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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q/A

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011
Or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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)

Florida
 
26-0325410
(State or other jurisdiction or incorporation or
organization)
 
(I.R.S. Employer Identification No.)
1926 Hollywood Blvd, Suite 100 Hollywood 
 
33020
(Address of principal executive offices)
 
(Zip Code)

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 ¨      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 105,842,980 of Common stock outstanding as of June 30, 2011.

 
 

 

EXPLANATORY NOTE
 
AAA Public Adjusting Group, Inc. (AAAA) is filing this amendment No. 1 (the Amendment) to its Form 10-Q for the quarterly period ended June 30, 2011, which was originally filed with the U.S. Securities and Exchange Commission on August 15, 2011. The purpose of the Amendment is to correct the insertion of a comma in the number for the amount of prepaid expenses for December 31, 2010 on the Balance Sheet.

10.1. Certain portions of information that were omitted from Exhibit 101 that was originally filed with the Form 10-Q have now been included in accordance with Rule 405 of Regulation S-T. The information contained in this Amendment does not reflect events occurring subsequent to the filing of the Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 
 
 

 
AAA PUBLIC ADJUSTING GROUP, INC

TABLE OF CONTENTS

June 30, 2011

 
Page
   
Consolidated Financial Statements
 
   
Balance Sheets
2
   
Statements of Revenues and Expenses
3 - 4
   
Statements of Cash Flows
5
   
Notes to Financial Statements
6 – 13

 
 

 

AAA PUBLIC ADJUSTING GROUP, INC
CONSOLIDATED BALANCE SHEETS
 JUNE 30, 2011 AND DECEMBER 31, 2010

   
June 30,
   
December 31,
 
   
2011
   
2010
 
   
(unaudited)
       
Assets
           
             
Current Assets
           
Cash and cash Equivalents
 
$
11,990
   
$
4,174
 
Accounts receivable – net
   
69,019
     
69,100
 
Prepaid expense
   
6,647
     
3,392
 
Total current assets
   
87,656
     
76,666
 
                 
Property, plant, and equipment – net
   
18,083
     
25,255
 
                 
Total Assets
 
$
105,739
   
$
101,921
 
                 
Liabilities and Stockholders' Equity
               
Current Liabilities
               
Notes payable, vehicle - current portion
 
$
11,388
   
$
12,912
 
Note payable
   
25,000
     
5,000
 
Notes payable – related parties
   
15,000
      -
 
Accounts payable and accrued liabilities
   
91,011
     
85,787
 
Deferred compensation
   
111,776
     
100,000
 
Accounts payable to insured
   
12,070
     
12,645
 
                 
Total current liabilities
   
266,245
     
216,344
 
                 
Long Term Liabilities
               
Notes payable, vehicle - net of current
   
15,143
     
19,936
 
Total long term liabilities
   
15,143
     
19,936
 
                 
Total Liabilities
   
281,388
     
236,280
 
                 
Stockholders' Equity (Deficiency)
               
Preferred Stock, 20,000,000 shares authorized, no shares issued
   
-
     
-
 
Common Stock, 250,000,000 shares authorized at $.0001 par, 105,842,980, and 103,747,980 shares issued and outstanding at June 30, 2011 and December 31, 2010
   
10,584
     
10,375
 
Additional paid in capital
   
363,218
     
149,713
 
Stock subscription receivable
   
(1,500
)
   
(1,500
)
Accumulated Deficit
   
(547,951
)
   
(292,947
)
Total Stockholders' Equity (Deficiency)
   
(175,649
)
   
(134,359
)
                 
Total Liabilities and Stockholders' Equity (Deficiency)
 
$
105,739
   
$
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 6 MONTHS ENDED JUNE 30, 2011 AND 2010
(unaudited)

   
2011
   
2010
 
             
Revenues (net)
 
$
300,418
   
$
290,564
 
                 
Operating Expenses:
               
Commissions to adjusters
   
195,860
     
184,808
 
Compensation
   
210,543
     
92,819
 
Other general and administrative expenses
   
125,601
     
103,151
 
                 
Total operating expenses
   
532,004
     
380,778
 
                 
Profit (Loss) from operations
   
(231,586)
     
(90,214
)
                 
Other income (expense)
               
                 
Interest (expense)
   
(23,418)
     
(5,103
)
                 
Net Income/(Loss) Before Income Taxes
   
(255,004)
     
(95,317
)
                 
Provision for income tax
   
-
     
-
 
                 
Net Income/(Loss)
 
$
(255,004)
   
$
(95,317
)
                 
Net income (loss) per common share, basic
 
$
(0.00)
   
$
0.00
 
                 
Weighted average number of common shares outstanding
   
104,357,623
     
91,017,255
 

The accompanying notes are an integral part of the financial statements

 
- 3 -

 

AAA PUBLIC ADJUSTING GROUP, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE 3 MONTHS ENDED JUNE 30, 2011 AND 2010
(unaudited)

   
2011
   
2010
 
             
Revenues (net)
 
$
169,225
   
$
140,446
 
                 
Operating Expenses:
               
Commissions to adjusters
   
115,512
     
85,643
 
Compensation
   
83,348
     
47,100
 
Other general and administrative expenses
   
51,258
     
55,247
 
                 
Total operating expenses
   
250,118
     
187,990
 
                 
Profit (Loss) from operations
   
(80,893)
     
(47,544
)
                 
Other income (expense)
               
                 
Interest (expense)
   
