Attached files
| file | filename |
|---|---|
| EX-32.1 - EX-32.1 - EMPERIAL AMERICAS, INC | v222916_ex32-1.htm |
| EX-31.1 - EX-31.1 - EMPERIAL AMERICAS, INC | v222916_ex31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2011
Or
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________ to _________
___________________________________
Commission File Number 333-153679
___________________________________
AAA PUBLIC ADJUSTING GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Florida
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26-0325410
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(State or other jurisdiction or incorporation or
organization)
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(I.R.S. Employer Identification No.)
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1926 Hollywood Blvd, Suite 100 Hollywood
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33020
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: 954-894-0043
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller Reporting Company 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
The registrant had 104,872,980 of Common stock outstanding as of March 31, 2011.
AAA PUBLIC ADJUSTING GROUP, INC
TABLE OF CONTENTS
March 31, 2011
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Page
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Consolidated Financial Statements
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Balance Sheets
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2
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Statements of Revenues and Expenses
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3
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Statements of Cash Flows
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4
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Notes to Financial Statements
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5 - 12
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AAA PUBLIC ADJUSTING GROUP, INC
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2011 AND DECEMBER 31, 2010
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March 31,
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December 31,
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2011
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2010
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(unaudited)
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Assets
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Current Assets
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Cash and cash Equivalents
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$ | 20,612 | $ | 4,174 | ||||
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Accounts receivable – net
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69,788 | 69,100 | ||||||
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Prepaid expense
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2,530 | 3.392 | ||||||
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Total current assets
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92,930 | 76,666 | ||||||
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Property, plant, and equipment - net
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21,607 | 25,255 | ||||||
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Total Assets
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$ | 114,537 | $ | 101,921 | ||||
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Liabilities and Stockholders' Equity
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Current Liabilities
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Notes payable, vehicle - current portion
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$ | 12,677 | $ | 12,912 | ||||
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Note payable
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5,000 | 5,000 | ||||||
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Accounts payable and accrued liabilities
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186,260 | 85,787 | ||||||
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Deferred compensation
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135,509 | 100,000 | ||||||
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Accounts payable to insured
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15,997 | 12,645 | ||||||
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Total current liabilities
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355,443 | 216,344 | ||||||
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Long Term Liabilities
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Notes payable,vehicle - net of current
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17,046 | 19,936 | ||||||
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Total long term liabilities
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17,046 | 19,936 | ||||||
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Total Liabilities
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372,489 | 236,280 | ||||||
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Stockholders' Equity (Deficiency)
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Preferred Stock, 20,000,000 shares authorized, no shares issued
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- | .. | ||||||
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Common Stock, 250,000,000 shares authorized at $.0001 par, 104,872,980, and 103,747,980 shares issued and outstanding at March 31, 2011 and December 31, 2010
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10,487 | 10,375 | ||||||
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Additional paid in capital
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178,101 | 149,713 | ||||||
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Stock subscription receivable
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(1,500 | ) | (1,500 | ) | ||||
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Accumulated Deficit
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(445,040 | ) | (292,947 | ) | ||||
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Total Stockholders' Equity (Deficiency)
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(257,952 | ) | (134,359 | ) | ||||
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Total Liabilities and Stockholders' Equity (Deficiency)
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$ | 114,537 | $ | 101,921 | ||||
The accompanying notes are an integral part of the financial statements
- 2 -
AAA PUBLIC ADJUSTING GROUP, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE 3 MONTHS ENDED MARCH 31, 2011 AND, 2010
(unaudited)
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2011
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2010
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Revenues (net)
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$ | 131,193 | $ | 150,118 | ||||
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Operating Expenses:
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Commissions to adjusters
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80,348 | 99,165 | ||||||
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Consulting services – other
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- | 1.275 | ||||||
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Compensation
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127,195 | 45,719 | ||||||
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Other general and administrative expenses
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74,343 | 46,629 | ||||||
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Total operating expenses
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281,886 | 192,788 | ||||||
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Profit (Loss) from operations
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(150,693 | ) | (42,670 | ) | ||||
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Other income (expense)
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Interest (expense)
