-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DEE7DZsRC+MdT/Mpgtig60vOUr0vP9hepKeuTm9nTieb6gZ2KNmGkkD1TneiYmUh LZSDoKAzX7khcNaQnhU5/A== 0001144204-06-006040.txt : 20060214 0001144204-06-006040.hdr.sgml : 20060214 20060214154202 ACCESSION NUMBER: 0001144204-06-006040 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060214 DATE AS OF CHANGE: 20060214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RECEIVABLE ACQUISITION & MANAGEMENT CORP CENTRAL INDEX KEY: 0000733337 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 133186327 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-09370 FILM NUMBER: 06614418 BUSINESS ADDRESS: STREET 1: 140 BROADWAY STREET 2: 46TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 2128587590 MAIL ADDRESS: STREET 1: 140 BROADWAY STREET 2: 46TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 FORMER COMPANY: FORMER CONFORMED NAME: FEMINIQUE CORP DATE OF NAME CHANGE: 19990730 FORMER COMPANY: FORMER CONFORMED NAME: BIOPHARMACEUTICS INC// DATE OF NAME CHANGE: 19990730 FORMER COMPANY: FORMER CONFORMED NAME: INTEGRATED GENERICS INC /NV/ DATE OF NAME CHANGE: 19880824 10QSB 1 v035679_10qsb.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 001-09370 (COMMISSION FILE NUMBER) FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2005 FOR RECEIVABLE ACQUISITION & MANAGEMENT CORPORATION (Exact Name of Registrant as Specified in the Charter) DELAWARE 13-3186327 (State of Other Jurisdiction (I.R.S. Employer of Incorporation) Identification Number) 140 Broadway, 46th Floor New York, New York 10005 212-858-7590 Check whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes |X| No |_| As of February 10, 2006, there were 16,413,037 shares of the Registrant's Common Stock, $0.001 par value per share, outstanding. Transitional Small Business Disclosure Format Yes |_| No |X| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [_] No [X] RECEIVABLE ACQUISITION & MANAGEMENT CORPORATION FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2005 TABLE OF CONTENTS PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION & OPERATIONS RISK FACTORS ITEM 3. CONTROLS AND PROCEDURES PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ITEM 3. DEFAULTS UPON SENIOR SECURITIES ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ITEM 5. OTHER INFORMATION ITEM 6. EXHIBITS SIGNATURES THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY AND ITS INDUSTRY. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND PROSPECTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCURRING IN THE FUTURE. 2 PART I ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED FOR THE THREE MONTHS ENDED DECEMBER 31, 2005 AND 2004 3 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED FOR THE THREE MONTHS ENDED DECEMBER 31, 2005 AND 2004 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED: Pages Balance Sheet of December 31, 2005 - Unaudited 5-6 Statement of Operations For the Three Months 7 Ended December 31, 2005 and 2004 - Unaudited Statement of Cash Flows For the Three Months 8 Ended December 31, 2005 and 2004 - Unaudited Notes to Condensed Consolidated Financial Statements 9-19 4 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED DECEMBER 31, 2005 ASSETS CURRENT ASSETS Cash $ 396,262 Finance receivables - short term 191,180 Total current assets 587,442 ------------ OTHER ASSETS Finance receivables - long-term 388,154 ------------ Total other assets 388,154 ------------ TOTAL ASSETS $ 975,596 ============ The accompanying notes are an integral part of the condensed consolidated financial statements. 5 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED) - UNAUDITED DECEMBER 31, 2005 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable - Trade $ 18,238 Accrued and other expenses 167,030 Preferred stock dividend payable 10,000 Note Payable -short term 38,102 ------------ Total current liabilities 233,370 ------------ ------------ TOTAL LIABILITIES 233,370 ------------ STOCKHOLDERS' EQUITY Preferred stock, par value $10 per share; authorized 10,000,000 shares, 80,000 shares issued and outstanding at December 31, 2005 800,000 Common stock, par value $.001 per share; authorized 325,000,000 shares issued and 17,808,917 outstanding at December 31, 2005 17,809 Additional paid-in capital (4,812) Accumulated (Deficit) (70,771) ------------ Total stockholders' equity 742,226 ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 975,596 ============ The accompanying notes are an integral part of the condensed consolidated financial statements. 6 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATION - UNAUDITED FOR THE THREE MONTHS ENDED DECEMBER 31, 2005 AND 2004
