<PAGE> 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: JUNE 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
June 30, 1998
Transitional Small Business Disclosure Format: Yes___; No X
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SECURITIES RESOLUTION ADVISORS, INC.
INDEX
Page
No.
PART I. Financial Information
Item 1. Condensed Balance Sheets - 3
June 30, 1998 and December 31, 1997
Condensed Statements of Operations - 4
Three and Six Months Ended June 30, 1998 and 1997
Condensed Consolidated Statement of Stockholders' Equity - 5
Six Months Ended June 30, 1998
Condensed Consolidated Statements of Cash Flows - 6-7
Six Months Ended June 30, 1998 and 1997
Notes to Condensed Consolidated Financial Statements - 8-11
Six Months Ended June 30, 1998 and 1997
Item 2. Management's Plan of Operation 12
PART II. Other information 13
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SECURITIES RESOLUTION ADVISORS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 168,598 $ 226,300
Marketable equity securities 2,119 --
Receivables, net 528,071 512,662
----------- -----------
Total current assets 698,788 738,962
Property and equipment, net 90,672 98,045
Equity securities held for investment 690,000 --
Other 19,415 20,433
----------- -----------
$ 1,498,875 $ 857,440
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 36,159 $ 18,586
Taxes payable 979 5,200
----------- -----------
37,138 23,786
Due to shareholder -- 50,000
Minority interest 144,218 2,037
STOCKHOLDERS' EQUITY
Common stock 145,250 9,753
Paid-in capital 1,843,329 657,396
Retained earnings (deficit) 126,940 114,468
----------- -----------
2,115,519 781,617
Stock subscription receivable (798,000) --
----------- -----------
Total stockholders' equity 1,317,519 781,617
----------- -----------
$ 1,498,875 $ 857,440
=========== ===========
</TABLE>
See accompanying notes to financial statements.
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SECURITIES RESOLUTION ADVISORS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $ 135,134 $ 130,840 $ 247,772 $ 180,822
DIRECT COSTS 43,243 42,670 77,035 61,020
------------ ------------ ------------ ------------
GROSS PROFIT 91,891 88,170 170,737 119,802
OTHER EXPENSE (INCOME)
Selling, general and administrative expense 84,708 82,992 160,624 114,755
Interest expense -- 1,000 -- 2,000
Unrealized loss on marketable equity securities 17 -- 17 --
Interest and other income (2) -- (2) --
------------ ------------ ------------ ------------
84,723 83,992 160,639 116,755
------------ ------------ ------------ ------------
EARNINGS BEFORE INCOME TAXES AND
MINORITY INTEREST 7,168 4,178 10,098 3,047
INCOME TAX EXPENSE (BENEFIT) 540 -- 979 --
------------ ------------ ------------ ------------
EARNINGS BEFORE MINORITY INTEREST 6,628 4,178 9,119 3,047
MINORITY INTEREST 3,353 -- 3,353 --
------------ ------------ ------------ ------------
NET EARNINGS (LOSS) $ 9,981 $ 4,178 $ 12,472 $ 3,047
============ ============ ============ ============
NET EARNINGS (LOSS) PER SHARE $ 0.001 $ 0.000 $ 0.001 $ 0.000
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 14,525,000 14,525,000 14,525,000 14,525,000
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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SECURITIES RESOLUTION ADVISORS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Stock
Common Stock Paid-in Subscription Retained
Shares Par Value Capital Receivable Earnings Total
------ --------- ------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
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 12,472 $ 12,472
------------ ------------ ------------ ------------ ------------ ------------
BALANCE, June 30, 1998 14,525,000 $ 145,250 $ 1,843,329 $ (798,000) $ 126,940 $ 1,317,519
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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SECURITIES RESOLUTION ADVISORS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net earnings (loss) $ 12,472 $ 3,047
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 9,910 4,780
Minority interest (3,353) --
Changes in assets and liabilities:
Marketable equity securities 17 --
Receivables (10,159) (79,253)
Other Assets -- (3,626)
Accounts payable and accrued liabilities (16,105) 15,721
--------- ----------
Net cash provided by (used in) operating activities (7,218) (59,331)
--------- ----------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Capital expenditures (1,519) (51,140)
Acquisition of Rose International Ltd. 1,035 --
--------- ----------
Net cash provided by (used in) investing activities (484) (51,140)
--------- ----------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Sale of common stock -- 130,775
Repayment of stockholder loan (50,000) --
--------- ----------
Net cash provided by (used in) financing activities (50,000) 130,775
--------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (57,702) 20,304
CASH AND CASH EQUIVALENTS, beginning of period 226,300 27,800
--------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 168,598 $ 48,104
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
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SECURITIES RESOLUTION ADVISORS, INC.
