ITEM 1. BUSINESS
We are a Delaware corporation whose principal executive offices are located at 2500 Plaza 5, Harborside Financial Center, Jersey City, NJ 0731. Unless the context otherwise requires, the terms "we", "us" or "our" as used herein refer to Receivable Acquisition & Management Corporation and our subsidiary.
Overview
Receivable Acquisition & Management Corporation (the “Company”) is in the business of acquiring and collecting portfolios of performing, sub-performing and non-performing consumer and commercial receivables. These portfolios generally consist of one or more of the following types of consumer receivables:
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charged-off receivables - accounts that have been written-off by the originators and may have been previously serviced by collection agencies;
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freshly charged-off accounts that have not been assigned for collection;
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sub-performing receivables - accounts where the debtor is currently making partial or irregular monthly payments, but the accounts may have been written-off by the originators; and
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performing receivables - accounts where the debtor is making regular payments or pays upon normal and customary procedures.
We generally acquire non-performing and sub-performing consumer and commercial receivable portfolios at a significant discount to the amount actually owed by the debtors or insurers. We acquire these portfolios after a qualitative and quantitative analysis of the underlying receivables and establish a purchase price based on expected recovery and our internal rate of return hurdle. After purchasing a portfolio, we outsource collections to carefully selected collection agencies and we actively monitor its performance and review and adjust our collection and servicing strategies accordingly.
We purchase receivables from creditors and others through privately negotiated direct sales and auctions in which sellers of receivables seek bids from several pre-qualified debt purchasers. These receivables consist primarily of credit cards, auto deficiencies, student loans, retail installment contracts, medical and other types of receivables. We pursue new acquisitions of consumer receivable portfolios on an ongoing basis through:
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our direct relationships with credit originators; and
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brokers who specialize in the sale of consumer receivable portfolios.
Our objective is to maximize our return on investment on acquired consumer receivable portfolios. As a result, before acquiring a portfolio, we analyze the portfolio to determine how to best maximize collections in a cost efficient manner and carefully analysis of collection agencies selected to service a portfolio. We believe in outsourcing 99% of its recovery efforts. We believe that we can never be experts in collecting all the various types of debt. We retain a handful of accounts internally for benchmarking purposes. Our philosophy is to keep overhead low and concentrate on our strengths of analysis and purchasing the portfolios at the right price and managing the recovery process.
The recovery process is largely done by collection agencies and law firms. Recovery process is generally handed over to lawyers when it is determined the debtor has the ability to satisfy his/her obligation but normal collection activities have not resulted in resolution.
In many ways investments are tailored to coincide with our recovery partner’s strengths. In the United States, we believe there are approximately 4,800 collection agencies and law firms. Most are generalists and some are specialist in the various segments of the market. In many cases we have a choice dependent upon the circumstances of the investment. We look for certain tangible and intangible qualities in our recovery partners. Companies that have made investment in infrastructure that allow them to perform on an efficient and timely basis are selected. Prior to assigning a portfolio for collection standard informal audit of the recovery partner is done.
In the event of legal action, we seek attorneys/collection law firms that are located in the state of the debtor. The proximity of the agent to the debtor has a significant influence on the debtors’ actions.
We use an internally developed incentive-based fee structure to negotiate the contingency fees of the recovery partners. This is a tiered method of paying the partner an increasing percentage of collections if they meet pre-agreed to hurdles. These hurdles are recovery of our investment plus returns in defined time periods. In most cases, an underestimation of the collection process involves the extension of the collection horizon. For instance, a debtor that is not in a position to immediately settle their obligation at the moment the obligation is purchased, is most likely to be in a position of being able to clear his/her credit in the foreseeable future if they are capable of gainful employment or expects their financial lot to improve. We will not write off these types of debtors but may extend our collection horizon to include the moment in time when collection/settlement is possible. We continuously weigh the benefits of selling the obligations versus holding it in anticipation of settlement. If we can realize an acceptable return within the expected horizon by selling the loan, the Company will do so. In most cases an obligation becomes collectible at a point in time. Periodically, we will evaluate our portfolios to identify accounts with profiles that are inconsistent with our collection strategies. Such accounts can be offered for sale to a network of investors, collection agencies and law firms.
Post acquisition administration of each portfolio and each account is vital to our business. Real time monitoring of portfolio performance and activity at the account level allows us to keep our recovery partners on their toes. The Company uses database software that has all the information of a debtor and fees, interest and collections are regularly reconciled with reports from the collection agencies. Each portfolio administrator can manage up to 25,000 accounts on an ongoing basis. The software allows us to export data into Excel for more portfolio analysis.
For the years ended September 30, 2008 and September 30, 2007, our revenues were approximately $608,204 and $352,944 respectively, and our net income was $168,659 versus a loss of approximately ($344,694) respectively. During these same years our cash collections were approximately $582,341 and $868,462 respectively and servicing incomes were approximately $89,551 and $106,075, respectively.
Industry Overview
The purchasing, servicing and collection of charged-off, sub-performing and performing consumer receivables is an industry that is driven by:
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levels of consumer debt;
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defaults of the underlying receivables; and
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utilization of third-party providers to collect such receivables.
We believe that as a result of the difficulty in collecting these past due receivables and the desire of originating institutions to focus on their core businesses and to generate revenue from these receivables, originating institutions are increasingly electing to sell these portfolios. However, due to rapid rise in prices, the Company is looking for investment opportunities in Europe.
Strategy
Our strategy is to acquire portfolios and outsource collections. We believe we differentiate ourselves from the rest of the field based on the following:
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knowledge of quantitative and qualitative variables
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knowledge of the history of debt under consideration for purchase
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understanding of portfolio’s characteristics than the originator/seller of the debt.
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How the debt is originated - telemarketing, direct mail solicitation, face to face in the office, home, or casual event. We further look at why the individual took on the debt - was it to buy something of need or a spontaneous purchase.
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Demographic of the debtor- socio economic category.
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Outsource to specialist recovery firms and avoiding pressure to keep internal collection personnel busy.