FOR THE THREE MONTHS ENDED DECEMBER 31, 2005 2004 -------------- -------------- REVENUES Financing income $ 76,137 $ 113,744 Gain on sale of finance receivable -- 87,514 Service income 44,108 29,977 -------------- -------------- TOTAL INCOME 120,245 231,235 COSTS AND EXPENSES Selling, general and administrative 172,473 163,343 -------------- -------------- Total costs and expenses 172,473 163,343 -------------- -------------- NET INCOME (LOSS) BEFORE OTHER INCOME (52,228) 67,892 OTHER INCOME (LOSS) Other income (loss) - loss on sale of finance receivable (5,409) -- Other income (loss) - interest 255 601 -------------- -------------- Total other income (loss) (5,154) 601 -------------- -------------- NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAX $ (57,382) $ 68,493 PROVISION FOR INCOME TAXES -- (20,583) -------------- -------------- NET INCOME (LOSS) (57,382) 47,910 LESS PREFERRED STOCK DIVIDEND (10,000) (10,000) -------------- -------------- INCOME (LOSS) APPLICABLE TO COMMON STOCK $ (67,382) $ 37,910 -------------- -------------- BASIC INCOME (LOSS) PER COMMON SHARE $ (0.00) $ (0.003) ============== ============== DILUTED INCOME (LOSS) PER COMMON SHARE $ -- $ (0.002) ============== ============== WEIGHTED AVERAGE OUTSTANDING SHARES OF COMMON STOCK - BASIC 16,413,037 14,870,601 ============== ============== WEIGHTED AVERAGE OUTSTANDING SHARES OF COMMON STOCK - DILUTED 17,358,909 22,320,601 ============== ==============
The accompanying notes are an integral part of the condensed consolidated financial statements. 7 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED FOR THE THREE MONTHS ENDED DECEMBER 31, 2005 AND 2004
2005 2004 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ (67,382) $ 47,910 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Changes in Certain Assets and Liabilities Proceeds from sale of portfolio - net of gain 112,290 205,736 Acquisition of finance receivables, net of buybacks -- (100,444) Collections applied to principal on finance receivables 140,687 114,205 (Increase) Decrease in Prepaid expenses & exchange account -- 97,763 (Decrease) Increase Accounts payable - Trade -- (63,539) (Decrease) Increase Accrued Expenses 125,843 18,119 (Decrease) Increase preferred dividend payable (10,000) -- (Decrease) in note payable payable (15,000) -- (Decrease) Increase in Income Taxes -- (18,455) ----------- ----------- Net cash provided by (used in) operating activities 286,438 301,295 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Repurchase of warrants (102,600) (10,000) ----------- ----------- Net cash provided by (used in) financing activities (102,600) (10,000) NET INCREASE (DECREASE) IN CASH 183,838 291,295 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 212,424 486,124 ----------- ----------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 396,262 $ 777,419 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Issuance of Common Stock for: Conversion of notes payable $ 16,897 $ 5,000 =========== ===========
The accompanying notes are an integral part of the condensed consolidated financial statements 8 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 AND 2004 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. THE COMPANY AND PRESENTATION The condensed consolidated unaudited interim financial statements included herein have been prepared by Receivable Acquisition and Management Corporation and Subsidiaries (the "Company"), formerly Feminique Corporation and Subsidiaries without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the September 30, 2005 audited consolidated financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year. The management of the Company believes that the accompanying unaudited condensed consolidated financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations, changes in stockholders' equity (deficit), and cash flows for the periods presented. On November 25, 2003, the Company incorporated a wholly owned subsidiary Receivable Acquisition and Management Corp of New York ("Ram"). This corporation plans to purchase, manage and collect defaulted consumer receivables. On April 21, 2004, the Company 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 the Company's shareholders at its April 20, 2004 annual meeting. 9 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2005 AND 2004 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. FINANCE RECEIVABLES The Company on December 15, 2003, acquired defaulted consumer receivable portfolios for $569,071 with a face value of $15,985,138. Another portfolio with face value of $18,944,048 was acquired for $331,501. 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. The Company acquired on April 19, 2004 a third portfolio with a face value of $447,390 for $31,317. The Company will use for this third portfolio the "Recovery Method" for revenue recognition under which no revenue is recognized until the investment amount of $31,317 has been recovered. The Company on September 16, 2004 put $97,763 on deposit for the fourth portfolio. However, the Company did not take possession of the portfolio and received a full refund in October 2004. The Company acquired on October 10, 2004 a new portfolio with a face value of $2,107,132 for $100,444. The Company will use for this portfolio the "Recovery Method" for revenue recognition under which no revenue is recognized until the investment amount of $100,444 has been recovered. On November 23, 2004 the Company sold the portfolio with an original face value of $18,944,048 and an acquisition price of $331,051 for a sales price of $293,250. The Company recognized a gain of $87,514 on the sale. The carrying value of the portfolio at the time of sale was $205,736. During the quarter ending March 31, 2005, the Company acquired portfolios for $487,280. The Company will use for these portfolios the "Recovery Method" for revenue recognition under which no revenue is recognized until the investment amount of $487,280 has been recovered. The Company acquired on April 11, 2005 a portfolio with a face value of $5,500,000 for $375,000. The Company will apply the "Recovery Method" for revenue recognition under which no revenue is recognized until the investment amount of $375,000 has been recovered. 