PwrCor, Inc. - Quarter Report: 2008 June (Form 10-Q)

 

 

 

 

PART I			FINANCIAL INFORMATION
ITEM 1.			FINANCIAL STATEMENTS	4
ITEM 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION & OPERATIONS	15
			RISK FACTORS	20
ITEM 3.			CONTROLS AND PROCEDURES	20
PART II			OTHER INFORMATION	21
ITEM 1.			LEGAL PROCEEDINGS	21
ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	22
ITEM 3.			DEFAULTS UPON SENIOR SECURITIES	22
ITEM 4.			SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	22
ITEM 5.			OTHER INFORMATION	22
ITEM 6.			EXHIBITS	22
SIGNATURES				23

 

 

 

 

 

			Pages
Condensed Consolidated Balance Sheets as of June 30, 2008(Unaudited) and September 30, 2007 (audited).			4
Condensed Consolidated Statements of Operations for the nine months and three Months ended June 30, 2008 and 2007 (Unaudited)			5
Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2008 and 2007 (Unaudited)			6
Notes to Condensed Consolidated Financial Statements			7-14

 

 

NOTE 1-	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	A. THE COMPANY AND PRESENTATION
	The condensed consolidated unaudited interim financial statements included herein have been prepared by Receivable Acquisition and Management Corporation and Subsidiaries (the "Company"), formerly Feminique Corporation and Subsidiaries without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the September 30, 2007 audited consolidated financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.
	The management of the Company believes that the accompanying unaudited condensed consolidated financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations, changes in stockholders' equity (deficit), and cash flows for the periods presented.
	On November 25, 2003, the Feminique Corporation incorporated a wholly-owned subsidiary Receivable Acquisition and Management Corp of New York. The Company purchases, manages and collects defaulted consumer receivables.
	On April 21, 2004, Feminique Corporation amended its certificate of incorporation to increase its authorized number of shares of common stock from 75,000,000 shares to 325,000,000 shares. This amendment was approved by Feminique Corporation’s shareholders at its April 20, 2004 annual meeting. The shareholders also changed the name of Feminique Corporation to Receivable Acquisition and Management Corporation.
	B. FINANCE RECEIVABLES
	The Company accounts for its investment in finance receivables under the guidance of Statement of Position (“SOP”) 03-3, “Accounting for Loans or Certain Debt Securities Acquired in a Transfer.” This SOP limits the yield that may be accreted (accretable yield) to the excess of the Company’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at the acquisition to be collected) over the Company’s initial investment in the finance receivables. Subsequent increases in cash flows expected to be collected are recognized prospectively through adjustment of the finance receivables yield over its remaining life. Decreases in cash flows expected to be collected are recognized as impairment to the finance receivable portfolios. The Company’s proprietary collections model is designed to track and adjust the yield and carrying value of the finance receivables based on the actual cash flows received in relation to the expected cash flows.
	During the quarter ended June 30, 2008, the Company neither acquired nor sold any finance receivables

 

NOTE 1-	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	B. FINANCE RECEIVABLES (CONTINUED)
	During the quarter ended December 31, 2007, the Company acquired total portfolios for $201,982. The Company will use for these portfolios the "Recovery Method" for revenue recognition under which no revenue is recognized until the investment amount of $201,982 has been recovered.
	During the quarter ended December 31, 2007 the Company sold several portfolios for a total sales price of $224,489. The Company recognized a net gain of $46,944 on these sales. During the quarter ended June 30, 2008 the Company was required to refund to the purchaser of these portfolios $11,034. Therefore the gain was adjusted to $35,910 as of June 30, 2008.
	In the event that cash collections would be inadequate to amortize the carrying balance, an impairment charge would be taken with a corresponding write-off of the receivable balance. Accordingly, the Company does not maintain an allowance for credit losses. The agreements to purchase the aforementioned receivables include general representations and warranties from the sellers covering account holder death or bankruptcy, and accounts settled or disputed prior to sale. The representation and warranty period permitting the return of these accounts from the Company to the seller is typically 90 to 180 days. Any funds received from the seller of finance receivables as a return of purchase price are referred to as buybacks. Buyback funds are simply applied against the finance receivable balance received. They are not included in the Company’s cash collections from operations nor are they included in the Company’s cash collections applied to principal amount. Gains on sale of finance receivables, representing the difference between sales price and the unamortized value of the finance receivables, are recognized when finance receivables are sold.
	Changes in finance receivables for the six months ended June 30, 2008 were as follows:

 

 

Under SOP-03-3 debt security impairment is recognized only if the fair market value of the debt has declined below its amortized costs. Currently no amortized costs are below fair market value. Therefore, the Company has not recognized any impairment for the finance receivables.

 

NOTE 1-	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	C. PRINCIPLES OF CONSOLIDATION
	The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
	D. CASH AND CASH EQUIVALENTS
	The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash or cash equivalents. There were no cash equivalents as of June 30, 2008.
	The Company maintains cash and cash equivalents balances at financial institutions that are insured by the Federal Deposit Insurance Corporation up to $100,000. At June 30, 2008, the Company’s uninsured cash balances total was $154,899.
	E. INCOME TAXES
	The Company has adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes. The statement requires an asset and liability approach for financial accounting and reporting of income taxes, and the recognition of deferred tax assets and liabilities for the temporary differences between the financial reporting bases and tax bases of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.
	F. USE OF ESTIMATES
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during this reported period. Actual results could differ from those estimates.
	G. STOCK-BASED COMPENSATION

 

Effective December 31, 2005, the Company adopted the provisions of Financial Accounting Standards Board Statement of Financial Accounting Standard ("SFAS") No. 123(R), "Share-Based Payments," which establishes the accounting for employee stock-based awards. Under the provisions of SFAS No.123(R), stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period of the grant). The Company adopted SFAS No. 123(R) using the modified prospective method and, as a result, periods prior to December 31, 2005 have not been restated. The Company recognized stock-based compensation for awards issued under the Company's stock option plans in other income/expenses included in the Consolidated Statement of Operations. Additionally, no modifications were made to outstanding stock options prior to the adoption of SFAS No. 123(R), and no cumulative adjustments were recorded in the Company's financial statements.

 

NOTE 1-	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	G. STOCK-BASED COMPENSATION (CONTINUED)
	Prior to December 31, 2005, the Company accounted for stock-based compensation in accordance with provisions of Accounting Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued to Employees," and related interpretations. Under APB No. 25, compensation cost was recognized based on the difference, if any, on the date of grant between the fair value of the Company's stock and the amount an employee must pay to acquire the stock. The Company grants stock options at an exercise price equal to 100% of the market price on the date of grant. Accordingly, no compensation expense was recognized for the stock option grants in periods prior to the adoption of SFAS No. 123(R).
	The Company measures compensation expense for its non-employee stock-based compensation under the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) Issue No. 96-18, "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services". The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received.
	The fair value is measured at the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital.
	H. REVENUE RECOGNITION
	Revenue is recognized based on AICPA Statement of Position 03-3, if the management is reasonably comfortable with expected cash flows. In the event, expected cash flows cannot be reasonably estimated, the Company will use the “Recovery Method” under which revenues are only recognized after the initial investment has been recovered.