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(1,400 | ) | (1,324 | ) | ||||
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Net Income/(Loss) Before Income Taxes
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(152,093 | ) | (43,994 | ) | ||||
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Provision for income tax
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- | - | ||||||
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Net Income/(Loss)
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$ | ( 152,093 | ) | $ | (43,994 | ) | ||
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Net income (loss) per common share, basic
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$ | (0.00 | $ | 0.00 | ||||
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Weighted average number of common shares outstanding
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103,860,480 | 90,240,480 | ||||||
The accompanying notes are an integral part of the financial statements
- 3 -
AAA PUBLIC ADJUSTING GROUP, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 3 MONTHS ENDED MARCH 31, 2011 AND, 2010
(unaudited)
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2011
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2010
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Cash Flows From Operating Activities:
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Net Income (Loss)
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$ | (152,093 | ) | $ | (43,994 | ) | ||
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Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By (Used in) Operating Activities:
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Depreciation
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3,648 | 7,408 | ||||||
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Change in operating assets and liabilities:
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(Increase) Decrease in accounts receivable
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(688 | ) | (18,721 | ) | ||||
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(Increase) Decrease in prepaid expenses
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862 | - | ||||||
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Increase in deferred compensation
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35,509 | 25,000 | ||||||
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Increase (Decrease) in accounts payable and accrued liabilities
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103,825 | 33,628 | ||||||
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Net Cash Provided (Used In) Operating Activities
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$ | (8,937 | ) | $ | 3,321 | |||
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Cash Flows From Investing Activities:
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Net Cash Provided (Used) in Investing Activities
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- | - | ||||||
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Cash Flows From Financing Activities:
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Repayment of notes payable
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( 3,125 | ) | (4,726 | ) | ||||
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Sale of Common stock
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28,500 | - | ||||||
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Net Cash Provided (Used) in Financing Activities
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25,375 | (4,726 | ) | |||||
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Net increase (decrease) in Cash and Cash Equivalents
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16,438 | (1,405 | ) | |||||
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Cash and Cash Equivalents at beginning of period
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4,174 | 12,404 | ||||||
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Cash and Cash Equivalents at end of period
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$ | 20,612 | $ | 10,999 | ||||
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Other Cash Flow Items:
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Cash payments for:
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Income tax
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$ | - | $ | - | ||||
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Interest expense
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$ | 1,404 | $ | 1,324 | ||||
The accompanying notes are an integral part of the financial statements
- 4 -
AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
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NOTE 1 -
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Organization
AAA Public Adjusting Group, Inc was incorporated on October 05, 2007 in the state of Florida. AAA Public Adjusting Group, Inc was formerly Florida Claims Consultants, LLC formed on March 3, 2004 in the state of Florida. On October 22, 2007, AAA Public Adjusting Group, Inc consummated an agreement with Florida Claims Consultants, LLC, pursuant to which Florida Claims Consultants, LLC, exchanged all of its Members’ interest for 60,000,000 shares of common stock of AAA Public Adjusting Group, Inc. The Company has accounted for the transaction as a combination of entities under common control and accordingly, recorded the merger at historical cost. The consolidated, historical financial statements have been appropriately re-stated.
The operation’s of the Company is to facilitate insurance claims by insured parties by representation on their behalf with the insurance companies.
Basis of Accounting
The books and records of the Company are maintained on the accrual basis of accounting which recognizes revenues when earned, regardless of when received and expenses when incurred, regardless of when paid, which is in accordance with generally accepted accounting principles.
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. As such, not all of the information and footnotes required by generally accepted accounting principles for complete financial statements have been presented. These consolidated financial statements should be read in conjunction with the financial statements and related footnotes for the year ended on December 31, 2010. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. The results of operations for three months ended March 31, 2011 are not necessarily indicative of the results for the full fiscal year ended December 31, 2011.
Principles of Consolidation
The consolidated financial statements include the accounts of AAA Public Adjusting Group, Inc. and its wholly owned subsidiary Florida Claims Consultants, LLC. All inter-company transactions and balances have been eliminated in the consolidated financial statements.
- 5 -
AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
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NOTE 1 -
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
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Net loss per share
Net income per share is computed by dividing the net income by the weighted average number of shares outstanding during the period. Net income per share, diluted, is not presented as no potentially dilutive securities are outstanding.
Income Taxes
Income taxes are accounted for under the asset and liability method as stipulated by Accounting Standards Codification (“ASC”) 740 formerly Statement of Financial Accounting Standards (”SFAS”) No. 109, “Accounting for Income Taxes”. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management’s view it is more likely than not (50%) that such deferred tax will not be utilized.
Effective January 1, 2009, the Company adopted certain provisions under ASC Topic 740, Income Taxes, (“ASC 740”), which provide interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Effective with the Company’s adoption of these provisions, interest related to the unrecognized tax benefits is recognized in the financial statements as a component of income taxes. The Adoption of ASC 740 did not have an impact on the Company’s financial position and results of operations.