We have invested significant resources in developing a proprietary analytical tool that takes into accounts all the value objects. Our proprietary database analysis application is able to cleanse and format raw data, sort and produce reports and statistics that analyze the predictability of collection of a pool under consideration such as geographic dispersion, statute analysis, recovery history, etc. This is coupled with a bottom up approach resulting in selection of portfolios with highest probability of collection, and valuation and finally pricing. Final purchase decisions are based on our multiple regression models that determine the likelihood of payment by analyzing both the demographic and account-level data of a given portfolio and comparing it our database of accounts and feedback from our recovery partners This is coupled with internally developed statistical models that attempt to score and map out a potential recovery curve of a given portfolio. By implementing a multi-tier approach, our analysis will result in the selection of portfolios with highest probability of collection, and valuation and finally rational pricing. This rigorous disciplined approach does not permit paying more than established range.
We believe we can grow the business by managing collections efficiently, paying the right price for portfolios, expanding relationships with credit originators, country diversification and maintaining a low fixed overhead although we cannot provide guarantees. We believe that as a result of our management's experience and expertise, and the fragmented yet growing market in which we operate, we are well-positioned to successfully implement our strategy.
Consumer Receivables Business
Due to capital constraint, the Company has not been able to purchase large portfolios and the portfolios it has acquired are through the following sources:
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our relationships with industry participants, collection agencies, and resellers;
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brokers who specialize in the sale of consumer and commercial receivable portfolios; and
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other sources.
We utilize our relationships with brokers, recovery partners and sellers of portfolios to locate portfolios for purchase. Our senior management is responsible for:
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coordinating due diligence, including in some cases on-site visits to the seller's office;
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stratifying and analyzing the portfolio characteristics;
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valuing the portfolio;
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preparing bid proposals;
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negotiating pricing and terms;
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closing the purchase; and
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the receipt of account documentation for the acquired portfolios.
The seller or broker typically supplies us with either a sample listing or the actual portfolio being sold on compact disk, a diskette or other form of media. We analyze each consumer receivable portfolio to determine if it meets our purchasing criteria. We may then prepare a bid or negotiate a purchase price. If a purchase is completed, senior management monitors the portfolio's performance and uses this information in determining future buying criteria and pricing.
We purchase receivables at discounts from the balance actually owed by the consumer. We determine how much to bid on a portfolio and a purchase price by evaluating many different variables, such as:
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The number of collection agencies previously attempting to collect the receivables in the portfolio;
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the average balance of the receivables;
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the age of the receivables;
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number of days since charge-off;
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payments made since charge-off; and
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demographics
Once a receivable portfolio has been identified for potential purchase, we prepare various analyses based on extracting customer level data from external sources, other than the issuer, to analyze the potential collectibility of the portfolio. We also analyze the portfolio by comparing it to similar portfolios previously serviced by our recovery partners or potential recovery partners. In addition, we perform qualitative analyses of other matters affecting the value of portfolios, including a review of the delinquency, charge off, placement and recovery policies of the originator as well as the collection authority granted by the originator to any third party collection agencies, and, if possible, by reviewing their recovery efforts on the particular portfolio. After these evaluations are completed, members of our senior management discuss the findings, decide whether to make the purchase and finalize the price at which we are willing to purchase the portfolio.
We purchase most of our consumer receivable portfolios directly from originators and other sellers including, from time to time, our recovery partners through privately negotiated direct sales or through a bidding process. In order for us to consider a potential seller as a source of receivables, a variety of factors are considered. Sellers must demonstrate that they have:
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adequate internal controls to detect fraud;
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the ability to provide post sale support; and
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the capacity to honor buy-back and return warranty requests.
Generally, our portfolio purchase agreements provide that we can return certain accounts to the seller. However, we may acquire a portfolio with few, if any, rights to return accounts to the seller. After acquiring a portfolio, we conduct a detailed analysis to determine which accounts in the portfolio should be returned to the seller. Although the terms of each portfolio purchase agreement differ, examples of accounts that may be returned to the seller include:
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debts paid prior to the cutoff date;
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debts in which the consumer filed bankruptcy prior to the cutoff date;
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debtor is incarcerated; and
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debts in which the consumer was deceased prior to cutoff date.
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In case of commercial receivables, recourse is limited to fraud and lack of documentation.
Receivable Servicing
Our objective is to maximize our return on investment on acquired consumer receivable portfolios. As a result, before acquiring a portfolio, we analyze the portfolio to determine how to best maximize collections in a cost efficient manner. Once a portfolio has been acquired, we or our recovery partner generally download all receivable information provided by the seller into our account management system and reconcile certain information with the information provided by the seller in the purchase contract. We or our recovery partners send notification letters to obligors of each acquired account explaining, among other matters, our new ownership and asking that the obligor contact us. In addition, we notify the three major credit reporting agencies of our new ownership of the receivables. We presently outsource all our collections to collection agencies. After assignment to a collection agency we actively monitor and review the collection agency’s performance on an ongoing basis.
Customer Service
The customer service department is responsible for:
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handling incoming calls from debtors and collection agencies that are responsible for collecting on our consumer receivable portfolios;
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coordinating customer inquiries and assisting the collection agencies in the collection process.
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Commercial servicing is exclusively handled by servicer with limited involvement of the Company.
Portfolio Sales
We sell portfolios if they do not meet our internal rate of return hurdle or if we can achieve our returns through a sale.
Marketing
The Company has established relationships with brokers who market consumer receivable portfolios from banks, finance companies and other credit providers. The Company has exclusive marketing agreements with certain Credit Union Leagues and continues to expand in that space. In addition, the Company subscribes to national publications that list consumer receivable portfolios for sale. The Company also directly contacts banks, finance companies or other credit providers to solicit consumer receivables for sale.
Competition
Our business of purchasing distressed consumer receivables is highly competitive and fragmented, and we expect that competition from new and existing companies will increase. We compete with:
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other purchasers of consumer receivables, including third-party collection companies; and
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other financial services companies who purchase consumer receivables.
Some of our competitors are larger and more established and may have substantially greater financial, technological, personnel and other resources than we have, including greater access to capital markets.
Management Information Systems
We have upgraded our information system to make tracking of collection activities more efficient. In addition, we rely on the information technology of our third-party recovery partners and periodically review their systems to ensure that they can adequately service our consumer receivable portfolios.
Employees
As of September 30, 2008, we had 3 full-time employees.
ITEM 1A.
