PwrCor, Inc. - Quarter Report: 2012 March (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
1-9370
(COMMISSION FILE NUMBER)
FOR THE QUARTERLY PERIOD MARCH 31, 2012
FOR
RECEIVABLE ACQUISITION & MANAGEMENT CORPORATION
(Exact Name of Registrant as Specified in the Charter)
DELAWARE | 13-3186327 |
(State of Other Jurisdiction | (I.R.S. Employer |
of Incorporation) | Identification Number) |
2 Executive Drive, Suite 630
Fort Lee, NJ 07024
201-677-8904
Check whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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:
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check One)
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Small reporting company [X]
Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date:
May 14, 2012
Common Stock: 17,948,896
TABLE OF CONTENTS
2
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
ASSETS |
|
|
|
| ||
|
| March 31, |
| September 30, | ||
|
| 2012 |
| 2011 | ||
|
|
|
|
| ||
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|
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|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash |
| $ | 49,591 |
| $ | 178,318 |
Notes receivable |
|
| 165,000 |
|
| 165,000 |
Finance receivables - short term |
|
| - |
|
| 432 |
|
|
|
|
|
|
|
Total current assets |
|
| 214,591 |
|
| 343,750 |
|
|
|
|
|
|
|
OTHER ASSETS |
|
|
|
|
|
|
Finance receivables - long-term |
|
| - |
|
| 865 |
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|
|
|
|
|
Total other assets |
|
| - |
|
| 865 |
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|
|
|
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|
|
TOTAL ASSETS |
| $ | 214,591 |
| $ | 344,615 |
|
|
|
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|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
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CURRENT LIABILITIES |
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|
|
|
|
|
Accrued and other expenses |
| $ | 42,240 |
| $ | 34,289 |
Officer loan |
|
| 2,782 |
|
| 2,782 |
Notes payable |
|
| 50,000 |
|
| 170,000 |
|
|
|
|
|
|
|
Total current liabilities |
|
| 95,022 |
|
| 207,071 |
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|
COMMITMENT & CONTINGENCIES |
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STOCKHOLDERS' EQUITY |
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Preferred stock, par value $10 per share; |
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|
|
10,000,000 shares authorized and 0 shares issued |
|
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|
|
and outstanding at March 31, 2012 and September 30, 2011 |
|
| - |
|
| - |
Common stock, par value $.001 per share; |
|
|
|
|
|
|
325,000,000 shares authorized and 17,948,896 shares |
|
|
|
|
|
|
issued and outstanding at March 31, 2012 and September 30, 2011 |
|
| 17,949 |
|
| 17,949 |
Additional paid-in capital |
|
| 667,597 |
|
| 667,597 |
Accumulated deficit |
|
| (565,977) |
|
| (548,002) |
|
|
|
|
|
|
|
Total stockholders' equity |
|
| 119,569 |
|
| 137,544 |
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 214,591 |
| $ | 344,615 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
FOR THE SIX AND THREE MONTHS ENDED MARCH 31, 2012 AND 2011 |
(UNAUDITED) |
|
| FOR THE SIX MONTHS ENDED | FOR THE THREE MONTHS ENDED | ||||||||
|
| MARCH 31, | MARCH 31, | ||||||||
|
| 2012 |
| 2011 | 2012 |
| 2011 | ||||
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REVENUES |
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|
Financing income |
| $ | 30,842 |
| $ | 23,111 | $ | 11,987 |
| $ | 13,310 |
Service income and other |
|
| 560 |
|
| 411 |
| 280 |
|
| 224 |
Total revenues |
|
| 31,402 |
|
| 23,522 |
| 12,267 |
|
| 13,534 |
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
| 49,442 |
|
| 57,421 |
| 27,412 |
|
| 28,264 |
Total costs and expenses |
|
| 49,442 |
|
| 57,421 |
| 27,412 |
|
| 28,264 |
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) FROM OPERATIONS |
|
| (18,040) |
|
| (33,899) |
| (15,145) |
|
| (14,730) |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 65 |
|
| 128 |
| 23 |
|
| 63 |
Total other income |
|
| 65 |
|
| 128 |
| 23 |
|
| 63 |
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) BEFORE PROVISION FOR INCOME TAX |