In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimate. As of March 31, 2011, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. The Company’s tax returns are subject to examination by the federal and state tax authorities for the years ended 2006 through 2010.
- 6 -
AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
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NOTE 1 -
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
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Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and equivalents
The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents.
Revenue Recognition
The Company recognizes revenues when fees due to the company are reasonably assured to be collected from: our client (the insured) or by the insured’s insurance carrier and not before. Collectability is not ensured until receipt of fees.
Fair Value of Financial Instruments
The Company’s financial instruments include cash, accounts receivable, and accounts payable. Due to the short-term nature of these instruments, the fair value of these instruments approximates their recorded value.
Advertising
Advertising costs, which are included in selling, general and administrative expenses, are expensed as costs are incurred. Advertising expenses for the three months ended March 31, 2011 and 2010 were $360 and $1,190 respectively.
Subsequent Events
In May 2009, the FASB issued SFAS No. 165, (ASC 855) “Subsequent Events” which offers assistance to the established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance requires disclosure of the date through which events subsequent to the Balance Sheet date have been evaluated and whether that date represents the date the financial statements were issued or available to be issued. Subsequent events have been evaluated through the date financial statements were available to be issued.
- 7 -
AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
NOTE 2 - GOING CONCERN
As shown in the accompanying financial statements, the Company incurred a net loss for the three months ended March 31, 2010 of $152,093, a $185,229 net loss for the year ending December 31, 2010, and cumulative losses since inception are approximately $445,000. The Company has a working capital deficit at March 31, 2011 of $262,513. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support its operations. This raises substantial doubt about the Company’s ability to continue as a going concern. Management states that they are confident that they can improve operations and raise the appropriate funds to grow their underlying business. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
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NOTE 3 -
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PROPERTY AND EQUIPMENT
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Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective periods. Depreciation is computed over the estimated useful lives of the related asset (from 5 - 7 years) using the straight-line method for financial statement purposes.
The following is a summary of property and equipment at March 31, 2011 and December 31, 2010:
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March 31,
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Dec. 31,
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2011
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2010
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| Office furniture & equipment | $ | 26,270 | $ | 26,270 | ||||
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Computer equipment
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14,729 | 14,729 | ||||||
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Leasehold improvements
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2,469 | 2,469 | ||||||
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Vehicles
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81,009 | 81,009 | ||||||
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Total equipment
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124,477 | 124,477 | ||||||
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Less accumulated depreciation
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102,870 | 99,222 | ||||||
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Net Property and Equipment
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$ | 21,607 | $ | 25,255 | ||||
Depreciation expense for the three months ended March 31, 2011 and 2010 was $3,648 and $7,408 respectively.
- 8 -
AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
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NOTE 4 -
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LEASE COMMITMENTS
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The Company renewed their office in Hollywood, Florida through April 30, 2012 at a minimum annual rent of $ 12,720 (payable monthly) inclusive of related sale taxes and utilities. The remaining lease obligations are:
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2011
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$ | 9,540 | ||
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2012
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4,240 | |||
| $ | 13,780 |
Rent expense for the three months ended March 31, 2011 and 2010 was $3,180 and $7,452 respectively.
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NOTE 5 -
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NOTES PAYABLE-Vehicles
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Notes payable consists of the following:
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Notes payable to financial institutions in monthly installments of $ 517 including interest at 9.79% to maturity on February 1, 2012. The note is collateralized by an automobile
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$ | 5,418 | ||
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Notes payable to financial institutions in monthly installments of $ 740 including interest at 7.74% to maturity on May 13, 2014. The note is collateralized by an automobile
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24,305 | |||
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Total Notes Payable
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$ | 29,723 |
The future scheduled payments of notes payable are:
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2011
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$ | 12,677 | |||||
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2012
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9,383 | ||||||
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2013
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7,663 | ||||||
| $ | 29,723 |
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NOTE 6 -
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NOTES PAYABLE-Investor
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March 31,
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Dec. 31,
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2011
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2010
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Note payable - $15,000 initial principle, interest at 16% plus $5,000, maturity extended to March 14, 2011 pursuant to a $5,000 renegotiation fee, and informally extended to June 14, 2011.
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$ | 5,000 | $ | 5,000 | ||||
- 9 -
AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
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NOTE 7 -
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CONCENTRATION OF RISK
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The Company did not have funds in excess of the $ 250,000 Federal Deposit Insurance Corporation’s (FDIC) insured limits. The company has funds on deposit with a major bank and does not believe that there is a concentration of risk factor. There is no concentration of risk regarding accounts receivable, as any single receivable is not material and there are offsetting related payables.
