<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For nine months ended September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ___________ to _____________.
Commission File Number 0-26857
THE ROSE GROUP CORPORATION OF NEVADA
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
FLORIDA 59-3575972
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
1748 INDEPENDENCE BOULEVARD, BUILDING A, SARASOTA, FLORIDA 34234
(Address of Principal Executive Offices)
(941) 360-6060
(Registrant's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days. /X/ YES / / NO
There were 11,460,441 shares of the Registrant's $.001 par value common stock
outstanding as of November 17, 2000.
Transitional Small Business Format (check one) YES / / NO /X/
<PAGE>
The Rose Group Corporation
of Nevada and Subsidiaries
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements..............................1
Item 2. Management's Discussion & Analysis of Financial
Condition and Results of Operations............................8
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.....................11
Item 5. Other Information.............................................11
Item 6. Exhibits and Reports on Form 8-K..............................12
SIGNATURES....................................................................13
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
THE ROSE GROUP CORPORATION
OF NEVADA AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited)
CONTENTS
Consolidated Financial Statements:
Consolidated Balance Sheet.................................................1
Consolidated Statements of Operations......................................2
Consolidated Statements of Changes in Stockholders' Deficit..............3-5
Consolidated Statements of Cash Flows .....................................6
Notes to Consolidated Financial Statements.................................7
<PAGE>
THE ROSE GROUP CORPORATION
OF NEVADA AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEET
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
ASSETS
Current assets:
<S> <C>
Cash held in escrow $ 5,019
Accounts receivable 22,234
Inventory 146,819
Prepaid expenses 39,385
Other current assets, including advances to stockholders of $10,752 53,828
---------------
Total current assets 267,285
Equipment, net of accumulated depreciation 94,694
---------------
Other assets:
Website costs, net of accumulated amortization 242,129
Patents and trademarks 10,405
Other assets 15,072
---------------
Total other assets 267,606
---------------
$ 629,585
===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable, trade, including related party of $60,000 448,197
Accrued expenses 33,732
Notes payable and current portion of long-term debt 580.861
Current portion of capital lease obligation 17,897
---------------
Total current liabilities 1,080,687
---------------
Long-term liabilities:
Note payable, stockholder 350,000
Capital lease obligation 27,658
Accounts payable 35,776
---------------
Total long-term liabilities 413,434
---------------
Stockholders' deficit:
Preferred stock; $.001 par value; 2,000,000 shares authorized;
no shares issued and outstanding
Common stock; $.001 par value; 50,000,000 shares authorized;
10,210,441 shares issued and outstanding 10,210
Additional paid-in capital 3,561,064
Common stock subscription receivable (25,000)
Common stock payable 90,000
Accumulated deficit during development stage (4,500,810)
---------------
Total stockholders' deficit (864,536)
---------------
$ 629,585
===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
1
<PAGE>
THE ROSE GROUP CORPORATION
OF NEVADA AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
March 13,
1997 (Date of
Three Months Ended Nine Months Ended Inception) to
September 30, September 30, September 30,
2000 1999 2000 1999 2000
------------------------------------------------------------------------------
Revenues:
<S> <C> <C> <C> <C> <C>
Sales $ 63,091 $ 76,213 $ 140,885 $ 336,913 $ 1,192,558
E-commerce sales, net 4,687 24,872 24,872
------------------------------------------------------------------------------
Total revenues 67,778 76,213 165,757 336,913 1,217,430
Cost of sales 61,807 23,504 82,564 182,882 654,842
------------------------------------------------------------------------------
Gross profit 5,971 52,709 83,193 154,031 562,588
------------------------------------------------------------------------------
Operating expenses:
General and administrative
expenses 671,892 341,067 2,755,384 667,863 4,672,860
Interest expenses 19,550 6,750 46,213 20,700 116,556
Depreciation and
amortization 21,468 1,500 38,918 4,650 65,958
Catalogue and website
expense 244,037
------------------------------------------------------------------------------
712,910 349,317 2,840,515 693,213 5,099,411
------------------------------------------------------------------------------
Net loss from operations (706,939) (296,608) (2,757,322) (539,182) (4,536,823)
Other income 18 29,536 47,298
------------------------------------------------------------------------------
Net loss $ (706,921) $ (296,608) $ (2,727,786) $ (539,182) $ (4,489,525)
==============================================================================
Loss per common share $ (.07) $ (.05) $ (.30) $ (.09) $ (.88)
==============================================================================