| $ | (17,975) |
| $ | (33,771) | $ | (15,122) |
| $ | (14,667) |
|
|
|
|
|
|
|
|
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|
|
PROVISION FOR INCOME TAXES |
|
| - |
|
| - |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) APPLICABLE TO COMMON STOCK |
| $ | (17,975) |
| $ | (33,771) | $ | (15,122) |
| $ | (14,667) |
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) PER COMMON SHARE, BASIC AND DILUTED |
| $ | (0.00) |
| $ | (0.00) | $ | (0.00) |
| $ | (0.00) |
|
|
|
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|
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|
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|
WEIGHTED AVERAGE OUTSTANDING SHARES |
|
|
|
|
|
|
|
|
|
|
|
OF COMMON STOCK - BASIC |
|
| 17,748,896 |
|
| 17,696,984 |
| 17,748,896 |
|
| 17,748,896 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
FOR THE SIX MONTHS ENDED MARCH 31, 2012 AND 2011 |
(UNAUDITED) |
|
| 2012 |
| 2011 | |||||
|
|
|
|
|
|
| |||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| |||
Net (Loss) |
| $ | (17,975) |
| $ | (33,771) | |||
Adjustments to reconcile net (loss) to |
|
|
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|
|
| |||
net cash (used in) operating activities: |
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|
| |||
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|
|
| |||
Changes in Certain Assets and Liabilities |
|
|
|
|
|
| |||
Collections applied to principal on finance receivables |
|
| 1,297 |
|
| 18,931 | |||
Decrease prepaid expenses |
|
| - |
|
| (160) | |||
Increase (decrease) in accrued expenses |
|
| 7,951 |
|
| (7,687) | |||
|
|
|
|
|
|
| |||
Net cash (used in) operating activities |
|
| (8,727) |
|
| (22,687) | |||
|
|
|
|
|
|
| |||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
| |||
Proceeds from exercise of stock options |
|
| - |
|
| 7,095 | |||
Payment on notes payable |
|
| (120,000) |
|
| - | |||
|
|
|
|
|
|
| |||
Net cash provided by (used in) financing activities |
|
| (120,000) |
|
| 7,095 | |||
|
|
|
|
|
|
| |||
NET (DECREASE) IN CASH |
|
| (128,727) |
|
| (15,592) | |||
|
|
|
|
|
|
| |||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD |
|
| 178,318 |
|
| 186,401 | |||
|
|
|
|
|
|
| |||
CASH AND CASH EQUIVALENTS - END OF PERIOD |
| $ | 49,591 |
| $ | 170,809 | |||
|
|
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|
| |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
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CASH PAID DURING THE PERIOD |
|
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|
| |||
Interest expense |
| $ | - |
| $ | - | |||
Income taxes |
| $ | - |
| $ | - |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012 AND 2011 (UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. THE COMPANY AND PRESENTATION
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 ("GAAP") 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, 2011 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.
FINANCE RECEIVABLES
The Company has adopted the provisions of Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) 310-30 for its investment in finance receivables, 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 Companys estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at the acquisition to be collected) over the Companys 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 Companys 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 six months ended March 31, 2012 and 2011, the Company neither acquired nor sold any finance receivables.
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.
6
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012 AND 2011 (UNAUDITED)
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 Companys cash collections from operations nor are they included in the Companys 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 March 31, 2012 and the balance at the end of the period was as follows:
*Estimated remaining collection refers to the sum of all future projected cash collections from acquired portfolios. ERC is not a balance sheet item, however, it is provided for informational purposes. Income recognized on finance receivables was $11,987 and $13,310 for the three month periods ended March 31, 2012 and 2011, respectively.