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NOTE 8 -
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ACCOUNTS RECEIVABLE and OFFSETTING PAYABLES
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Accounts receivable reflects net funds due the company for its services and gross funds due the company and which are offset by any funds due to the insured. These “net” receivables are offset by related commission payments to adjusting agents. The insured clients and adjusting agents are not paid until the company has received appropriate compensation. Related balances at March 31, 2011 and December 31, 2010 were:
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March 31,
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December 31,
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2011
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2010
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Total funds receivable
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$ | 69,789 | $ | 69,100 | ||||
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Payable to insured
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(15,997 | ) | (12,645 | ) | ||||
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Payable to adjusting agents
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(31,014 | ) | (37,389 | ) | ||||
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Net
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$ | 22,778 | $ | 19,066 | ||||
Allowances for doubtful accounts for the periods ended March 31, 2011 and December 31, 2010 was $560 and $5,723 respectively. This allowance is net of offsetting payables to insured clients, adjusting agents and related expenses.
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NOTE 9-
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CAPITAL TRANSACTIONS
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On February 11, 2011, the Company raised the authorized shares of common stock, pursuant to Florida code, section 607.10025, to two hundred fifty million (250,000,000) shares and authorized a 15 to 1 forward, stock split effective March 18, 2011. This forward stock split has been retroactively reflected in the financial statements.
In March 2011, 1,125,000 shares of common stock was sold for $28,500.
- 10 -
AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
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NOTE 10-
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DEFERRED COMPENSATION
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Commencing in the first quarter 2010, some officers’ salaries are being deferred until there is sufficient working capital. Deferred compensation at March 31, 2011 and December 31, 2010 was $135,509 and $100,000, respectively.
On February 10, 2011 Frederick Antonelli resigned as President and CEO and remains a Director and employee. Christopher Lombardi was named President and CEO with an annual salary of $75,000. The $75,000 salary is to be deferred until the company has sufficient working capital.
On March 25, 2011, the company executed a master convertible note agreement, effective April 1, 2011. This agreement allows for the conversion of deferred salary into debt, at a 5% interest rate, no specific maturity date and for the conversion of related debt into shares of common stock at a 25% discounted price of the 5 day average closing bid price prior to the day of execution.
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NOTE 11 -
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INCOME TAXES
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Prior to the merger in October, 2007, the Company was taxed as a limited liability company. As such, income taxes and loss benefits were recognized individually by the limited liability members.
For financial statement purposes for the periods ending March 31, 2011, and December 31, 2010 the reported provision for income taxes differs from the amount computed by applying the statutory U.S. Federal income tax rate of 34% to the loss before income taxes as follows:
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Federal income taxes at statutory rate
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34 | % | ||
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State tax rate, net of federal income tax
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4 | |||
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Offsetting Valuation Adjustment
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(38 | ) | ||
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Effective income tax rate
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0 | % |
As of March 31, 2011, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $360,000 that may be offset against future taxable income through 2026. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. No tax asset has been reported in the financial statements, due to the uncertainty that there is a 50% or greater chance the carry-forwards will expire unused. Accordingly, the potential tax benefits of the loss carry forwards are offset by a valuation allowance of the same amount.
- 11 -
AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
.
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NOTE 12 -
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EXPENSE RECOVERY
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The company is reimbursed by officers and employees for use of company vehicles.
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NOTE 13 -
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NEW ACCOUNTING PRONOUNCEMENTS
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A. ACCOUNTING STANDARDS CODIFICATION
The Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 105-10 in June 2009, to be effective September 15, 2009. This establishes the ASC codification as the single source of authoritative nongovernmental Generally Accepted Accounting Principles (GAAP). All existing accounting standards are superseded as described in FASB Accounting Standards Codification (SFAS) No. 168, aside from those issued by the SEC. All other accounting literature not included in the Codification is non-authoritative. Adoption of this Codification as of September 30, 2009, which is reflected in our disclosures and references to accounting standards, had no change to our financial position or results of operations.
B REVENUE RECOGNITION
The Financial Accounting Standard Board (FASB) in October 2009 issued Account Standards Update (ASU) 2009-13 Revenue Recognition (Topic 605). This update provides guidance for revenue recognition consideration in multiple-deliverable contractual arrangements. The update requires that a vendor determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This update will be effective after June 15, 2010, and early adoption is permitted.