ITEM 1A. RISK FACTORS
You should carefully consider the risks described below as well as other information provided to you in this document, including information in the section of this annual report entitled “Information Regarding Forward Looking Statements.” The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently believes are immaterial may also impair our business operations. If any of the following risks actually occur, the Company’s businesses, financial condition or results of operations could be materially adversely affected, the value of the common stock could decline, and you may lose all or part of your investment.
We may not be able to purchase consumer or commercial receivable portfolios at favorable prices or on sufficiently favorable terms or at all and our success depends upon the continued availability of consumer receivable portfolios that meet our purchasing criteria and our ability to identify and finance the purchases of such portfolios.
The availability of consumer and commercial receivable portfolios at favorable prices and on terms acceptable to us depends on a number of factors outside of our control, including:
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the growth of consumer debt;
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the continued volume of consumer receivable portfolios available for sale; and
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competitive factors affecting potential purchasers and sellers of consumer receivable portfolios.
We have seen at certain times that the market for acquiring consumer receivable portfolios is becoming more competitive, thereby possibly diminishing our ability to acquire such receivables at attractive prices in future periods. The growth in consumer debt may also be affected by:
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a slowdown in the economy;
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reductions in consumer spending;
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changes in the underwriting criteria by originators; and
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changes in laws and regulations governing consumer lending.
Any slowing of the consumer debt could result in a decrease in the availability of consumer receivable portfolios for purchase that could affect the purchase prices of such portfolios. Any increase in the prices we are required to pay for such portfolios in turn will reduce the profit, if any, we generate from such portfolios.
Our quarterly operating results may fluctuate and cause our stock price to decline.
Because of the nature of our business, our quarterly operating results may fluctuate, which may adversely affect the market price of our common stock. Our results may fluctuate as a result of any of the following:
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the timing and amount of collections on our consumer receivable portfolios;
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our inability to identify and acquire additional consumer receivable portfolios;
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a decline in the estimated value of our consumer receivable portfolio recoveries;
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increases in operating expenses associated with the growth of our operations; and
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general and economic market conditions.
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Currency fluctuations can have an impact on our recoveries from U.K. portfolios.
We may not be able to recover sufficient amounts on our consumer receivable portfolios to recover the costs associated with the purchase of those portfolios and to fund our operations.
In order to operate profitably over the long term, we must continually purchase and collect on a sufficient volume of receivables to generate revenue that exceeds our costs.
Our ability to recover on our portfolios and produce sufficient returns can be negatively impacted by the quality of the purchased receivables. In the normal course of our portfolio acquisitions, some receivables may be included in the portfolios that fail to conform to certain terms of the purchase agreements and we may seek to return these receivables to the seller for payment or replacement receivables. However, we cannot guarantee that any of such sellers will be able to meet their payment obligations to us. Accounts that we are unable to return to sellers may yield no return. If cash flows from operations are less than anticipated as a result of our inability to collect sufficient amounts on our receivables, our ability to satisfy our debt obligations, purchase new portfolios and our future growth and profitability may be materially adversely affected.
We are subject to intense competition for the purchase of consumer receivable portfolios and, as a result of this competition, if we are unable to purchase receivable portfolios, our profits, if any, will be limited.
We compete with other purchasers of consumer receivable portfolios, with third-party collection agencies and with financial services companies that manage their own consumer receivable portfolios. We compete on the basis of reputation, industry experience and performance. Some of our competitors have greater capital, personnel and other resources than we have. The possible entry of new competitors, including competitors that historically have focused on the acquisition of different asset types, and the expected increase in competition from current market participants may reduce our access to consumer receivable portfolios. Aggressive pricing by our competitors could raise the price of consumer receivable portfolios above levels that we are willing to pay, which could reduce the number of consumer receivable portfolios suitable for us to purchase or if purchased by us, reduce the profits, if any, generated by such portfolios. If we are unable to purchase receivable portfolios at favorable prices or at all, our revenues and earnings could be materially reduced.
Failure of our third party recovery partners to adequately perform collection services could materially reduce our revenues and our profitability, if any.
We are dependent upon outside collection agencies to service all our consumer receivable portfolios. Any failure by our third party recovery partners to adequately perform collection services for us or remit such collections to us could materially reduce our revenues and our profitability. In addition, our revenues and profitability could be materially adversely affected if we are not able to secure replacement recovery partners and redirect payments from the debtors to our new recovery partner promptly in the event our agreements with our third-party recovery partners are terminated, our third-party recovery partners fail to adequately perform their obligations or if our relationships with such recovery partners adversely change.
Our collections may decrease if bankruptcy filings increase.
During times of economic recession, the amount of defaulted consumer receivables generally increases, which contributes to an increase in the amount of personal bankruptcy filings. Under certain bankruptcy filings, a debtor's assets are sold to repay credit originators, but since the defaulted consumer receivables we purchase are generally unsecured we often would not be able to collect on those receivables. We cannot assure you that our collection experience would not decline with an increase in bankruptcy filings. If our actual collection experience with respect to a defaulted consumer receivables portfolio is significantly lower than we projected when we purchased the portfolio, our earnings could be negatively affected.
We may not be able to continue our operations if we are unable to generate funding from third party financing sources
If we are unable to access external sources of financing, we may not be able to fund and grow our operations. The failure to obtain financing and capital as needed would limit our ability to:
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purchase consumer receivable portfolios; and
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achieve our growth plans.
We use estimates for recognizing revenue on a majority of our consumer receivable portfolio investments and our earnings would be reduced if actual results are less than estimated.
We recognize finance income on a majority of our consumer receivable portfolios using the interest method. We only use this method if we can reasonably estimate the expected amount and timing of cash to be collected on a specific portfolio based on historic experience and other factors. Under the interest method, we recognize finance income on the effective yield method based on the actual cash collected during a period, future estimated cash flows and the portfolio's carrying value prior to the application of the current quarter's cash collections. The estimated future cash flows are reevaluated quarterly. If future cash collections on these portfolios were less than what was estimated, we would recognize less than anticipated finance income or possibly an expense that would reduce our earnings during such periods. Any reduction in our earnings could materially adversely affect our stock price.
We may not be successful at acquiring receivables of new asset types or in implementing a new pricing structure.
