NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
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 ("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, 2012 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.
B.
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, 2013 and 2012, 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.
5
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 AND 2012 (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, 2013 and 2012 ended were as follows:
|
|
| |
|
March 31,
|
|
September 30,
|
|
2013
|
|
2012
|
Balance at the beginning of the year October 1
|
$ -
|
|
$ 1,297
|
Cash collections applied to Principal
|
-
|
|
$ (1,297)
|
Balance at the end of the Period
|
$ -
|
|
$ -
|
Estimated Remaining Collections ("ERC")
|
$ -
|
|
$ -
|
*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 $25,305 and $30,842 for the periods ended March 31, 2013 and 2012, 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, 2013 and September 30, 2012.
6
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
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.
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 2012 and the disclosures related to Level 3 fair value measurements are effective for the Company in 2013. 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, 2013 and September 30, 2012, the Company had no options outstanding under this plan.
7
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
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, 2013 and September 30, 2012, respectively, the Company had -0- warrants outstanding.
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, 2013 and 2012.
Due to the uncertainty of utilizing the approximate $711,917 and $565,977 in net operating loss carryforwards for the six months ended March 31, 2013 and 2012 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 2034.
|
|
| |
|
March 31,
|
|
September 30,
|
|
2013
|
|
2012
|
Deferred tax assets
|
$ 249,171
|
|
$ 198,092
|
Less: valuation allowance
|
(249,171)
|
|
$ (198,092)
|
Totals
|
$ -
|
|
$ -
|
NOTE 5-
STOCKHOLDERS EQUITY
COMMON STOCK
There were 325,000,000 shares of common stock authorized, with 18,698,896 and 17,948,896 shares issued and outstanding at March 31, 2013 and September 30, 2012, respectively. The par value for the common stock is $.001 per share.
The following details for common stock transactions for the six months ended March 31, 2013.
The Company issued 750,000 shares of common stock at $0.07812 per share on April 12, 2013 to discharge a shareholder's loan of $50,000 and accrued interest of $8,587, The Board of Directors approved this transaction in the month of March 2013.
8
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
PREFERRED STOCK
There were 10,000,000 shares of preferred stock authorized, no shares issued and outstanding as of March 31, 2013 and September 30, 2012.
NOTE 6 -
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, 2013:
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|
|
|
|
|
|
| |
Assets
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
|
|
|
|
|
|
|
Finance receivables
|
|
-
|
|
-
|
|
$-
|
|
$-
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
-
|
|
-
|
|
$-
|
|
$-
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
-
|
|
-
|
|
-
|
|
-
|
9
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 AND 2012 (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, 2012:
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|
|
|
|
|
|
| |
Assets
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
|
|
|
|
|
|
|
Finance receivables
|
|
-
|
|
-
|
|
$-
|
|
$-
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
-
|
|
-
|
|
$-
|
|
$-
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
-
|
|
-
|
|
-
|
|
-
|
NOTE 7 -
NOTES PAYABLE
On May 4, 2011, the Company issued a convertible note payable in the amounts of $50,000 to Brent Grady and $50,000 to 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. On April 12, 2013 Dr. Rizwan Chaudhry was issued 750,000 shares of common stock to satisfy the outstanding note and accrued interest, The Board of Directors approved this transaction in the month of March 2013.
NOTE 8 -
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.
10
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
NOTE 9 -
SUBSEQUENT EVENTS
On March 29, 2013, the Company entered into a definitive merger agreement with Cornerstone Program Advisors LLC, a Delaware limited liability company and Sustainable Energy Industries, Inc. a Delaware corporation (Sustainable). In connection with the proposed merger transaction between the Company, Cornerstone and Sustainable, the Company will enter into a voluntary share exchange transaction (the Exchange) whereby the Company would acquire all of the issued and outstanding membership units of Cornerstone and the issued and outstanding shares of Sustainable in exchange for the issuance to the members of Cornerstone and issuance to the shareholders of Sustainable an aggregate of approximately 176,400,000 shares of common stock of the Company.
In accordance with the terms of the Agreement, at the closing of the Exchange, the Company shall have no outstanding assets except $50,000 in cash and a certain default judgment awarded to the Company in The Matter of Receivable Acquisition & Management Corp. vs. Airbak Technologies, LLC & Philip Troy Christy, individually and as a member of Airbak Technologies, LLC (Civil No. 11-4330 (FSH) (PS) in the U.S. District Court of New Jersey, in the amount of $299,000 plus post-judgment interest and no outstanding liabilities. Of that amount, $100,000 is attributable to Mr. Ramesh Arora and that amount will have to be paid out to him upon recovery on the judgment. The consummation of the Merger is subject to various other terms and conditions, including but not limited to, shareholder approval. The Company expects to close the merger in the month of May, 2013.
11