10 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2005 AND 2004 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. FINANCE RECEIVABLES (CONTINUED) The Company acquired the fourth tranche of a forward flow on June 2, 2005 with a face value of $619,275 for $37,660. The Company will apply the "Recovery Method" for revenue recognition under which no revenue is recognized until the investment amount of $37,660 has been recovered. During the quarter ending June 30, 2005, the Company acquired total portfolios for $412,660. The Company will use for these portfolios the "Recovery Method" for revenue recognition under which no revenue is recognized until the investment amount of $412,660 has been recovered. On July 12, 205, the Company sold the portfolio with an original face value of $3,674,498 and an acquisition price of $233,330 for a sales price of $168,767. The Company will recognize a loss in the fourth quarter. The Company retained approximately $92,000 in face value of paying accounts. During the quarter ending September 30, 2005, the Company acquired total portfolios for $239,162. The Company will use for these portfolios the "Recovery Method" for revenue recognition under which no revenue is recognized until the investment amount of $239,162 has been recovered. On November 22, 2005 the Company sold a portfolio with an acquisition price of $172,827 for $112,290. The Company recognized a loss of $5,409 on the sale. 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. 11 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2005 AND 2004 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. FINANCE RECEIVABLES (CONTINUED) Changes in finance receivables for the three months ended December 31, 2005 were as follows: Three Months Ended December 31, 2005 ------------------ Balance at beginning of period October 1, 2005 $ 832,312 Acquisition of finance receivables Cash collections applied to principal (140,687) Sale of portfolio - net of gain (112,290) ------------------ Balance at the end of the period $ 579,335 ================== Estimated Remaining Collections ("ERC") * $ 2,253,000 ================== o 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 $76,137 and $113,744 for the three months ending December 31, 2005 and 2004, respectively. NOTE 1- C. PRINCIPLES OF CONSOLIDATION The condensed 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 December 31, 2005. The Company maintains cash and cash equivalents balances at financial institutions that are insured by the Federal Deposit Insurance Corporation up to $100,000. At December 31, 2005 and 2004, the Company`s uninsured cash balances total $296,262 and $677,419, respectively. E. FURNITURE AND EQUIPMENT Furniture and equipment when acquired will be stated at cost. Depreciation will be provided using straight-line method over the estimated useful lives of the assets. Maintenance and repairs are charged to operations when incurred. When assets are sold or otherwise disposed of, the asset accounts and related accumulated depreciation accounts are relieved, and any gain or loss is included in operations. 12 F. 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. G. 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. H. STOCK-BASED COMPENSATION Employee stock awards under the Company's compensation plans are accounted for in accordance with Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees", and related interpretations. The Company provides the disclosure requirements of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), and related interpretations. Stock-based awards to non-employees are accounted for under the provisions of SFAS 123 and has adopted the enhanced disclosure provisions of SFAS No. 148 "Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of SFAS No. 123". The Company measures compensation expense for its employee stock-based compensation using the intrinsic-value method. Under the intrinsic-value method of accounting for stock-based compensation, when the exercise price of options granted to employees is less than the estimated fair value of the underlying stock on the date of grant, deferred compensation is recognized and is amortized to compensation expense over the applicable vesting period. In each of the periods presented, the vesting period was the period in which the options were granted. All options were expensed to compensation in the period granted rather than the exercise date. 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. I. 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. 13 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2005 AND 2004 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. EARNINGS PER SHARE OF COMMON STOCK Historical net income 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:
December 31, December 31, 2005 2004 -------------- -------------- Net income after payment of preferred dividend $ (67,382) $ 37,910 -------------- -------------- Weighted-average common shares Outstanding (Basic) 16,413,037 14,870,601 Weighted-average common stock Equivalents Stock options 950,000 950,000 Warrants 1,446,000 6,500,000 -------------- -------------- Weighted-average common shares Outstanding (Diluted) 18,809,037 22,320,601 ============== ==============
K. RECENT ACCOUNT PRONOUNCEMENTS In June 2001, the FASB issued Statement No. 142 "Goodwill and Other Intangible Assets". This Statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the consolidated financial statements. 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. This SOP would limit the revenue that 14 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 has decided on the early adoption of the application of this SOP. In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This statement is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatory redeemable financial instruments of nonpublic entities, if applicable. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. The adoption of this statement did not have a significant impact on the Company's results of operations or financial position. L. RECLASSIFICATION Certain amounts in the December 31, 2004 Financial Statements have been reclassified to conform to the 2005 presentation. NOTE 2- NOTES PAYABLE A. On October 2, 2003, the Company borrowed an additional $20,000 from Artemis Equity Hedge Fund Ltd, evidenced by a convertible promissory note bearing interest at 7% per annum. The note was due on or before March 30, 2004. This note is classified as a short-term note as the holder may convert at their discretion. The Company issued in May 2004, 100,250 shares of common stock to satisfy the debt. B. On December 11, 2003, the Company borrowed an additional $800,000 from Artemis Equity Hedge Fund Ltd, evidenced by a convertible promissory note bearing interest at 5% per annum. The note was due on or before March 31, 2004. This note is classified as a short-term Note as the holder may convert at their discretion. The note may be exchanged into convertible preferred stock with a 5% dividend. The preferred stock is convertible at $10 per share. The Company issued 80,000 shares of preferred stock in June 2004 to satisfy the debt. 15 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2005 AND 2004 NOTE 2- NOTES PAYABLE (CONTINUED) C. On January 29, 2004 the Company borrowed an additional $5,000 note bearing interest at 5% per annum. The note was convertible into common stock at $.20 per share. The Company issued in October 2004, 24,876 shares of common stock to satisfy the debt. D. On June 10, 2005, the Company agreed to repurchase 1,000,000 warrants at $.10 per warrant. The Company has paid $20,000 and will pay the remaining $80,000 over 16 months. The holder of the Note Payable owns 2,253,000 stock purchase warrants. The holder informed the Company that the holder will exercise all 2,253,000 stock purchase warrants at an exercise price of $0.0075 for a total exercise amount of $16,897. In lieu of payment the holder agreed to a $16,987 reduction in the Note Payable. The reduction in payment is effective if the Company continues to pay the holder $5,000 through July 2006 and a final payment in August of $3,102. The holder exercised the warrants on November 28 2005 and 2,253,000 shares of common stock were issued to reduce the note payable in the amount of $16,897. (See Note 5) NOTE 3- 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 December 31, 2005, the Company had 950,000 options outstanding under this plan. 16 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2005 AND 2004 NOTE 4- INCOME TAXES The income tax accounting reported within these statements is summarized as follows: December 31, December 31, 2005 2004 ------------ ------------ Provision Current: Federal $ -- $ (9,625) State and Local -- (10,958) ------------ ------------ Total Current -- (20,583) Deferred -- -- ------------ ------------ Total provision for income taxes $ -- $ (20,583) ============ ============ The Company's effective tax rate is different than what would be expected if the statutory rates were applied to "net income (loss) before income taxes" primarily because of expenses deductible for financial reporting purposes that are not deductible for tax purposes allowed. There was no provision for income tax for the three months ended December 31, 2005. At December 31, 2005 the Company had accumulated deficit approximating $70,772, available to offset future taxable income through 2023. December 31, 2005 ------------ Deferred tax assets $ 21,232 Less: valuation allowance (21,232) ------------ Total $ -- ============ 17 RECEIVABLE ACQUISITION AND MANAGEMENT CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2005 AND 2004 NOTE 5- STOCK HOLDERS' EQUITY (Equity) There were 325,000,000 shares of common stock authorized, with 17,808,917 and 14,870,601 shares issued and outstanding at December 31, 2005 and 2004, respectively. The par value for the common stock is $.001 per share. The following details the stock transactions for the years ended September 30, 2005 and 2004. The Board of Directors approved a 1 for 15 reverse stock split at the shareholders meeting on April 21, 2004. The September 30, 2004 shares have been retroactively restated to reflect the reverse