We may pursue the acquisition of receivable portfolios of asset types in which we have little current experience. We may not be successful in completing any acquisitions of receivables of these asset types and our limited experience in these asset types may impair our ability to collect on these receivables. This may cause us to pay too much for these receivables, and consequently, we may not generate a profit from these receivable portfolio acquisitions.
The loss of any of our executive officers may adversely affect our operations and our ability to successfully acquire receivable portfolios.
Our Chairman, Gobind Sahney, our President and Chief Executive Officer, Max Khan, are responsible for making substantially all management decisions, including determining which portfolios to purchase, the purchase price and other material terms of such portfolio acquisitions. These decisions are instrumental to the success of our business. The loss of the services of Gobind Sahney or Max Khan could disrupt our operations and adversely affect our ability to successfully acquire and service receivable portfolios.
Government regulations may limit our ability to recover and enforce the collection of our receivables.
Federal, state and municipal laws, rules, regulations and ordinances may limit our ability to recover and enforce our rights with respect to the receivables acquired by us. These laws include, but are not limited to, the following federal statutes and regulations promulgated thereunder and comparable statutes in states where consumers reside and/or where creditors are located:
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the Fair Debt Collection Practices Act;
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the Federal Trade Commission Act;
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the Truth-In-Lending Act;
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the Fair Credit Billing Act;
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the Equal Credit Opportunity Act; and
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the Fair Credit Reporting Act.
Additional laws may be enacted that could impose additional restrictions on the servicing and collection of receivables. Such new laws may adversely affect the ability to collect the receivables.
Because the receivables were originated and serviced pursuant to a variety of federal and/or state laws by a variety of entities and involved consumers in all 50 states, the District of Columbia and Puerto Rico, there can be no assurance that all original servicing entities have at all times been in substantial compliance with applicable law. Additionally, there can be no assurance that we or our recovery partners have been or will continue to be at all times in Substantial compliance with applicable law. The failure to comply with applicable law could materially adversely affect our ability to collect our receivables and could subject us to increased costs and fines and penalties. In addition, our third-party recovery partners may be subject to these and other laws and their failure to comply with such laws could also materially adversely affect our revenues and earnings.
The Company is also subject to various debt collection and privacy regulations of countries where is operates.
Class action suits and other litigation in our industry could divert our management's attention from operating our business and increase our expenses.
Certain originators and recovery partners in the consumer credit industry have been subject to class actions and other litigation. Claims include failure to comply with applicable laws and regulations and improper or deceptive origination and servicing practices. If we become a party to such class action suits or other litigation, our results of operations and financial condition could be materially adversely affected.
If a significant portion of our shares available for resale are sold in the public market, the market value of our common stock could be adversely affected.
Sales of a substantial number of shares of our common stock in the public market could cause a decrease in the market price of our common stock. We had approximately 17,122,896 shares of common stock issued and 16,052,896 shares outstanding as of the date hereof. In addition, options to purchase approximately 950,000 shares of our common stock were outstanding and 946,000 warrants outstanding as of the date here of. We may also issue additional shares in connection with our business and may grant additional stock options to our employees, officers, directors and consultants under our stock option plans or warrants to third parties. As of September 30, 2008 there were 950,000 shares available for such purpose. If a significant portion of these shares were sold in the public market, the market value of our common stock could be adversely affected.
Our common stock will be subject to the “Penny Stock” rules of the SEC.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
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that a broker or dealer approve a person's account for transactions in penny stocks; and
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the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
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obtain financial information and investment experience objectives of the person; and
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make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:
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sets forth the basis on which the broker or dealer made the suitability determination; and
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that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
ITEM 2. PROPERTIES
Our executive and administrative offices are located at 2500 Plaza 5, Harborside Financial Center, Jersey City, NJ 07311 and 162 S. Rancho Santa Fe, Suite B 85, Encinitas, California 92024, respectively. We believe that our existing facilities are adequate for our current and anticipated needs. We lease our New Jersey facility at approximately $3,000 per month and such lease expires on February 28, 2009. We lease our California facilities at $1,800 per month and such lease expires in March 2009.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. Except for the following, the Company is currently not aware of nor has any knowledge of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results:
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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.
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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 was seeking an amount no less than $46,931. The Company reached a settlement with the Defendants and recovered $7,092 in July 2007.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Since October 2004, our common stock, par value $.001 per share, had been quoted on the Nasdaq Bulletin Board under the symbol “RCVA”. Prior to October 2004, there was no market for our common stock. The last reported price as of December 31, 2008 was $0.006 per share.
Holders
As of December 31, 2008 we had approximately 2,100 holders of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.
Dividends
We have never declared or paid any cash dividends on our common stock. We do not anticipate paying any cash dividends to stockholders in the foreseeable future. In addition, any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem relevant.
Equity Compensation Plans
As of September 30, 2008, we had the following securities authorized for issuance under the equity compensation plans:
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The statements of operations data for the years ended September 30, 2008 and 2007 are derived from our audited financial statements which are included elsewhere in this Form 10-K. The historical results are not necessarily indicative of results to be expected for future periods.
Consolidated Statements of Operations Data:
Consolidated Balance Sheet Data:
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Introduction
The following discussion should be read in conjunction with the Financial Statements and Notes thereto. Our fiscal year ends September 30. This document contains certain forward-looking statements including, among others, anticipated trends in our financial condition and results of operations and our business strategy. (See Part I, Item 1A, "Risk Factors"). These forward-looking statements are based largely on our current expectations and are subject to a number of risks and uncertainties. Actual results could differ materially from these forward-looking statements. Important factors to consider in evaluating such forward-looking statements include (i) changes in external factors or in our internal budgeting process which might impact trends in our results of operations; (ii) unanticipated working capital or other cash requirements; (iii) changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the industries in which we operate; and (iv) various competitive market factors that may prevent us from competing successfully in the marketplace.
Results of Operations
Year Ended September 30, 2008 Compared to Year Ended September 30, 2007
Revenues
Total revenue for the twelve months ended September 30, 2008 increased by 72% to 608,204 from $352,944 for the year ended September 30, 2007. The Company had a net income of $168,659 for the year ended September 30, 2008 versus a net loss of ($344,694) for the year ended September 30, 2007. The servicing income was generated from Ramco Income Fund Ltd and other investment vehicles managed by the Company. The finance income is net of all collections expenses because the Company outsources all its collections on a contingency basis.