Under ASC 310-30 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.
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 March 31, 2012 and September 30, 2011.
E. INCOME TAXES
The Company accounts for income taxes pursuant to the provisions of the ASC 740, Accounting for Income Taxes, which requires an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities.
7
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012 AND 2011 (UNAUDITED)
F. USE OF ESTIMATES
The preparation of financial statements in conformity with US generally accepted accounting principles 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. LOSS PER SHARE OF COMMON STOCK
Basic net 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.
H. RECENT ACCOUNT PRONOUNCEMENTS
In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Improving Disclosures about Fair Value Measurements (the Update). The Update provides amendments to FASB Accounting Standards Codification (ASC) 820-10 that require entities to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. In addition the Update requires entities to present separately information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements using significant unobservable inputs (Level 3). The disclosures related to Level 1 and Level 2 fair value measurements are effective for the Company in 2010 and the disclosures related to Level 3 fair value measurements are effective for the Company in 2011. The Update requires new disclosures only, and has no impact on our consolidated financial position, results of operations, or cash flows.
NOTE 2 - STOCK OPTIONS
In April 2004, the Company adopted a stock option plan upon approval by the shareholders at the Annual General Meeting under which selected eligible key employees of the Company are granted the opportunity to purchase shares of the Companys common stock. The plan provides that 37,500,000 shares of the Companys 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 as long as that person continues to be employed or serve on the on the Board of Directors, whichever is shorter. At March 31, 2012 and September 30, 2011, the Company had no options outstanding under this plan.
NOTE 3 - WARRANTS
The Company issued warrants during the year 2004 with an exercise price of $0.0075 and a 10 year term. During 2011 all of the outstanding warrants were exercised and the company received proceeds of $7,095. At March 31, 2012 and September 30, 2011, respectively, the Company had -0- warrants outstanding.
8
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012 AND 2011 (UNAUDITED)
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.
There was no provision for income tax for the six months ended March 31, 2012 and 2011. Due to the uncertainty of utilizing the approximate $565,977 and $499,961 in net operating loss carry-forwards for the six months ended March 31, 2012 and 2011 respectively, and realizing the deferred tax assets in the future, an offsetting valuation allowance has been established for the full amount of the deferred tax assets. The losses are available to offset future taxable income through 2032.
| March 31, |
| September 30, | ||
| 2012 |
| 2011 | ||
|
|
|
|
|
|
Deferred tax assets | $ | 198,092 |
| $ | 174,986 |
Less: valuation allowance |
| (198,092) |
|
| (174,986) |
Totals | $ | - |
| $ | - |
NOTE 5 - STOCK HOLDERS EQUITY
COMMON STOCK
There were 325,000,000 shares of common stock authorized, with 17,948,896 shares issued and outstanding at March 31, 2012 and September 30, 2011, respectively. The par value for the common stock is $.001 per share.
There were no common stock transactions for the six months ended March 31, 2012.
PREFERRED STOCK
There were 10,000,000 shares of preferred stock authorized, no shares issued and outstanding as of March 31, 2012 and September 30, 2011.
NOTE 6 - RELATED PARTY
The Company was the investment manager of Ramco Income Fund Limited (Fund) a Bermuda entity which has been fully redeemed and dissolved.
9
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012 AND 2011 (UNAUDITED)
NOTE 7 - FAIR VALUE MEASUREMENTS
The Company has categorized its financial assets and liabilities based upon the fair value hierarchy specified by FASB Accounting Standards Codification (ASC ) Topic 820, Fair Value Measurement and Disclosures (ASC 820) This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurement, but discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). This standard provides for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1 - Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active
Level 3 - Unobservable inputs that reflect the Companys own assumptions.