Weighted average shares
outstanding 9,898,663 6,278,779 9,156,344 5,956,948 5,125,885
==============================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS. 2
<PAGE>
THE ROSE GROUP CORPORATION
OF NEVADA AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
Nine Months Ended September 30, 2000 (Unaudited) and
Period March 13, 1997 (Date of Inception) to September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Accumulated Common
Common Stock Additional Deficit During Stock Common
---------------------- Paid-in Development Subscription Stock
Shares Amount Capital Stage Receivable Payable Total
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stock issued for cash
(March 1997) 100 $ 1,000 $ 1,000
Net loss for the period $ (24,468) (24,468)
--------------------------------------------------------------------------------------------------
Balance, December 31, 1997 100 1,000 (24,468) (23,468)
Acquisition of company
(March 1998) 5,463,670 5,464 $ 412,093 (404,414) $ (14,500) (1,357)
Recapitalization of company
(March 1998) (100) (1,000) (412,093) 393,129 14,500 (5,464)
Net loss for the year (278,747) (278,747)
--------------------------------------------------------------------------------------------------
Balance, December 31, 1998 5,463,670 5,464 (314,500) (309,036)
Sale of stock for cash, net of
offering cost of $51,750
(March 1999) 300,000 300 97,950 98,250
Stock options issued in
connection with loan
(March 1999) 5,400 5,400
Stock issued for services
rendered (March 1999) 250,000 250 124,750 125,000
Contribution of services
(March 1999) 103,000 103,000
Contribution of offering costs
(March 1999) 30,000 30,000
Sale of stock for cash, net of
offering costs of $17,350
(June 1999) 100,000 100 32,650 32,750
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS. 3
<PAGE>
THE ROSE GROUP CORPORATION
OF NEVADA AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (CONTINUED)
Nine Months Ended September 30, 2000 (Unaudited) and
Period March 13, 1997 (Date of Inception) to September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Accumulated Common
Common Stock Additional Deficit During Stock Common
------------------------ Paid-In Development Subscription Stock
Shares Amount Capital Stage Receivable Payable Total
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stock issued in connection
with accounts payable
(June 1999) 75,000 75 37,425 37,500
Contribution of offering costs
(June 1999) 10,000 10,000
Sale of stock for cash, net of
offering costs of $58,840
(September 1999) 967,000 967 424,660 (12,500) 413,127
Stock issued for services
(September 1999) 50,000 50 24,950 25,000
Collection of stock
subscription
(December 1999) 12,500 12,500
Sale of stock for cash, net
of offering costs of
$29,550 (December 1999) 640,000 640 289,811 290,451
Net loss for the year ended
December 31, 1999 (1,458,524) (1,458,524)
-------------------------------------------------------------------------------------------------
Balance, December 31, 1999 7,845,670 7,846 1,180,596 (1,773,024) (584,582)
Stock, options and warrants
issued for services rendered
(March 2000) (unaudited) 86,867 86,867
Stock issued for services
(March 2000) (unaudited) 500,000 500 249,500 250,000
Issuance of common stock,
net of $278,389 of offering
costs (June 2000)
(unaudited) 1,237,057 1,237 1,575,959 1,577,196
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS. 4
<PAGE>
THE ROSE GROUP CORPORATION
OF NEVADA AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (CONTINUED)
Nine Months Ended September 30, 2000 (Unaudited) and
Period March 13, 1997 (Date of Inception) to September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Accumulated Common
Common Stock Additional Deficit During Stock Common
--------------------- Paid-in Development Subscription Stock
Shares Amount Capital Stage Receivable Payable Total
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sale of stock for cash and
subscription receivable
(June 2000) (unaudited) 29,894 29 49,971 (25,000) 25,000
Stock warrants issued for
offering costs (June 2000)
(unaudited) 25,937 25,937
Stock issued for offering costs
(June 2000) (unaudited) 97,820 98 146,632 146,730
Common stock subscriptions
payable (June 2000)
(unaudited) $ 15,000 15,000
Issuance of common stock,
net of $3,898 of offering
costs (September 2000)
(unaudited) 500,000 500 245,602 246,102
Common stock subscriptions
payable (September 2000)
(unaudited) 75,000 75,000
Net loss for the nine months
ended September 30,
2000 (unaudited) (2,727,786) (2,727,786)
--------------------------------------------------------------------------------------------------
Balance, September 30,
2000 (unaudited) 10,210,441 $ 10,210 $ 3,561,064 $(4,500,810) $(25,000) $ 90,000 $ (864,536)
==================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS. 5
<PAGE>
THE ROSE GROUP CORPORATION
OF NEVADA AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
March 13,
Nine Months Ended 1997 (Date of
September 30, Inception) to
------------------------------ September 30,
2000 1999 2000
--------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (2,727,786) $ (539,182) $ (4,489,525)
-------------------------------------------------
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 38,918 4,650 65,958
Amortization of loan costs 5,400
Contribution of services 103,000
Stock, options and warrants issued for services 336,867 178,000 486,867