For the twelve months ended September 30, 2008, we invested $201,982 in one portfolio with a face value of $5,770,917. During the year ended September 30, 2007, we acquired new portfolios with a face value in excess of $4,757,555 at a cost of $345,806. The Company has been unable to make greater investments due to rise in prices paid for charged off consumer credit charge-offs and inability to raise additional capital. The face value represents the outstanding balance owed by debtors at the time of purchase and the Company expects to collect only a small percentage of the outstanding balance. In 2007, the Company used the accretion method based on SOP03-3 for revenue recognition for certain portfolios and recovery method for others. In 2008, the Company used the recovery method only for all portfolios.
During the year ended September 30, 2008, we serviced a pool of charged-off consumer accounts on behalf of Ramco Income Fund Limited and from other investment vehicles. Servicing fees received under this arrangement declined by approximately 15% to $89,551 from $106,075 in the year ended September 30, 2007. The Fund has been redeeming investors and stopped making fresh investments since January 2007, which has resulted in sharp decline in servicing fees from the Fund. Upon the redemption of underlying investors in the Fund, the Company will receive a majority of the residual cash flow from all portfolios acquired for each series of investors. The cumulative residual from the Fund cannot be estimated at this time.
Total operating expenses
Total operating expenses in the year ended September 30, 2008 declined by approximately 17% or $110,008 to $523,056 compared to $633,064 for the year ended September 30, 2007. The Company expects the overall expenses to decline further next year.
Other income and expense
For the year ended September 30, 2008, the Company had interest income of $8,193, interest expense of ($19,921), $32,340 gain on sale of receivables and $62,899 from debt forgiveness versus income of $3,330, interest expense of $42,699 and ($25,205) loss on sale of receivables during the year ended September 30, 2007. The Company has no other contingent expense.
Income taxes
For the year ended September 30, 2008, the Company has not recorded any income tax liability.
Net Income (loss)
Net income for the twelve months ended September 30, 2008 was $168,659 versus a loss of ($344,694) for the twelve months ended September 30, 2007.
Liquidity and Capital Resources
Liquidity
For the year ended September 30, 2008 the Company had working capital of $276,349 versus $165,049 versus for the year ended September 30, 2007. Working capital for year ended September 30, 2008 improved by approximately 67% or $111,300 from $165,049 for the year ended September 30, 2007. The improvement was largely due repayment of note and lower operating expenses. The Company had $233,450 in cash and continues to generate sufficient cash to fund operations for the foreseeable future. We can raise additional capital through structured notes for any additional portfolio purchases, for which we cannot provide any guarantee.
Cash Flows and Expenditures
Year ended September 30, 2008 compared to September 30, 2007
During the year ended September 30, 2008, the Company spent $201,982 on portfolio acquisitions compared to $345,806 during year ended September 30, 2007 on portfolio acquisitions. Total cash collected, excluding portfolio sales, were $582,341 and $873,761 respectively. The Company has financing in place to acquire portfolios if they become available at reasonable prices.
During the year we generated $89,551 in servicing revenue compared to $106,075 during 2007 primarily from Ramco Income Fund, Ltd and other investment vehicles. Servicing fees from the Fund has declined due to redemptions and lack of additional investments.
We currently utilize various business channels for the collection of charged off credit cards and other receivables. The Company is currently using seven (7) collection agencies and several law firms on a contingency basis.
Cash flow from operations was $223,489 during the year ended September 30, 2008 compared to $147,372 during the year ended September 30, 2007.
Our primary investing activity is the purchase of new receivable portfolios. We purchase receivable portfolios directly from issuers and from resellers as well as from brokers that represent various issuers. We carefully evaluate portfolios and bid on only those that meet our selective targeted return profile.
Capital expenditures for fixed assets were not material for the year ended September 30, 2008 and all purchases of capital expenditures were funded with internal cash flow.
Net cash (used) from financing activities was ($276,569) during the year ended September 30, 2008 versus ($15,482) during the year ended September 30, 2007. The company paid off one note payable and paid off a second note on a discounted basis.
Portfolio Data
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 September 30, 2008.
(1)
Purchase price refers to the cash paid to a seller to acquire defaulted receivables, plus certain capitalized expenses, less the purchase price refunded by the seller due to the return of non-compliant accounts (also defined as buybacks). Non-compliant refers to the contractual representations and warranties between the seller and the Company. These representations and warranties from the sellers generally cover account holders’ death or bankruptcy and accounts settled or disputed prior to sale. The seller can replace or repurchase these accounts.
(2)
Actual cash collections net of recovery cost.
(3)
Total estimated collections refer to the actual cash collections, including cash sales, plus estimated remaining collections of which we can provide no guarantee regarding the success of the outstanding remaining collections. The Company will take an impairment charge if the actual recoveries fall short of expected recoveries.
Capital Resources
The cash flow from portfolios currently owned would be adequate to meet our operating expenses for the foreseeable future.
Inflation
We believe that inflation has not had a material impact on our results of operations for the year ended September 30, 2008.
Critical Accounting Policies
The Company utilizes the interest method under guidance provided by the AICPA issued Statement of Position (“SOP”) 03-03 to determine income recognized on finance receivables
In October 2003, the American Institute of Certified Public Accountants issued Statement of Position (“SOP”) 03-03, “Accounting for Loans or Certain Securities Acquired in a Transfer.” This SOP proposes guidance on accounting for differences between contractual and expected cash flows from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. This SOP is effective for loans acquired in fiscal years beginning after December 15, 2004. The SOP would limit the revenue that may be accrued to the excess of the estimate of expected future cash flows over a portfolio’s initial cost of accounts receivable acquired. The SOP 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 SOP 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 portfolio’s remaining life. The SOP provides that previously issued annual financial statements would not need to be restated. Management is in the process of evaluating the application of this SOP.