stock split. The Company issued 827,067 shares of common stock at $0.1995 per share in May 2004 to discharge a shareholder's loan of $165,000. The Company issued 100,250 shares of common stock at $0.1995 per share in May 2004 to discharge a $20,000 loan from Artemis Equity Hedge Fund. On January 21, 2004 the Company entered into an agreement to acquire General Outsourcing Services, Inc., a corporation owned by the Chairman of the Company. The Company issued 4,230,000 shares at $0.0014 per share in June 2004 in consideration of this agreement. On January 22, 2004 the Company entered into an employment agreement with its President and CEO, Max Khan to issue 4,300,000 shares. The company issued 4,300,000 shares of common stock at $.0014 per share in June 2004 as employment compensation for Mr. Max Khan. The Company issued 388,408 shares of common stock in exchange for consulting services. The 388,408 shares of common stock were issued at $0.0014 per share as payment for consulting services. The Company issued 24,876 shares of common stock at $.20 per share in October 2004 to discharge a shareholders' loan of $5,000. The Company issued 200,000 shares of common stock at $.008 per share in February 2005 as a conversion of warrants into common stock. The Company repurchased 14,684 shares of common stock on June 24, 2005. The shares will be retired in August 2005. Currently, the purchase is accounted for as a prepaid asset. The shares were repurchased for $.10 per share for a total amount of $1,468. The Company received $3,750 for the exercise of 500,000 warrants at $.0075 per share of common stock in June 2005. The Company will issue 500,000 shares of common stock in August 2005. The Company issued to the holder of the note payable, 2,253,000 shares of common stock at $0.0075 per share on November 28, 2005 as a conversion of warrants into common stock. In lieu of payment in the amount of $16,897 the shares were purchased through a $16,897 reduction of the note payable. (See Note 2. D) 18 The Company repurchased 201,000 warrants at a price of $0.10 per warrant on November 18, 2005. The total repurchase price was $20,100. The Company repurchased 500,000 warrants at a price of $0.125 per warrant on November 18, 2005. The total repurchase price was $62,500. The Company repurchased 200,000 warrants at a price of $0.10 per warrant on November 18, 2005. The total repurchase price was $20,000. PREFERRED STOCK There were 10,000,000 shares of preferred stock authorized, with 80,000 issued an outstanding as of December 30, 2005 and 2004. The par value for the preferred shares is $10 per share. ITEM 2. MANAGEMENTS'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report on Form 10-K as of and for the year ended September 30, 2004 as filed with the Securities and Exchange Commission. Cautionary Statements Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995: This report contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks, uncertainties and assumptions that, if they never materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements, including statements regarding overall trends, gross margin trends, operating cost trends, liquidity and capital needs and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. The risks, uncertainties and assumptions referred to above may include the following: o changes in the business practices of credit originators in terms of selling defaulted consumer receivables or outsourcing defaulted consumer receivables to third-party contingent fee collection agencies; o ability to acquire sufficient portfolios; o ability to recover sufficient amounts on acquired portfolios; o a decrease in collections if bankruptcy filings increase or if bankruptcy laws or other debt collection laws change; o changes in government regulations that affect the Company's ability to collect sufficient amounts on its acquired or serviced receivables; 19 o the Company's ability to retain the services of recovery partners; o changes in the credit or capital markets, which affect the Company's ability to borrow money or raise capital to purchase or service defaulted consumer receivables; o the degree and nature of the Company's competition; and o our ability to respond to changes in technology and increased competition; o the risk factors listed from time to time in the Company's filings with the Securities and Exchange Commission. Overview The Company is now engaged in purchase and recovery of defaulted consumer receivables. These receivables are acquired at deep discounts and outsourced for collections on a contingency basis. The Company also manages Ramco Income Fund, Ltd, a Bermuda domiciled mutual fund with $3.1 million in invested capital. The Company continues to seek additional capital to invest into additional portfolios. The Company also manages two SPV structures with approximately $4.5 million under management. RESULTS OF OPERATIONS Overview The company continues to execute its long term strategy. With several relationships in place with debt sellers, the company is now in discussions with several lenders for a credit facility which will allow us to acquire larger portfolios. The following table summarizes collections, revenues, operating expenses, income before taxes and fully diluted net income.