STATEMENTS OF CASH FLOWS, CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
---- ----
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid None $ 2,000
========= =========
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
=========
</TABLE>
See accompanying notes to consolidated financial statements.
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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.
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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 June 30, 1998, the Company has an investment in marketable equity
securities, which are classified as trading securities. As of June 30,
1998 the cost of $14,682 exceeded the fair value of the securities by
$12,563.
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
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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
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL - The Company had working capital of $661,650 as
of June 30, 1998 as compared to working capital of $715,176, a decline
of $53,526. The majority of the decline is the result of repayment of a
loan from a shareholder in the amount of $50,000 during the six-month
period ended June 30, 1998.
During the six months ended June 30, 1998, the Company experienced a
decrease in cash and cash equivalents in the amount of $57,702, which
consisted primarily of the repayment of a stockholder loan in the
amount of $50,000. During the six months ended June 30, 1997 the
Company sold common stock for $130,775 and utilized $51,140 to acquire
property and equipment as a result of the increased business which
commenced during the period. The remaining cash was utilized as
working capital to support the increase in accounts receivable and the
associated increased administrative and direct costs.
During the six months ended June 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 six-month period ended June 30, 1998, revenues were 37%
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 June 30, 1998 were 3% higher than in the corresponding
1997 period. Direct costs have been reduced from 34% of revenue during
the six-month period ended June 30, 1997 to 31% during the same 1998
period.
OTHER EXPENSE (INCOME)
During the six-month period ended June 30, 1998, selling, general and
administrative expense amounted to $160,624 or 65% of revenues as
compared to $114,755 or 63% of revenues during the same 1997 period.
The increase in these costs was due to the additional work demand noted
above.
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - Not applicable
(b) Reports on Form 8-K - The Company filed a report on Form 8-K
dated June 5, 1998 to report the acquisition by the Company of
The Accord Group, Inc. in exchange for 8,000,000 shares of the
Company's common stock. The Company has filed an amendment to
Form 8-K to include the audited financial statements of the
acquired company for the year ended December 31, 1997 and the
pro forma combined balance sheet as of March 31, 1998 and the
pro forma statements of continued operations for the year
ended December 31, 1997 and for the three month period ended
March 31, 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: August 20, 1998 By: /s/ Richard Singer II
-------------------- ---------------------
Richard Singer II
President and Principal
Accounting Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (a)
Financial Statements as of June 30, 1998 and for the six month period then ended
and is qualified in its entirety by reference to such (b) Form 10-QSB for the
quarter ended June 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 168,598
<SECURITIES> 2,119
<RECEIVABLES> 528,071
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 698,788
<PP&E> 90,672
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,498,875
<CURRENT-LIABILITIES> 37,138
<BONDS> 0
0
0
<COMMON> 145,250
<OTHER-SE> 1,172,269
<TOTAL-LIABILITY-AND-EQUITY> 1,498,852
<SALES> 247,772
<TOTAL-REVENUES> 247,772
<CGS> 77,035
<TOTAL-COSTS> 77,035
<OTHER-EXPENSES> 160,625
<LOSS-PROVISION> 17
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,198
<INCOME-TAX> 979
<INCOME-CONTINUING> 9,118
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,472
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