The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2012:
Assets |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance receivables |
| - |
| - |
| $ - |
| $ - |
|
|
|
|
|
|
|
|
|
Total Assets |
| - |
| - |
| $ - |
| $ - |
|
|
|
|
|
|
|
|
|
Liabilities |
| - |
| - |
| - |
| - |
|
|
|
|
|
|
|
|
|
Total Liabilities |
| - |
| - |
| - |
| - |
10
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012 AND 2011 (UNAUDITED)
The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2011:
Assets |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance receivables |
| - |
| - |
| $ 1,297 |
| $ 1,297 |
|
|
|
|
|
|
|
|
|
Total Assets |
| - |
| - |
| $ 1,297 |
| $ 1,297 |
|
|
|
|
|
|
|
|
|
Liabilities |
| - |
| - |
| - |
| - |
|
|
|
|
|
|
|
|
|
Total Liabilities |
| - |
| - |
| - |
| - |
NOTE 8 - NOTES RECEIVABLE
On April 27, 2011 the Company has notes receivable from Airbak Technologies, LLC. The principal balances of these notes are $165,000 at March 31, 2012. These notes bear interest at a rate of 15% or maximum of $24,000. Airbak defaulted on the Note Company has a default judgment outstanding and the highest permitted default interest rate continues. In the event a merger with Airbak is not completed the Company will enforce the judgment and pursue claims against the members of Airbak Technologies, LLC.
NOTE 9 - NOTES PAYABLE
On May 4, 2011, the Company issued a convertible note payable in the amounts of $50,000 each to Brent Grady and Dr. Rizwan Chaudhry, at an annual interest rate of 5%. The note is due on November 4, 2012. On August 10, 2011, the Company issued a convertible note payable in the amounts of $40,000 and $30,000 to BMS Associates and Farheen Shadab, at an annual interest rate of 5%. The note is due on February 10, 2013.
Brent Grady note of $50,000, BMS Associates note of $40,000 and the Farheen Shadab note of $30,000 have been paid back without interest and penalty and the Company continues to accrue interest on the remaining notes.
NOTE 10 - GOING CONCERN
The Company has incurred operating losses since inception, has limited working capital, and its operating activities may require financing from outside institutions and/or related parties. The accompanying consolidated financial statements have been prepared assuming that the company will continue as a going concern. The Company will need outside financing to support its continued operations or may need to seek a merger with another company in order to survive.
11
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012 AND 2011 (UNAUDITED)
NOTE 11 - SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, The Company has analyzed its operations subsequent to March 31, 2012 to the date these financial statements were issued, and has determined that it does not have material subsequent events to disclose in these financial statements.
12
ITEM 2. MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Managements Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report on Form 10K as of and for the year ended September 30, 2012 as filed with the Securities and Exchange Commission. Cautionary Statements Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995:
This report contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks, uncertainties and assumptions that, if they never materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements, including statements regarding overall trends, gross margin trends, operating cost trends, liquidity and capital needs and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts.
RESULTS OF OPERATIONS
Overview
The Company use to purchase and collect upon defaulted consumer receivables. These receivables were acquired at deep discounts and outsourced for collections on a contingency basis. The Company also managed Ramco Income Fund, Ltd, a Bermuda domiciled mutual fund. The Company ceased investing in new portfolios in September 2007 and closed the Bermuda fund and is currently seeking to merge with or acquire another operating entity seeking to go public via reverse merger. There is no assurance that the company will succeed in such a merger or acquisition.
Revenue
During the quarter ended March 31, 2012, the Company had a net loss of ($15,122) on revenue of $12,267 versus a net loss of ($14,667) on revenue of $13,534 in the quarter ended March 31, 2011. Total revenue for the quarter ended March 31, 2012 included finance income of $11,987 and servicing income of $280 versus finance income of $13,310 and servicing income of $224 during the quarter ended March 31, 2011.
Operating Expenses
Total operating expenses for the three month ended March 31, 2012 were $27,412 versus $28,264 during the three month ended March 31, 21011. The Company has taken additional step to reduce expenses and conserve cash so a strategic transaction can be completed.