 

NOTE 1-	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	I. EARNINGS (LOSS) PER SHARE OF COMMON STOCK
	Historical net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss because to do so would be antidilutive for periods presented.
	The following is a reconciliation of the computation for basic and diluted EPS:

 

 

NOTE 2-	NOTES PAYABLE
	A. The Note Payable issued on October 30, 2006 for a value of $150,000 had an outstanding balance of $102,899 as of December 31, 2007. During the month of January 2008 the note was paid off in full for a discounted value of $40,000. The amount of $62,899 was recognized as income.
	B. The Company issued on January 8, 2007 a private note offering in the amount of $300,000. The Company intends to pay the holder of the note in 24 fixed monthly payments of $14,546 from the date of issuance of the note at a rate of 15% per annum on or before January 9, 2009 (the "Maturity Date”).The note was paid in full during the quarter ending June 30, 2008.
NOTE 3-	STOCK OPTIONS
	In April 2004, the Company adopted a stock option plan upon approval by the shareholders art the Annual General Meeting under which selected eligible key employees of the Company are granted the opportunity to purchase shares of the Company’s common stock. The plan provides that 37,500,000 shares of the Company’s authorized common stock be reserved for issuance under the plan as either incentive stock options or non-qualified options. Options are granted at prices not less than 100 percent of the fair market value at the end of the date of grant and are exercisable over a period of ten years or a long as that person continues to be employed or serve on the on the Board of Directors, whichever is shorter. At June 30, 2008, the Company had 950,000 options outstanding under this plan.

 

NOTE 4-	INCOME TAXES
	Income Taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes related to differences between the basis of assets and liabilities for financial and income tax reporting will either be taxable or deductible when the assets or liabilities are recovered or settled. The difference between the basis of assets and liabilities for financial and income tax reporting are not material therefore, the provision for income taxes from operations consist of income taxes currently payable.
	The Company’s effective tax rate is different than what would be expected if the statutory rates were applied to “net income (loss) before income taxes” primarily because of expenses deductible for financial reporting purposes that are not deductible for tax purposes allowed.
	There was no provision for income tax for the nine months ended June 30, 2008.
	At June 30, 2008 and 2007 the Company had an accumulated deficit approximating $176,149 and 291,827, available to offset future taxable income through 2027.

 

NOTE 5-	STOCKHOLDERS EQUITY
	COMMON STOCK
	There were 325,000,000 shares of common stock authorized, with 17,122,896 and 19,078,917 shares issued and outstanding at June 30, 2008 and 2007, respectively. The par value for the common stock is $.001 per share.   The following details the stock transactions for the nine months ended June 30, 2008 and 2007.   The Company received $1,500 for the exercise of 200,000 warrants at $.0075 per share in September 2006. The Company issued 200,000 shares of common stock in November 2006.

 

NOTE 5-	STOCKHOLDERS EQUITY (CONTINUED)
	COMMON STOCK (CONTINUED)
	The Company repurchased 150,000 shares of common stock during May 2006. The shares were accounted for as a prepaid asset until November 2006. The shares were repurchased for $.10 per share for a total amount of $15,000. The shares were cancelled in November 2006.   On October 31, 2006 the Company reached an agreement with a shareholder to buyback 2,000,000 shares of that shareholder's common stock at $.10 per share for a total amount of $200,000. The stock purchase was completed on October 31, 2006. The shares were cancelled in November 2006.   On February 23, 2007 the Company issued an additional 200,000 shares of common stock to Artemis Hedge Fund, Ltd. to resolve all outstanding accrued dividends.   The company received $1,500 for the exercise of 200,000 warrants at $.0075 per share in May 2007.   During the month of October 2007 the company issued 200,000 common shares in exchange for warrants exercised in May 2007 for $.0075 per share. The company was carrying the unissued shares as a liability for stock to be issued till the date of issuance.   During the quarter ended December 31, 2007 the company repurchased 6,020 shares of common stock at $.025 per share for a total amount of $151. The stock purchase was completed at December 31, 2007. The shares were retired.
	PREFERRED STOCK
	On October 28, 2006 the Company reached an agreement with Artemis Hedge Fund Ltd the holder of 80,000 Series A Convertible Preferred Stock at $10 par value to convert the preferred shares into 800,000 shares of the Company's common stock. Additionally the Company agreed to issue 70,000 shares of common stock for all accrued dividends. There were 10,000,000 shares of preferred stock authorized, no shares outstanding as of March 31, 2008 and 2007 respectively.
NOTE 6-	RELATED PARTY
	The Company receives servicing fees from Ramco Income Fund Limited. The Company manages Ramco Income Fund Limited a Bermuda entity. The servicing fees were for the nine months ended June 30, 2008 and 2007 were $81,271 and $81,819 respectively.