(Increase) decrease in:
Accounts receivable 16,209 (13,323) (22,234)
Other receivables (3,076) (3,076)
Inventory (4,720) (60,728) (146,819)
Prepaid assets
Catalogue and web site costs (30,385) (27,361) (39,385)
Other assets (39,945) (29,187) (50,072)
Increase (decrease) in accounts payable
and other accrued expenses 82,124 (72,879) 457,099
-------------------------------------------------
Total adjustments 395,992 (20,828) 856,738
-------------------------------------------------
Net cash used by operating activities (2,331,794) (560,010) (3,632,787)
-------------------------------------------------
INVESTING ACTIVITIES
Acquisition of equipment (26,947) (37,963) (86,174)
Increase in website costs (167,798) (167,798)
Acquisition of Vascular International of Nevada, Inc., net (6,821)
-------------------------------------------------
Net cash used by investing activities (194,745) (37,963) (260,793)
-------------------------------------------------
FINANCING ACTIVITIES
Net (payments) borrowings on line of credit (1,010) 24,895 28,953
Proceeds from notes payable 395,000 100,000 770,905
Payments on notes payable (180,142) (56,356) (245,905)
Decrease (increase) in advances to stockholder 70,856 (43,583) (10,752)
Proceeds from note payable, stockholder 27,000 377,000
Payments on offering costs (114,620) (39,970) (232,110)
Proceeds from issuance of common stock 2,335,470 672,067 3,221,134
Payments under capital lease obligation (9,808) (15,645)
-------------------------------------------------
Net cash provided by financing activities 2,522,746 657,053 3,893,580
-------------------------------------------------
NET (DECREASE) INCREASE IN CASH (3,793) 59,080 0
CASH AT BEGINNING OF PERIOD 3,793 1,008
-------------------------------------------------
CASH AT END OF PERIOD $ 0 $ 60,088 $ 0
=================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS. 6
<PAGE>
THE ROSE GROUP CORPORATION
OF NEVADA AND SUBSIDIARIES
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited)
1. FINANCIAL STATEMENTS
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary for a fair statement of (a) the results of
operations for the three and nine months ended September 30, 2000 and 1999 and
the period March 13, 1997 to September 30, 2000, (b) the financial position at
September 30, 2000, and (c) cash flows for the nine-month periods ended
September 30, 2000 and 1999 and the period March 13, 1997 to September 30, 2000,
have been made.
The unaudited consolidated financial statements and notes are presented as
permitted by Form 10-QSB. Accordingly, certain information and note disclosures
normally included in consolidated financial statements prepared in accordance
with generally accepted accounting principles have been omitted. The
accompanying consolidated financial statements and notes should be read in
conjunction with the audited consolidated financial statements and notes of the
Company for the fiscal year ended December 31, 1999. The results of operations
for the nine-month period ended September 30, 2000 are not necessarily
indicative of those to be expected for the entire year.
2. GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. However, the Company has sustained
a substantial loss for the nine months ended September 30, 2000, has negative
working capital of $813,402, and stockholders' deficit of $864,536 at September
30, 2000. These factors raise substantial doubt about the Company's ability to
continue as a going concern. These consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
3. TERMINATION OF YAHOO! AGREEMENT
During the third quarter 2000, Yahoo! terminated the marketing agreement with
the Company due to non-payments. As a result, the Company wrote off
approximately $625,000 of prepaid marketing costs associated with the
agreement. The Company believes that Yahoo! will not hold the Company liable
for any additional amounts due on this contract and, hence, eliminated the
payable to Yahoo! in the amount of $562,500 during the quarter.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This filing contains forward-looking statements. The words "anticipated,"
"believe," "expect," "plan," "intend," "seek," "estimate," "project," "will,"
"could," "may," and similar expressions are intended to identify forward-looking
statements. These statements include, among others, information regarding future
operations, future capital expenditures, and future net cash flow. Such
statements reflect the Company's current views with respect to future events and
financial performance and involve risks and uncertainties, including, without
limitation, general economic and business conditions, changes in foreign,
political, social, and economic conditions, regulatory initiatives and
compliance with governmental regulations, the ability to achieve further market
penetration and additional customers, and various other matters, many of which
are beyond the Company's control. Should one or more of these risks or
uncertainties occur, or should underlying assumptions prove to be incorrect,
actual results may vary materially and adversely from those anticipated,
believed, estimated, or otherwise indicated. Consequently, all of the
forward-looking statements made in this filing are qualified by these cautionary
statements and there can be no assurance of the actual results or developments.