Rent and Occupancy
Rent and occupancy expenses were $6,000 for the three months ended March 31, 2012 versus $6,000 for the three months ended March 31, 2011.
Depreciation
The Company did not record any depreciation expense for the three and six months ended March 31, 2012.
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Recovery Partners
The Company outsources all its recovery activities to carefully selected debt collection agencies and network of collection attorneys with specific collection expertise. The company is currently using six collection agencies and several law firms in the U.S. and U.K. The average contingent collections fee is 30%.
Liquidity and Capital Resources
As of March 31, 2012, the Company had a working capital of $119,569 versus working capital of $149,978 during the quarter ended March 31, 2011. The decrease in working capital is largely due to repayment of note payables, declining collections and servicing fees and will continue to decline for the same reasons. The Company believes that funds generated from operations, resale of portfolios together with existing cash will be sufficient to finance its operations for the next twelve months. At the end of three month ended March 31, 2012, the Company had net cash of $49,591versus $170,809 at the end of quarter March 31, 2011. At the end of three months ended March 31, 2012, net cash used by operating activities was ($8,727) versus net cash used of ($22,687) for the three months ended March 31, 2011. Cash used by financing activities was $120,000 during the quarter ended March 31, 2012 versus cash provided by financing activities of $7,095 during the quarter ended March 31, 2011. There were no cash flows from financing activities in comparable quarters.
The Company believes that funds generated from operations, together with existing cash will be sufficient to finance its operations for the next twelve months. The Company has begun strategic review of operations and exploring the possibility of non-strategic acquisition or merger with another operating company.
Income Taxes
We did not record any income tax provision for the three months ended March 31, 2012.
Contractual Obligation
The Company entered into a twelve month lease at $2,000 per month which includes broadband and telephone. The lease expires on March 31, 2013.
Critical Accounting Policy & Estimates
Our Managements Discussion and Analysis of Financial Condition and Results of Operations section discusses our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the condensed consolidated financial statements included in this quarterly report.
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The Company utilizes the interest method under guidance provided by the Financial Accounting Standards Board Accounting Standards Certification (ASC) 310-30 to determine income recognized on finance receivables.
In October 2003, ASC 310-30, Accounting for Loans or Certain Securities Acquired in a Transfer was issued. This ASC proposes guidance on accounting for differences between contractual and expected cash flows from an investors initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. This ASC is effective for loans acquired in fiscal years beginning after December 15, 2004. The ASC would limit the revenue that may be accrued to the excess of the estimate of expected future cash flows over a portfolios initial cost of accounts receivable acquired. The ASC would require that the excess of the contractual cash flows over expected cash flows not be recognized as an adjustment of revenue, expense, or on the balance sheet. The ASC would freeze the internal rate of return, referred to as IRR, originally estimated when the accounts receivable are purchased for subsequent impairment testing. Rather than lower the estimated IRR if the original collection estimates are not received, the carrying value of a portfolio would be written down to maintain the original IRR. Increases in expected future cash flows would be recognized prospectively through adjustment of the IRR over a portfolios remaining life. The ASC provides that previously issued annual financial statements would not need to be restated. Management is in the process of evaluating the application of this ASC. In accordance with ASC 310-30, the Company is currently is using the cost recovery method for revenue recognition for all its current portfolios.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
RISK FACTORS
IN ADDITION TO OTHER INFORMATION IN THIS REPORT, YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS CAREFULLY. THESE RISKS MAY IMPAIR THE COMPANY'S OPERATING RESULTS AND BUSINESS PROSPECTS AS WELL AS THE MARKET PRICE OF THE COMPANY'S COMMON STOCK.