Special Note on Forward-Looking Statements
This report contains “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical facts, included or incorporated into this Form 10-K are forward-looking statements. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” and similar expressions often characterize forward looking statements. These statements may include, but are not limited to, projections of collections, revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services, and financing needs or plans, as well as assumptions relating to these matters. These statements include, among others, statements found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”
Actual results could differ materially from those contained in the forward-looking statements due to a number of factors, some of which are beyond our control. Factors that could affect our results and cause them to differ from those contained in the forward-looking statements include:
·
the availability of financing;
·
our ability to maintain sufficient liquidity to operate our business including obtaining new capital to enable us to purchase new receivables;
·
our ability to purchase receivable portfolios on acceptable terms;
·
our continued servicing of the receivables in our securitization transactions and for the unrelated third party;
·
our ability to recover sufficient amounts on receivables to fund operations;
·
our ability to hire and retain qualified personnel to recover our receivables efficiently;
·
changes in, or failure to comply with, government regulations; and
·
the costs, uncertainties and other effects of legal and administrative proceedings.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market rate risk
We are exposed to market risk related to changes in interest rates and foreign currency exchanges rates.
Interest rate risk
We hold our assets in cash and cash equivalents. We do not hold derivative financial instruments or equity securities.
Foreign currency exchange rate risk
Our revenue and expenses are denominated in U.S. dollars. We currently own one portfolio in United Kingdom; we do not anticipate that foreign exchange gains or losses will be significant. We have not engaged in foreign currency hedging to date.
Our international business is subject to risks typical of international activity, including, but not limited to, differing economic conditions; change in political climates; differing tax structures; and other regulations and restrictions. Accordingly, our future results could be impacted by changes in these or other factors.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
RECEIVABLE ACQUISITION AND MANAGEMENT
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2008 AND 2007
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified Public Accountants
Lippincott Drive
Suite J
Marlton, New Jersey 08053
(856) 346-2828 Fax (856) 396-0022
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To Receivable Acquisition and Management Corporation and Subsidiaries
Plaza 5, Harborside Financial Center, Jersey City, New Jersey,
We have audited the accompanying consolidated balance sheets of Receivable Acquisition and Management Corporation and Subsidiaries (the “Company”) as of September 30, 2008 and 2007, and the related consolidated statements of income, stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended September 30, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Receivable Acquisition and Management Corporation and Subsidiaries as of September 30, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2008 in conformity with accounting principles generally accepted in the United States of America.
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified Public Accountants
Marlton, New Jersey 08053
December 29, 2008
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2008 AND 2007
The accompanying notes are an integral part of these consolidated financial statements.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007
The accompanying notes are an integral part of these consolidated financial statements.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2008 and 2007
The accompanying notes are an integral part of these consolidated financial statements.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007
The accompanying notes are an integral part of these consolidated financial statements.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008 AND 2007
NOTE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A.
THE COMPANY AND PRESENTATION
Receivable Acquisition and Management Corporation and Subsidiaries (the “Company”) was formerly Biopharmaceutics, Inc., In June 1999 pursuant to a meeting of the Board of Directors, Biopharmaceutics Inc, adopted a resolution and filed a Certificate of Amendment to the Certificate of Incorporation and changed the name of Biopharmaceutics, Inc., to Feminique Corporation.
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.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B.
FINANCE RECEIVABLES (CONTINUED)
During the quarter ended March 31, 2007, the Company acquired total portfolios for $324,248. The Company will use for these portfolios the "Recovery Method" for revenue recognition under which no revenue is recognized until the investment amount of $324,248 has been recovered.
During the quarter ended March 31, 2007 the Company sold several portfolios for a total sales price of $231,036. The Company recognized a net gain of $3,129 on these sales. The Company retained approximately $488,335 in face amount of these portfolios.
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 September 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.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B.
FINANCE RECEIVABLES (CONTINUED)
Changes in finance receivables for the year ended September 30, 2008 and 2007 were 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 $481,743 and $228,525 for the years ended September 30, 2008 and 2007 respectively.
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.
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 September 30, 2008 and 2007.
The Company maintains cash and cash equivalents balances at financial institutions that are insured by the Federal Deposit Insurance Corporation up to $250,000. At September 30, 2007, the Company’s uninsured cash balances total $186,000.
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.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2007 AND 2006
NOTE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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:
For the year ended September 30, 2007 options and warrants were not included in the computation of diluted EPS because inclusion would have been antidilutive. There were 1,896,000 options and warrants at September 30, 2007.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
J.
RECENT ACCOUNT PRONOUNCEMENTS
In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 was issued in order to eliminate the diversity in practice surrounding how public companies quantify financial statement misstatements. SAB 108 requires that registrants quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in a misstated amount that, when all relevant quantitative and qualitative factors are considered, is material. SAB108 must be implemented by the end of the Company's first fiscal year ending after November 15, 2007. The Company does not expect SAB 108 to have any material impact on financial reporting or disclosures.
In March 2006, the FASB issued FASB Statement No. 156, Accounting for Servicing of Financial Assets - an amendment of FASB Statement No. 140. This Statement:
1. Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract under certain situations.
2. Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable.
3. Permits an entity to choose either the amortization method or the fair value measurement method subsequent measurement methods for each class of separately recognized servicing assets and servicing liabilities.
4. At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entity's exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value.
5. Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities.
We do not expect FASB No. 156 to have a material impact on our financial reporting, and we are currently evaluating the impact, if any, the adoption of FASB No. 156 will have on our disclosure requirements. The adoption of FASB No. 156 did not have a material impact on the company’s results or financial statements.
In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
J.
RECENT ACCOUNT PRONOUNCEMENTS (CONTINUED)
This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. FASB Statement No. 157 will be effective for our financial statements issued for our fiscal year beginning October 1, 2008. We do not expect the adoption of FASB Statement No. 157 to have a material impact on our financial reporting, and we are currently evaluating the impact, if any, the adoption of FASB Statement No. 157 will have on our disclosure requirements
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48), which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 will be effective for our fiscal year beginning October 1, 2007. The adoption of FIN 48 did not have a material impact on our financial reporting and disclosure.
In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, “;Quantifying Misstatements”. SAB 108 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company does not expect SAB 108 to have a material impact on its results or financial statements
The FASB also issued in September 2006 Statement of Financial Accounting Standards No. 158, employers’ Accounting for Defined Benefit Pension and other Postretirement Plans effective for financial statements issued for fiscal years beginning after December 15, 2006. This Standard requires recognition of the funded status of a benefit plan in the statement of financial position. The Company does not expect FASB 158 to have a material impact on its results or financial statements
In February 2007 the FASB issued Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - including an amendment of FASB Statement No. 115 effective for financial statements issued for fiscal years beginning after November 15, 2007. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The Company does not expect FASB 159 to have a material impact on its results or financial statements.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
J.