 

 

 

 

The following table shows the Company’s portfolio buying activity during the quarter, among other things, the purchase price, actual cash collections and estimated cash collection as of June 30, 2008 

 

 

 

 

 

 

 

(1)

That information required to be disclosed by the Company in reports that it files or submits under the act is recorded, processed, summarized and reported, within the time periods specified in the Commissions’ rules and forms, and

(2)

Controls and procedures are designed by the Company to ensure that information required to be disclosed by Receivable Acquisition & Management Corporation Inc. in the reports it files or submits under the Act is accumulated and communicated to the issuer’s management including the principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding financial disclosure.

 

 

 

 

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On April 23, 2004, Reliant Industries, Inc., Michael Wong and Debbie Wong filed a complaint with the Supreme Court of the State of New York Suffolk County against Biopharmaceuticals, Inc. and Edward Fine. Biopharmaceuticals, Inc. is the Company’s former name. The plaintiffs allege that the Company together with the other defendant committed fraud, breach of contract and negligence. The plaintiffs are seeking monetary payments for any loss that they may suffer as a result of the alleged fraud, breach of contract and negligence as well as legal fees, punitive damages and costs disbursements. The Company denies all allegations and intends to defend this action vigorously. The case was dismissed in the Company’s favor on February 7, 2007.

 

·

On June 29, 2005, Allied Surgical Centers Management, LLC, et al. (“Allied”) filed a complaint against the Company seeking declaratory and injunctive relief in connection with contracts entered in April 2005 between Allied and the Company pursuant to which the Company acquired various account receivables from Allied (the “Contracts”). Such complaint was filed in the Superior Court of the State of California, For the County of Los Angeles, Central District. Allied is seeking a declaratory judgment from the court which would exclude various account receivables (the “Disputed Account Receivables”) from the Contracts. Allied is also seeking a temporary restraining order and preliminary injunction restricting the Company from attempting to seize or collecting the Disputed Account Receivables. The Company filed a cross complaint on July 15, 2005. In the cross complaint, the Company is seeking an accounting, a mandatory injunction for specific performance of the Contracts and damages in the amount of $21,000,000 in connection with Allied’s alleged breach of contract, fraud, intentional interference with prospective economic advantage, breach of good faith, breach of fiduciary duty, conversion and slander. The Company and Allied have reached a settlement in connection with this matter. Allied has dropped all its claims and agreed to pay all funds received since the purchase of Allied’s portfolio in April 2005. The settlement agreement was executed on February 10, 2006. The Company received the final settlement payment in February, 2008.

 

 

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On September 9, 2005, the Company filed a complaint with the Supreme Court of the State of New York - County of New York against Triton Capital, Inc., Southern Capital Associates, Inc., JMS Collections, LLC., Wendt Law Office, James Roscetti, and Dave Dwyer for breach of contract, conversion, deceptive business practices and unjust enrichment. The Company is seeking an amount no less than $46,931. The Company reached a settlement with the Defendants and recovered $7,092 in July 2007.

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit Number		Description
31.1		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
31.2		Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
32.1		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code.
32.2		Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code.

 

 

 

	RECEIVABLE ACQUISITION & MANAGEMENT CORPORATION
Date: August 14, 2008	By:	/s/ Max Khan
		Max Khan Chief Executive Officer Chief Financial Officer
		Director

 

 

	By:	/s/ Max Khan
		Max Khan Chief Executive Officer, Chief Financial Officer and Director
		Date: August 14, 2008