The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements (and related notes thereto) included
elsewhere herein.
RESULTS OF OPERATIONS -- Three and Nine Months Ended September 30, 2000 and 1999
REVENUES
Revenues for the nine-month period ended September 30, 2000 were $165,757 as
compared to $336,913 for the period ended September 30, 1999, a decrease of
$171,156, or 50 percent. This decrease is primarily the result of a
customer's discontinuance of a product.
Revenues for the three-month period ended September 30, 2000 were $67,778 as
compared to $76,213 for the period ended September 30, 1999, a decrease of
$8,435, or 11 percent. This decrease is primarily the result of a
customer's discontinuance of a product.
8
<PAGE>
COST OF REVENUES
Cost of revenues for the nine-month period ended September 30, 2000 was $82,564
(or 59 percent of revenues) compared to $182,882 (or 54 percent of revenues) for
the period ended September 30, 1999. The decrease in cost of revenues is
principally due to a customer's discontinuance of a product.
Cost of revenues for the three-month period ended September 30, 2000 was $61,807
(or 98 percent of revenues) compared to $23,504 (or 31 percent of revenues) for
the period ended September 30, 1999. The increase in cost of revenues is
principally due to a customer's discontinuance of a product.
As a result of the change in the product sales mix, the Company realized an
increase in gross profit percentage in 2000 as compared to 1999, with a gross
profit percentage of 50 percent for the nine-month period ended September 30,
2000 versus 46 percent during the same period in 1999.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses amounted to $2,755,384 for the nine months
ended September 30, 2000 as compared to $667,863 in 1999. The increase of
$2,087,521 for the period primarily reflects the expenses attributable to
the Company's establishment of an infrastructure to execute its business
strategy. The expenses specifically resulted from the Company's investment in
additional personnel including technical, administrative, marketing,
merchandising and operational employees as well as expenditures for
advertising to promote the Company's products and services.
General and administrative expenses amounted to $671,856 for the three months
ended September 30, 2000 as compared to $341,067 in 1999. The increase of
$330,789 for the period primarily reflects the expenses attributable to
the Company's establishment of an infrastructure to execute its business
strategy. The expenses specifically resulted from the Company's investment in
additional personnel including technical, administrative, marketing,
merchandising and operational employees as well as expenditures for
advertising to promote the Company's products and services.
INTEREST EXPENSE
Interest expense for the nine-month period ended September 30, 2000 was $46,213
as compared to $20,700 for the same period in 1999. The increase is the result
of additional financing for the building of e-commerce management, facilities
infrastructure and equipment acquisition.
Interest expense for the three-month period ended September 30, 2000 was $19,550
as compared to $6,750 for the same period in 1999. The increase is the result of
additional financing for the building of e-commerce management, facilities
infrastructure and equipment acquisition.
LOSS BEFORE INCOME TAXES
The preceding factors combined to show an increase in net loss totaling
$2,248,604 for the nine-month period ended September 30, 2000 as compared to the
nine-month period ended September 30, 1999. There was a net loss of $2,727,786
for the nine-month period ended September 30, 2000 as compared to a net loss of
$539,182 for the comparable period in 1999.
The preceding factors combined to show an increase in net loss totaling $410,313
for the three-month period ended September 30, 2000 as compared to the
three-month period ended September 30, 1999. There was a net loss of $706,921
for the three-month period ended September 30, 2000 as compared to a net loss of
$296,608 for the comparable period in 1999.
9
<PAGE>
LIQUIDITY OF CAPITAL RESOURCES
The Company had working deficit of $813,402 at September 30, 2000, which
represented a increase in the deficit of $800,340 from the working capital
deficit of $2,657 at September 30, 1999. The increase in the deficit is mainly
due to the expenses incurred in establishing the infrastructure necessary to
execute the Company's business strategy.
OPERATING ACTIVITIES
For the nine months ended September 30, 2000, net cash used by operating
activities amounted to $2,331,794, an increase from net cash used by operating
activities of $1,771,784 for the comparable period in 1999. This increase in
cash used is primarily a result of the building of e-commerce management,
facilities, infrastructure, and equipment acquisition.
INVESTMENT ACTIVITIES
For the nine months ended September 30, 2000, net cash used by investing
activities amounted to $194,745 as compared to net cash used by investment
activities of $37,963 for the comparable period in 1999. The increase in cash
used is due to the expenditures for the Company's website enhancement costs.
