted average number of shares outstanding during the period. Fully diluted earnings per share is presented if the assumed conversion of common stock equivalents results in material dilution. B. ACQUISITION On June 5, 1998, SRAD completed the acquisition of Accord in a transaction accounted for as a reverse acquisition, utilizing the purchase method of accounting, wherein the assets of SRAD were recorded at fair value and the operations of Accord have become the historical operations of the Company. SRAD issued 8,000,000 shares of its $.01 par value common stock to three individuals in exchange for 8,000,000 shares (82.02%) of the $.001 par value common stock of Accord. The assets acquired and liabilities assumed are listed in the Statement of Cash Flows. C. MARKETABLE SECURITIES As of September 30, 1998, the Company has an investment in marketable equity securities, which are classified as trading securities. As of September 30, 1998 the cost of $14,682 exceeded the fair value of the securities by $12,165. D. COMMON STOCK AND COMMON STOCK OPTIONS On August 7, 1995 the Board of Directors of the Company authorized an Incentive Stock Option Plan (the "Plan") which for a term of ten years provides that one million shares of the Company's common stock be reserved for issuance to selected key employees and consultants. The Plan is to be administered by a compensation committee composed of two directors of the Company, and this committee may grant no more than three hundred thousand shares of common stock to any one individual at a price based on the fair market value of the shares at the date of grant. The grant may be exercised over a ten year period, in not less than one thousand share lots and when 9 10 exercised, the stock must be held for six months prior to sale. Only the person to whom the option is granted may exercise the options and the Board of Directors may modify the Plan at any time. At June 30, 1998 the Company had granted options outstanding totaling 450,000 shares for ten years at an exercise price of $1.00 per share in accordance with the Plan, none of which had been exercised. On August 10, 1995 the Board of Directors adopted a 1995-1996 Nonstatutory Stock Option Plan for its officers, directors, key employees and consultants reserving 500,000 common shares for this option plan, which expired December 31, 1996. The options may be granted at prices determined by the compensation committee, which administers this plan, and may be exercised upon grant and paid for at the discretion of the Compensation Committee, with any unpaid amounts for shares received being evidenced by promissory notes. At June 30, 1998 the Company had outstanding grants which totaled 355,000 shares at an average exercise price of $2.11 per share, none of which had been exercised. Common stock options do not have an impact on primary earnings per share or fully diluted earnings per share as the average trading price and the ending trading price has approximated or been less than the lowest exercise price of the common stock options. E. INCOME TAXES The Company follows SFAS No. 109, "Accounting for Income Taxes". Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. SFAS No. 109 requires that a valuation allowance be established to reduce deferred tax assets to the amount that is more likely than not to be realized. Deferred income taxes result primarily from temporary differences in recognizing net operating losses for tax and financial reporting purposes. Any future tax benefit of net operating loss carryforwards has been fully reserved due to the uncertainty of the benefits being realized. 10 11 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL - The Company had working capital of $680,722 as of September 30, 1998 as compared to working capital of $715,176, a decline of $34,454. The majority of the decline is the result of repayment of a loan from a shareholder in the amount of $50,000 offset by the $23,697 of obligations of the Company which were paid by the shareholder. During the nine months ended September 30, 1998, the Company experienced a decrease in cash and cash equivalents in the amount of $49,428, which consisted primarily of the repayment of a stockholder loan in the amount of $50,000. During the nine months ended September 30, 1997 the Company sold common stock for $570,775 and utilized $63,451 to acquire property and equipment. The Company also utilized the majority of the remaining cash as working capital to finance its expanded business. During the nine months ended September 30, 1998, the Company incurred $1,519 for capital expenditures. No additional capital expenditures are planned at this time unless the Company is required to add additional personnel to service expanded business. RESULTS OF OPERATIONS - The operations of the Company are all within one segment and involve services to the investing community who have lost money due to the advice, lack of fiduciary responsibility or fraudulent practices of brokers and broker dealers. REVENUES AND DIRECT COSTS During the nine-month period ended September 30, 1998, revenues were 14% higher than in the corresponding 1997 period. This is the result of an increase in staff during the three-month period ended March 31, 1997 as a result of additional work demand. Revenues during the three-month period ended September 30, 1998 were 17% lower than in the corresponding 1997 period. Direct costs were 32% of revenue during the nine-month period ended June 30, 1998 as compared to 29% during the same 1997 period. Direct costs were 34% of revenue during the three-month period ended September 30, 1998 as compared to 23% during the same 1997 period. During the nine months ended September 30, 1998, the Company has increased its work volume, however, due to the contingent nature of their fee income, their revenue during the quarter ended September 30, 1998 was lower than for the same 1997 period. OTHER EXPENSE (INCOME) During the nine-month period ended September 30, 1998, selling, general and administrative expense amounted to $244,137 or 68% of revenues as compared to $218,333 or 70% of revenues during the same 1997 period. The increase in these costs was due to the additional work demand noted above. 11 12 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - Not applicable (b) Reports on Form 8-K - None during the quarter ended September 30, 1998. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SECURITIES RESOLUTION ADVISORS, INC. Date: November 18, 1998 By: /s/ Richard Singer II ----------------- ------------------------------ Richard Singer II President and Principal Accounting Officer 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1998 AND FOR THE NINE MONTH PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1998. 9-MOS DEC-31-1998 SEP-30-1998 176,872 2,516 518,446 0 0 697,834 125,643 39,417 1,492,966 40,809 0 0 0 145,250 1,164,502 1,492,966 358,147 358,147 114,855 144,855 244,137 0 0 4,705 0 4,705 0 0 0 4,705 0.00 0.00
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