PENNY STOCK REGULATIONS AND REQUIREMENTS FOR LOW PRICED STOCK
The SEC adopted regulations which generally define a "penny stock" to be any non-Nasdaq equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Based upon the price of the Common Stock as currently traded on the OTC Markets QB, the Company's Common Stock is subject to Rule 15g-9 under the Exchange Act which imposes additional sales practice requirements on broker-dealers which sell securities to persons other than established customers and "accredited investors." For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received a purchaser's written consent to the transaction prior to sale. Consequently, this rule may have a negative effect on the ability of stockholders to sell common shares of the Company in the secondary market.The risks, uncertainties and assumptions may include the following:
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Due to inability to raise capital and deep recession, the Company decided not to make new investments and has subsequently been in a run-off mode. The management is focused on merging with or acquiring another operating company that may be seeking to go public via reverse merger. There is no assurance that the
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management will succeed and as a result, shareholders may be adversely affected.
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changes in the business practices of credit originators in terms of selling defaulted consumer receivables or outsourcing defaulted consumer receivables to third-party contingent fee collection agencies;
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ability to acquire sufficient portfolios;
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ability to recover sufficient amounts on acquired portfolios;
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a decrease in collections if bankruptcy filings increase or if bankruptcy laws or other debt collection laws change;
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changes in government regulations that affect the Companys ability to collect sufficient amounts on its acquired or serviced receivables;
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the Companys ability to retain the services of recovery partners;
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changes in the credit or capital markets, which affect the Companys ability to borrow money or raise capital to purchase or service defaulted consumer receivables;
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the degree and nature of the Companys competition; and
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our ability to respond to changes in technology and increased competition;
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the risk factors listed from time to time in the Companys filings with the Securities and Exchange Commission.
ITEM 4T. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
The term disclosure controls and procedures is defined in Rules 13(a)-15e and 15(d) - 15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act). Our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2012. They have concluded that, as of March 31, 2012, our disclosures were effective to ensure that:
(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 issuers management including the principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding financial disclosure. |
This term refers to the controls and procedures of a Company that are designed to ensure that information required to be disclosed by a Company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the required time periods. Our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report. They have concluded that, as of March 31, 2012 our disclosure and procedures were effective in ensuring that required information will be disclosed on a timely basis in our reports filed under the exchange act.
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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
No changes in the Companys internal control over financial reporting have come to managements attention during the Companys last fiscal quarter that have materially affected, or are likely to materially affect, the Companys internal control over financial reporting.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings or a proceeding being contemplated by a governmental authority nor is any of the Companys property the subject of any pending legal proceedings or a proceeding being contemplated by a governmental authority except for the following:
On July 28, 2011, the Company filed a complaint with the United States District Court, District of New Jersey against Philip Troy Christ and Airbak Technologies LLC for breach of contract, false representations, dual pledging of collateral and default of certain Promissory Notes issued under a Master Loan Agreement. The Company and an investor introduced by the Company had advanced $165,000 to Airbak and an investor introduced by the Company advanced $100,000 under a Secured Master Loan Agreement with the intent of concluding a merger. However, Mr. Philip Troy Christy individually and concurrently entered into merger negotiations with another company and Airbak failed to repay the Promissory Notes that became due. The Company is seeking an amount no less than $165,000 plus accrued interest, cost of litigation and other legal costs incurred while negotiating a merger with Airbak and an additional $100,000 plus accrued interest on behalf of the investor. The Company has received a certified judgment against Airbak and it intends to pursue against Airbak LLC and its members to the full extent of the law. The outcome of the negotiation cannot be determined at this point.
ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS
Exhibits:
Exhibit Number | Description |
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed by the undersigned, thereunto duly authorized.
| RECEIVABLE ACQUISITION & MANAGEMENT CORPORATION |
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Date: May 14, 2012 |
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| By: /s/ Max Khan |
| Max Khan |
| Chief Executive Officer |
| Chief Financial Officer |
| Director |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| /s/ Max Khan |
| By: Max Khan |
| Chief Executive Officer, |
| Chief Financial Officer and Director |
| Date: May 14, 2012 |
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