Three Months Ended December 31 ------------------------------------------------------------- 2005 2004 $ Change % Change ------------------------------------------------------------- Net Collections (excluding sale) $ 265,544 $ 208,245 Finance Income $ 76,137 $ 113,744 ($ 37,607) -49% as a % of Collections 29% 54.62% Servicing Income $ 44,108 $ 29,977 $ 14,131 Gain on Sale ($ 5,409) $ 87,514 $ 87,514 Operating Expenses $ 172,473 $ 163,343 $ 9,130 6% Income Before Taxes ($ 67,382) $ 68,493 ($ 135,875) 198%
20 Revenue The company generated $120,245 in revenue during the quarter ended December 31, 2005 versus $231,235 for quarter ended December 31, 2004. Total revenue included $76,137 in finance income in the quarter ended December 31, 2005 versus $113,744 finance income during the quarter ended December 31, 2004; loss of $5,409 from portfolio sale in the quarter ended December 31, 2005 versus gain of $87,514 from portfolio sale during the quarter ended December 31, 2004 and $44,108 servicing income of $44,108 during the quarter ended December 31, 2005 versus $29,977 in the quarter ended December 31, 2004. Finance income was lower during the quarter during the quarter ended December 31, 2005 because the Company is applying accretion method to only two portfolios. During the quarter ended December 31, 2005, excluding proceeds of $ 112,290 from the sale of one portfolio, the Company collected $265,544 versus $208,245 and portfolio sale of $293,250 during the quarter ended December 31, 2004. The Company recognized only $76,137 in finance income in the quarter ended December 31, 2005 versus $113,744 in finance income during the quarter ended December 31, 2004. As a percentage, finance income recognized was 29% of total net cash collections during the quarter ended December 31, 2005 versus 55% of total cash collected during the quarter ended December 31, 2004. Operating Expenses Total operating expenses were $172,473 for the three months ended December 31, 2005 versus $163,343 for the three months ended December 31, 2004. The operating expenses, excluding legal fees, were in line with expectations. For the three months ended December 31, 2005 and 2004, legal and accounting expenses were $42,900 and $31,000 respectively. The Company continues to incur expenses related to Allied litigation. The Company reached a settlement agreement on December 12, 2005 which was finalized on February 10, 2006. The company does not expect the overall expenses to rise materially for the remainder of the year. Rent and Occupancy Rent and occupancy expenses were $7,965 for the three months ended December 31, 2005 versus $8,500 for the Quarter ended December 31, 2004. Depreciation The Company did not record any depreciation expense for the three months ended December 31, 2004. Purchase of defaulted receivables During the three months ended December 31, 2005, the Company acquired defaulted consumer receivables portfolios with aggregate face value amount of $1,242,503 at a cost of $80,000. As a part of its strategy, the Company does not do any in-house collection, but outsources collection to carefully selected specialist debt collection agencies. The Company is currently working with three collection agencies on a contingency basis. The contingency fees in the collections industry ranges from 20% to 50% depending on the age of receivables. The Company has backup agencies in place for redundancy purposes. 21 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 December 31, 2005.