RECENT ACCOUNT PRONOUNCEMENTS (CONTINUED)
Also in February 2007 the FASB issued Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements- an amendment of ARB No. 51 effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company does not expect FASB 160 to have a material impact on its results or financial statements.
In March 2008 the FASB issued Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB No. 133 effective for financial statements issued for fiscal years beginning after November 15, 2007. This Statement requires enhanced disclosures about an entity’s derivatives and hedging activities and thereby improves the transparence of financial reporting. The Company does not expect FASB 161 to have a material impact on its results or financial statements.
NOTE
NOTES PAYABLE
A.
The Company issued on April 10, 2006 a private convertible note offering in the amount of $300,000. The company intended to repay the holder of the convertible note in 18 payments of $ 18,155 from the date of issuance of the convertible note at a rate of 11% per annum on or before October 7, 2007 (the “Maturity Date”) However the Company repaid $116,000 of the principal on May 11, 2006. The repayment terms, as of May 11, 2006 were restated as $11,738, per month until October 7, 2007. The interest rate of 11% per annum will not change. The note was paid in full on March 31, 2007.
B.
The Company issued on October 30, 2006 a note payable for the value of $150,000 in exchange for the retirement of 2,000,000 shares of common stock for $200,000. The company paid $50,000 in cash and issued a note payable of $150,000 for the balance. The terms are as follows: The Company is currently paying $3,000 per month. The note had an outstanding balance of $102,899 as of December 31, 2007. During the month of January 2008 the note was repaid in full for a discounted value of $40,000. The amount of $62,899 was recognized as income.
C.
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 repaid in full during the year ended September 30, 2008.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE
NOTES PAYABLE (CONTINUED)
As of September 30, 2008 and 2007 the estimated long-term notes payable mature as follows:
NOTE
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 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 September 30, 2008, the Company had 950,000 options outstanding under this plan.
NOTE
WARRANTS
The Company issued warrants during the year 2004. At September 30, 2008 the Company had 946,000 warrants outstanding exercisable at approximately $.01 per warrant per share.
NOTE
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.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE 5-
INCOME TAXES (CONTINUED)
There was no provision for income tax for the years ended September 30, 2008 and 2007.
At September 30, 2008 and 2007 the Company had an accumulated deficit approximating $195,332 and $363,991 available to offset future taxable income through 2028.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE
STOCK HOLDERS’ EQUITY
COMMON STOCK
There were 325,000,000 shares of common stock authorized, with 17,122,896 and 16,928,917 shares issued and outstanding at September 30, 2008 and 2007, respectively. The par value for the common stock is $.001 per share.
The following details the stock transactions for the years ended September 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.
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 the 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 month ended December 31, 2007 the company cancelled 6,021 shares of common stock at $.025 per share for a total amount of $151.
During the quarter ended September 30, 2008 the Company repurchased 1,070,000 shares of common stock at a market price of approximately $ .014 per share. The total purchase price was $15,039. The shares were accounted for as treasury stock as of September 30, 2008.
RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2008 AND 2007
NOTE
STOCK HOLDERS’ EQUITY (CONTINUED)
PREFERRED STOCK
On October 28, 2006 the Company reached an agreement with Artemis Hedge Fund Ltd the holder of 80,0000 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 September 30, 2008 and 2007.
NOTE
RELATED PARTY
The Company receives fees from Ramco Income Fund Limited. The Company manages Ramco Income Fund Limited a Bermuda entity. The servicing fees for the year ended September 30, 2008 and 2007 were $89,551 and $106,075 respectively.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
Our principal executive and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a - 15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this annual report. He has concluded that, based on such evaluation, our disclosure controls and procedures were effective as of September 30, 2008, as further described below.
(b) Management’s Annual Report on Internal Control Over Financial Reporting
Overview
Internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) refers to the process designed by, or under the supervision of, our principal executive officer and principal financial officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management has used the framework set forth in the report entitled “Internal Control - Integrated Framework” published by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission to evaluate the effectiveness of RAMC’s internal control over financial reporting. As a result of the material weaknesses described below, management has concluded that the Company’s internal control over financial reporting was effective as of September 30, 2008.
Management’s Assessment
Management has determined that, as of the September 30, 2008 measurement date, there were no material weaknesses in both the design and effectiveness of our internal control over financial reporting.
Human Resources: The Company has an outsourcing model whereby all collections functions are outsourced to external collection agencies and law firms. Each agency and law firm is required to send remittances along with detailed collections report at least once a month. Our collections manager handles receipt of checks and reports. She has a supervisor to review all data entered into our software system. The data is further verified by the CEO who receives independent reports from agencies and law firms.
Collections: All remittances are received as checks along with remittance report from all our collection agencies. Collections are entirely handled by our operations center in Rancho Santa Fe, California. The reports are entered into our software system “Collect”. The checks are then deposited by our New Jersey office. The checks are posted into our accounting records upon receipt of reports from California office and independent reports from the Collection Agencies. Receipt, depositing and recording functions are completely delineated. To date we have not had an incidence of theft or leakage.
Internal Accounting: Our internal accounting is done by a CPA firm before financials are submitted to our auditors.
Financial Reporting: The Company does not deal with any inventories or receivables. Our reporting is based on actual collections. Receivables are rarely created. The Company pays most of its bills upon receipt.
Revenue Recognition: The Company currently uses the ultra conservative method of “Recovery Method” instead of Interest Method for recognizing finance income. Finance income is only recognized when the investment cost has been fully recognized.
Portfolio Impairment and Accretion: The Company assesses each portfolio for possible impairment or accretion at the end of each fiscal year based on actual collections at the time of determination.
This annual report does not include an attestation report of the Company’s registered accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission
(c) Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth the names, age, and position of each of our directors and executive officers.
Name
Age
Present Principal Employment
Max Khan
Director, President, CEO and CFO
Gobind Sahney
Chairman
Steven Lowe
Director and Secretary
Set forth below is biographical information for each officer and director.