The Company has implemented this update effective for the years beginning January 1, 2010 and does not believe that it would have a material impact on the financial statement for the year ending December 31, 2010, and subsequent reporting.
C STOCKHOLDER DISTRIBUTION
In January 2010 FASB issued ASU “Equity” (Topic 505), accounting for distributions to shareholders with components of stock and cash. This amendment affects entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders with a potential limitation in the total amount of cash that all shareholders can elect to receive in the aggregate. The Company does believe that implementation of this FASB would have a material effect on the financial statements.
- 12 -
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Business Overview
Our company is licensed by the Florida Department of Insurance as “public insurance adjusters.” A public insurance adjuster is an authority on loss adjustments that property owners can retain to assist in preparing, filing, and adjusting their insurance claims.
We are operated by claims professionals handling all types of insurance claims. AAA is committed to representing the client’s interest in evaluating and presenting a claim to the insurance company responsible for payment.
Our business is dedicated to representing client interests by maximizing and expediting their financial recovery and to make sure policy provisions are fully adhered to. Insurance companies have the benefit of their claims representatives estimating property damage, the property owner needs an advocate to ensure proper payment is made.
We believe the current economic environment will not materially or adversely affect our business. Our current cash position along with cash flow from continuing operations will be adequate to sustain operations into the foreseeable future.
Results of Operations – Three Months Ended March 31, 2011
Revenue
For the three months ended March 31, 2011 revenue was $131,193 compared with $150,118 for the three months ended March 31, 2010. This decrease of $18,925 or approximately 13% is primarily due to a reduction of settlement of prior years hurricane related claims.
Commission to Adjusters
Commission expenses for adjusters for the three months ended March 31, 2011 was $80,348 or approximately 61% of revenue compared with $99,165 or approximately 66% of revenue for three months ended March 31, 2010. This decrease is due to the reduction in related prior years revenues from hurricane related claims.
Consulting Services
Consulting expense for the three months ended March 31, 2011 was $0 compared to $1,275 for the three months ended March 31, 2010. In an effort to cut expenses we have drastically reduced the outsourcing for the Orlando market electing to handle these operations in house.
- 13 -
Compensation
Compensation expense for the three months ended March 31, 2011 was $127,195 compared to $45,719 for the three months ended March 31, 2010, an increase of $81,476 or 179%. The increase is primarily the result of an additional officer starting in February, 2011.In recognition of the working capital position, of the 2011 compensation $76,000 is accrued and to be paid in company stock and $35,509 is deferred. Both the 2011 salaries and the 2010 salaries have been deferred until such time as there is sufficient working capital.
Other General and Administration Expenses
For the three months ended March 31, 2011 other general and administration expenses were $74,343 compared to $46,629 for the three months ended March 31, 2010. This increase of $27,714 resulted from increase in legal fees attributable to “public company” expenses, net of cost reductions in advertising, rent, consulting, auto, and other expenses.
Net Income
The net loss for the three months ended March 31, 2011 was ($152,093) compared with a loss of ($43,994) for the three months ended March 31, 2010. This ($108.099) (248%) higher loss resulted from higher compensation and public company legal expenses net of lower net revenues and gross profits and operating cost reductions to conserve cash.
Liquidity and Capital Resources
On March 31, 2011, the Company had $20,612 in available cash, an increase of $16,438 from December 31, 2010. Net cash provided by operating activities decreased $21,586 due to lower revenues. This shortfall was more than offset by Net cash used in financing activities that increased $39,429 due to repayment of car notes and sales of securities.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable
Item 4. Controls and Procedures.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company carried out an evaluation under the supervision of Christopher Lombardi, the Company’s President, Chief Financial Officer and Frederick Antonelli, the Company’s Director (the “Reviewing Officers”), of the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Reviewing Officers concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in the reports we file or submit under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms.
There have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the period covered by this report.
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Part II
Item 1. Legal Proceedings
None
Item 1.a.
Not Applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Board Appointments and Resignations
January 21, 2011 Karl Bach resigned from the Company as Director. On February 10, 2011 Frederick Antonelli resigned from the Company as President and CEO and remains a Director and, Christopher Lombardi was named President and CEO with an annual salary of $75,000. The $75,000 salary will be deferred
Item 6. Exhibits
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Exhibit 31.1
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Certification of the Principal Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Exhibit 32.1
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Certification of the Principal Executive Officer and Chief Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Date: May 16, 2011
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AAA Public Adjusting Group, Inc.
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By:
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/s/ Christopher Lombardi
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President, Chief Executive Officer and Principal Financial Officer
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