Purchase Period Purchase Price(1) Actual Cash Collections (2) Estimated (3) 12/31/2003 $ 569,070 $ 1,419,089 $ 360,381 4/19/2004 $ 31,317 $ 29,868 $ 33,353 12/31/2004 $ 100,444 $ 104,651 $ 142,441 2/28/2005 $ 81,076 $ 67,501 $ 115,977 1/25/2005(4) $ 233,330 $ 205,210 $ 33,690 3/11/2005(5) $ 172,872 $ 48,611 $ 33,000 4/11/2005 $ 375,000 $ 115,603 $ 561,539 6/2/2005 $ 37,660 $ 26,616 $ 74,444 7/25/2005 $ 177,668 $ 91,189 $ 308,564 9/28/2005 $ 61,974 $ 13,728 $ 141,207 12/28/2005 $ 80,000 $ 17,721 $ 222,279
(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 or sale. (3) Total estimated collections refer to the actual cash collections, including cash sales, plus estimated remaining collections. The Company will take an impairment charge if the actual recoveries fall short of expected recoveries. (4) The Portfolio was sold in July for $168,767 and paying accounts with a face value of $92,000 were retained. (5) The Portfolio was sold in November for $112,290 and paying accounts with a face value of $33,000 was retained. When the Company acquires a portfolio of defaulted receivables, it estimates the expected recovery of the portfolio. A 36 to 60 month projection of cash collections is created for each portfolio. Only after the portfolio has established probable and estimable performance in excess of projections will the accretable yield be increased and recognized as revenue. If actual cash collections are less than the original forecast, the Company will take an impairment charge. Collection activities commence within 30 days of purchase, which allows for adequate time to scrub the portfolio for deceased, settled, incarcerated and bankruptcy filed accounts. Recovery Partners The Company outsources all its recovery activities to carefully selected debt collection agencies and network of collection attorneys with specific collection expertise. The company is currently using seven collection agencies and several law firms in the U.S. and U.K. The average contingent collections fee is 30% which rises during the later years of recovery. 22 Seasonality Collections tend to be higher in the first and second quarters of the year and lower in the third and fourth quarter of the year, due to consumer payment patterns in connection with seasonal employment, income tax refunds and holiday spending habits. Currency Risk The Company plans to acquire defaulted receivable portfolios in the United Kingdom and such purchase may expose the company to adverse currency risks. Liquidity and Capital Resources As of December 31, 2005 the Company had working capital of $354,072 versus working capital of $848,450 as of December 31, 2004. Working capital was lower during the quarter ended December 31, 2005 versus the quarter ended December 31, 2004 which was boosted by a large portfolio sale and conversion of all outstanding debt into equity. The company also spent approximately $100,000 to buyback approximately 900,000 warrants during the quarter ended December 31, 2005. The Company believes that funds generated from operations, together with existing cash will be sufficient to finance its operations for the foreseeable future. During the three months ended December 31, 2005, cash flow from operations was $286,438 versus $301,295 in the quarter ended December 31, 2004. Our primary investing activity to date has been the purchase of charged-off consumer receivable portfolios. During the quarter ended December 31, 2005, we invested $80,000 in a portfolio with a face value of $1,242,000 and is a part of a forward flow arrangement that we have with the seller. Cash generated from operations is depended upon the Company's ability to collect on its defaulted consumer receivables. Many factors, including the economy, purchase price and the Company's ability to retain the services of its recovery partners, are essential to generate cash flows. Fluctuations in these factors that cause a negative impact on the Company's business could have a material negative impact on its expected future cash flows. During the quarters ended December 31, 2005 and 2004, the Company generated approximately $377,834 and $501,341 respectively from collections and portfolio sale, net of contingency fee. The Company continues to seek additional capital that would allow the company to make larger portfolio acquisitions in the near future. There is no assurance that the Company would be successful in raising the capital. Income Taxes We did not record any income tax provision for the quarter ended December 31, 2005 versus $20,583 for the quarter ended December 31, 2004. Contractual Obligation The Company has a 12 month lease with H&Q Global Services at $2,915 per month plus variable expenses that include telecommunication, copier, postage and delivery charges. Market Outlook for Charged-off Receivables Recently there has been a substantial inflow of capital into this business which has resulted in significant increase in prices paid. We expect that over time, many of these new entrants to the market, whose business model may be based on less than a multi-disciplined approach to purchasing and collecting, will not generate the returns they anticipated. This may then reduce their ability to access capital and potentially may require them to sell their remaining portfolios and exit the market. Also, the