GOBIND SAHNEY, age 47, 1987 to 2004, Chairman & CEO, Young Entrepreneurs Society, Inc. (YES) a credit card marketing Company.1997 to 2004, Chairman & President, Sahney & Company, a corporate finance advisory firm. Mr. Sahney is a lifetime member of the National Eagle Scout Association; member Babson College Board of Trustees; the Babson College Asian Advisory Board; Mr. Sahney is a graduate of Babson College with dual degrees in Finance and Accounting. Born in 1961, Mr. Sahney lives in San Diego and has 2 children.
MAX KHAN, age 42, has been in the financial industry since 1987. He began his career as a financial consultant in New York. Mr. Khan founded Alliance Global Finance Inc. in 1992 with focus on corporate finance and investment banking. Mr. Khan served as president of Alliance Global Finance from 1991 through October 2003. Mr. Khan has a Bachelors Degree in Accounting and Economics from City University of New York and MBA from Pace University (New York). He is married with 2 children and lives in New York.
Steven Lowe, age 47, is a practicing attorney. He is the founder of Lowe Law. Mr. Lowe graduated from Vanderbilt University and received his JD from University of Connecticut School of Law.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who own more than ten percent of the Company’s outstanding Common Stock to file with the SEC and the Company reports on Form 4 and Form 5 reflecting transactions affecting beneficial ownership. Based solely on a review of the copies of the reports furnished to us, or written representations that no reports were required to be filed, we believe that during the fiscal year ended September 30, 2008 all Section 16(a) filing requirements applicable to our directors, officers, and greater than 10% beneficial owners were complied with.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding compensation paid to our principal executive officer, principal financial officer, and our highest paid executive officer, all of whose total annual salary and bonus for the years ended September 30, 200 and 2008 exceeded $100,000.
Grants of Plan-Based Awards
There were no grants of plan-based awards to named executive officers for the year ended September 30, 2008.
Outstanding Equity Awards at Fiscal Year-End
None.
Option Exercises and Stock Vested
No executive officer identified in the Summary Compensation Table above exercised an option in fiscal year 2008. There were no shares of stock awarded or vested with respect to any of those executive officers.
Pension Benefits
None.
Non-qualified Deferred Compensation
The Company does not have any defined contribution or other plan which provides for the deferral of compensation on a basis that is not tax-qualified.
Employment Agreements
The Company has an employment agreement with Max Khan. The employment agreement expired on April 30, 2007. Under the existing employment provided Mr. Khan was entitled to receive $180,000 in annual compensation. Mr. Khan and the Company did not enter into a separation agreement and he has been serving the company without an employment agreement.
Potential Payments Upon Termination or Change-in-Control
None.
Director Compensation Arrangements
None
ITEM 12.
ITEM 12. EQUITY COMPENSATION PLAN INFORM AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Equity Compensation Plan Information
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the number of shares known to be owned by all persons who own at least 5% of RAMC’s outstanding common stock, the Company's directors, the executive officers, and the directors and executive officers as a group as of December 1, 2008, unless otherwise noted. Unless otherwise indicated, the stockholders listed in the table have sole voting and investment power with respect to the shares indicated.
(1) Represents fully vested options granted in 2005.
*Less than 1*% of the outstanding common stock
** Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants, or convertible debt currently exercisable or convertible, or exercisable or convertible within 60 days of December 1, 2008 are deemed outstanding for computing the percentage of the person holding such option or warrant. Percentages are based on a total of 17,122,896 shares of common stock outstanding on December 1, 2008, and the shares issuable upon the exercise of options, warrants exercisable, and debt convertible on or within 60 days of December 1, 2008, as described below
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
There has not been any related transaction during the year ended September 30, 2008. Mr. Steven Lowe remains the only independent director of the board.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit and Non-Audit Fees
Aggregate fees for professional services rendered for the Company by Bagell, Josephs Levine & Company, L.L.C for the fiscal years ended September 30, 2008 and 2007 are set forth below. The aggregate fees included in the Audit category are fees billed for the fiscal years for the audit of the Company's annual financial statements and review of financial statements and statutory and regulatory filings or engagements. The aggregate fees included in each of the other categories are fees billed in the fiscal years. (All references to "$" in this Proxy Statement are to United States dollars.)
Audit Fees for the fiscal years ended September 30, 2008 and 2007 were for professional services rendered for the audits of the consolidated financial statements of the Company, quarterly review of the financial statements included in Quarterly Reports on Form 10-QSB, consents, and other assistance required to complete the year-end audit of the consolidated financial statements.
Audit-Related Fees as of the fiscal years ended September, 2008 and 2007 were for assurance and related services reasonably related to the performance of the audit or review of financial statements and not reported under the caption Audit Fees.
Tax Fees as of the fiscal year ended September 30, 2008 and 2007 were for professional services related to tax compliance, tax authority audit support and tax planning.
There were no fees that were classified as All Other Fees as of the fiscal years ended September, 2008 and 2007.
As the Company does not have a formal audit committee, the services described above were not approved by the audit committee under the de minimus exception provided by Rule 2-01(c)(7)(i)(C) under Regulation S-X. Further, as the Company does not have a formal audit committee, the Company does not have audit committee pre-approval policies and procedures.
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements and Schedules
1. Financial Statements
The following consolidated financial statements are filed as part of this report under Item 8 of Part II “Financial Statements and Supplementary Data.:
A. Consolidated Balance Sheets at September 30, 2008 and 2007.
B. Consolidated Statements of Operations for the Years Ended September 30, 2008 and 2007.
C. Consolidated Statements of Changes in Shareholders’ Equity (Capital Deficit) for the Years Ended September 30, 2008 and 2007.
D. Consolidated Statements of Cash Flows for the Years Ended September 30, 2008 and 2007.
(b) Exhibits
Ex. 31.1 Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of
Ex. 32.1 Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 29th day of December, 2008.
RECEIVABLE ACQUISITION & MANAGEMENT CORPORATION
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/Accounting Officer, Chief Financial Officer and Director
Date: December 29, 2008
/s/ Gobind Sahney
By: Gobind Sahney
Chairman of the Board
Date: December 29, 2008
/s/ Steven Lowe
By: Steven Lowe
Director
Date: December 29,