FINANCING ACTIVITIES
The Company's financing activities include payments on borrowings, offering
costs, and capital leases. Net cash of $2,552,746 was provided by financing
activities for the nine months ended September 30, 2000 as compared to net cash
provided by financing activities of $657,053 for the nine months ended September
30, 1999. Proceeds from the Company's Regulation D offering and from notes
payable were the principal sources of cash in the current period.
CAPITAL RESOURCES
At September 30, 2000, the Company does not have any material commitments for
capital expenditures other than for those expenditures incurred in the ordinary
course of business.
The Company believes that its current operations and cash balances will not be
sufficient to satisfy its currently anticipated cash requirements for the next
12 months. Additional capital will be required in excess of the Company's
liquidity, requiring it to raise additional capital through an equity offering,
secured or unsecured debt financing. The availability of additional capital
resources will depend on prevailing market conditions, interest rates, and the
existing financial position and results of operations of the Company.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three month period ended September 30, 2000, the Company issued
500,000 shares of common stock in connection with a private offering. These
shares are not registered under the Securities Act of 1933, and have been
offered under an exemption for offerings not involving a public offering.
ITEM 5. OTHER INFORMATION
In June, 2000, the Company cancelled the consulting services agreement
that was entered into with Pinnacle Asset Management. However, the Company did
not cancel the warrant that it issued to Pinnacle to purchase 500,000 shares of
common stock at $.50 per share.
In July, 2000, the Company entered into a subscription agreement
pursuant to which agreement it agreed to sell 1,500,000 shares of the Company's
common stock to Consulting and Strategy International, LLC ("Consulting and
Strategy") and its designees, who are all accredited investors, at a purchase
price of $.50 per share for an aggregate purchase price of $750,000, of which
$250,000 has been paid and $500,000 was due to the Company upon the effective
date of a registration statement registering the shares sold to Consulting and
Strategy (the "Registration Statement"). The Company also agreed to issue two
classes of warrants to Consulting and Strategy, upon Consulting and Strategy's
payment to the Company of the remaining $500,000 due under the agreement,
including a Class A Warrant to purchase 500,000 shares of common stock at an
exercise price of $1.00 per share for payment of $500.00 and a Class B Warrant
to purchase 500,000 shares of common stock at an exercise price of $1.50 per
share for payment of $750.00.
The Company subsequently amended the subscription agreement with
Consulting and Strategy in October, 2000 to reduce the exercise price of the
Class A and Class B warrants to $.50 per share, and to reduce the purchase price
of 1,000,000 of the total 1,500,000 shares sold to Consulting and Strategy under
the subscription agreement to $.35. Therefore, Consulting and Strategy is now
only required to pay the Company $350,000 for the remaining 1,000,000 shares
upon the effective date of the Registration Statement. In consideration of the
reduction in exercise and share price, Consulting and Strategy has agreed to
advance to the Company $15,000 per week to cover administrative expenses for a
period of ten weeks and $150,000, the aggregate amount payable over the ten
weeks, will be credited against the $350,000 due under the subscription
agreement.
On August 30, 2000, the Company entered into a consulting and financial
advisory services agreement with Securities & Investment Planning Company
("Securities & Investment"), under which Securities & Investment has agreed to
provide financial consulting services and assistance pertaining to possible
merger and acquisition proposals and short and long-term financing. Securities &
Investment will render its services to the Company on a non-exclusive basis for
a period of a year from the date of the agreement in exchange for $15,000. The
Company has already paid $7,500 to Securities & Investment upon execution of the
agreement and is required to pay the remaining balance of $7,500 by December 31,
2000. If Securities & Investment is successful in finding financing or a
suitable merger or acquisition candidate for the Company, the Company will pay
them an additional fee based upon a percentage of the aggregate amount of any
financing or transaction that is completed.
In September, 2000, the Company was advised that LAMI, a for-profit
affiliate of Lamaze International, is in default of its arrangement with Lamaze
International. The Company has an agreement with LAMI pursuant to which it is
able to market and distribute products bearing the Lamaze brand name and, in the
event that LAMI remains in default, the Company may not be able to continue
using the Lamaze brand name on its products. However, the Company has not been
advised to cease using such name on its products.
11
<PAGE>
Since October 9, 2000, a market-maker began to quote the Company's
common stock on the OTC Bulletin Board under the symbol "RSGR."
Mr. Steven Rose tendered his resignation from his position on the
Board of Directors for person reasons. His resignation is effective November 1,
2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereto duly authorized:
THE ROSE GROUP CORPORATION
OF NEVADA
Dated: November 20, 2000 By: /s/ Sheldon R. Rose
-----------------------------------------
Sheldon R. Rose, President, Chief
Executive Officer, and Chief Financial
Officer
13