sellers are increasing turning to large buyers that has hampered our ability to invest our available cash. 23 Critical Accounting Policy 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. RISK FACTORS IN ADDITION TO OTHER INFORMATION IN THIS REPORT, YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS CAREFULLY. THESE RISKS MAY IMPAIR THE COMPANY'S OPERATING RESULTS AND BUSINESS PROSPECTS AS WELL AS THE MARKET PRICE OF THE COMPANY'S COMMON STOCK. PENNY STOCK REGULATIONS AND REQUIREMENTS FOR LOW PRICED STOCK The SEC adopted regulations which generally define a "penny stock" to be any non-Nasdaq equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Based upon the price of the Common Stock as currently traded on the NASDAQ Bulletin Board, the Company's Common Stock is subject to Rule 15g-9 under the Exchange Act which imposes additional sales practice requirements on broker-dealers which sell securities to persons other than established customers and "accredited investors." For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received a purchaser's written consent to the transaction prior to sale. Consequently, this rule may have a negative effect on the ability of stockholders to sell common shares of the Company in the secondary market. ITEM 3. CONTROLS AND PROCEDURES As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and principal financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under 24 the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II OTHER INFORMATION ITEM 1. 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: 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. 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 compliant 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 25 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. On September 9, 2005 the Company filed a complaint with the Supreme Court of the State of New York - County of New York against Triton Capital, Inc., Southern Capital Associates, Inc., JMS Collections, LLC., Wendt Law Office, James Roscetti, and Dave Dwyer for breach of contract, conversion, deceptive business practices and unjust enrichment. The Company is seeking an amount no less than $46,931. ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS The holder of the Note Payable was issued 2,253,000 stock purchase warrants. The holder informed the Company that it intended to exercise all 2,253,000 stock purchase warrants at an exercise price of $0.0075 for a total exercise amount of $16,897. In lieu of payment, the holder agreed to a $16,987 reduction in the Note Payable. The reduction in payment is effective if the Company continues to pay the holder $5,000 through July 2006 and a final payment in August of $3,102. The holder exercised the warrants on November 28 2005 and 2,253,000 shares of common stock were issued to reduce the note payable in the amount of $16,897. The Company repurchased 201,000 warrants at a price of $0.10 per warrant on November 18, 2005. The total repurchase price was $20,100. The Company repurchased 500,000 warrants at a price of $0.125 per warrant on November 18, 2005. The total repurchase price was $62,500. The Company repurchased 200,000 warrants at a price of $0.10 per warrant on November 18, 2005. The total repurchase price was $20,000. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable. ITEM 5. OTHER INFORMATION Not Applicable ITEM 6. EXHIBITS Exhibits: Exhibit Number Description ------ ----------- 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 26 SIGNATURES In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed by the undersigned, thereunto duly authorized. RECEIVABLE ACQUISITION & MANAGEMENT CORPORATION Date: February 10, 2006 By: /s/ Max Khan ------------------------------------ Max Khan Chief Executive Officer Chief Financial Officer Director In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: /s/ Max Khan ---------------------------------------- By: Max Khan Chief Executive Officer, Chief Financial Officer and Director Date: February 10, 2006 27 EX-31.1 2 v035679_ex31-1.txt EXHIBIT 31.1 Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. I, Max Khan, the Chief Executive Officer and Chief Financial Officer of Receivable Acquisition & Management Corporation, certify that: 1. I have reviewed this annual report on Form 10-QSB of Receivable Acquisition & Management Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any changes in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's Board of Directors (or persons performing the equivalent function): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. 28 Dated: February 10, 2006 /s/ Max Khan -------------------- By: Max Khan Chief Executive Officer, Chief Financial Officer Director 29 EX-32.1 3 v035679_ex32-1.txt EXHIBIT 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. In connection with the annual report of Feminique Corporation (the "COMPANY") on Form 10-QSB for the period ended December 31, 2005 as filed with the SEC on the date hereof (the "REPORT"), I hereby certify, in my capacity as an officer of the Company, for purposes of 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Max Khan --------------------------- By: Max Khan Chief Executive Officer, Chief Financial Officer Director DATE: February 10, 2006 30 -----END PRIVACY-ENHANCED MESSAGE-----