(22,018)
     
(3,779
)
                 
Net Income/(Loss) Before Income Taxes
   
(102,911)
     
(51,323
)
                 
Provision for income tax
   
-
     
-
 
                 
Net Income/(Loss)
 
$
(102,911)
   
$
(51,323
)
                 
Net income (loss) per common share, basic
 
$
(0.00)
   
$
0.00
 
                 
Weighted average number of common shares outstanding
   
105,454,980
     
101,517,195
 

The accompanying notes are an integral part of the financial statements

 
- 4 -

 

AAA PUBLIC ADJUSTING GROUP, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 6 MONTHS ENDED JUNE 30, 2011 AND 2010
(unaudited)

   
2011
   
2010
 
Cash Flows From Operating Activities:
           
Net Income (Loss)
 
$
(255,004
)
 
$
(95,317
)
                 
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By (Used in) Operating Activities:
               
Depreciation
   
7,172
     
14,744
 
Stock issued for services
   
117,500
     
6,000
 
Beneficial interest expense for below market conversion on common stock to be redeemed for convertible note payable
   
17,714
       
-
Change in operating assets and liabilities:
               
Increase) Decrease in accounts receivable
   
81
     
6,328
 
(Increase) Decrease in prepaid expenses
   
(3,255)
     
(2,060)
 
Increase in deferred compensation
   
61,776
     
50,000
 
Increase (Decrease) in accounts payable and accrued liabilities
   
4,649
     
845
 
                 
Net Cash Provided (Used In) Operating Activities
 
$
(49,367
)
 
$
(19,460)
 
                 
Cash Flows From Investing Activities:
               
Net Cash Provided (Used) in Investing Activities
   
-
     
-
 
                 
Cash Flows From Financing Activities:
             
Repayment of notes payable
 
(6,317
)
   
(12,125)
 
Sale of Common stock
   
28,500
     
23,500
 
Proceeds from loans and notes payable
   
35,000
     
15,000
 
Net Cash Provided (Used) in Financing Activities
   
57,183
     
26,375
 
                 
Net increase (decrease) in Cash and Cash Equivalents
   
7,816
     
6,915
 
                 
Cash and Cash Equivalents at beginning of period
   
4,174
     
12,404
 
                 
Cash and Cash Equivalents at end of period
 
$
11,990
   
$
19,319
 
                 
Supplemental disclosure of cash flow Information:
               
Cash payments for interest
 
$
2,418
   
$
2,557
 
                 
Supplemental schedule of non-cash financing activities:
               
Issuance of 500,000 shares of common stock for deferred compensation
 
$
50,000
     
-
 

The accompanying notes are an integral part of the financial statements

 
- 5 -

 

AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011

NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 six months ended June 30, 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.

 
- 6 -

 

AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011

NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

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 June 30, 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.

 
- 7 -

 

AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011

NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

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 six months ended June 30, 2011 and 2010 were $2,020 and $6,685, 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.

 
- 8 -

 

AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011

NOTE 2 -
GOING CONCERN

As shown in the accompanying financial statements, the Company incurred a net loss for the six months ended June 30, 2011 of $255,004, and a $185,229 net loss for the year ending December 31, 2010, and cumulative losses since inception are approximately $547,951. The Company has a working capital deficit at June 30, 2011 of $178,589. 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.

NOTE 3 -
PROPERTY AND EQUIPMENT

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 June 30, 2011 and December 31, 2010:

  
 
June 30,
   
Dec. 31,
 
   
2011
   
2010
 
             
Office furniture & equipment
 
$
26,270
   
$
26,270
 
Computer equipment
   
14,729
     
14,729
 
Leasehold improvements
   
2,469
     
2,469
 
Vehicles
   
81,009
     
125,167
 
Total equipment
   
124,477
     
168,635
 
                 
Less accumulated depreciation
   
106,394
     
108,887
 
                 
Net Property and Equipment
 
$
18,083
   
$
59,748
 

Depreciation expense for the six months ended June 30, 2011 and 2010 was $7,172 and $14,744 respectively.

 
- 9 -

 

AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011

NOTE 4 -
LEASE COMMITMENTS

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:
 
2011
 
$
6,360
 
2012
   
4,240
 
   
$
10,600
 

Rent expense for the six months ended June 30, 2011 and 2010 was $7,687 and $8,572 respectively.

NOTE 5 -
NOTES PAYABLE-Vehicles

Notes payable consists of:
   
June 30,
2011
   
Dec 31,
2010
 
             
Note payable to a financial institution in monthly installments of $ 517 including interest at 9.79% to Mature on February 1, 2012.  This note is collateralized by an automobile
 
$
3,989
   
$
6,814
 
                 
Note payable to a financial institution in monthly installments of $ 740 including interest at 7.74% to mature on May 13, 2014.  This note is collateralized by an automobile
   
22,542
     
26,034
 
                 
Total Notes Payable
 
$
26,531
   
$
32,848
 

The future scheduled payments of notes payable are:
 
2011
 
$
9,485
 
2012
   
9,383
 
2013
   
7,663
 
2014
       
Total
 
$
26,531
 

NOTE 6 -
NOTES PAYABLE-Investor

   
June 30,
   
Dec. 31,
 
   
2011
   
2010
 
             
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 currently overdue
 
$
5,000
   
$
5,000
 
Note payable - $20,000, 60 day convertible note at 8%, maturity to July 5, 2011
   
20,000
      -
   
   
$
25,000
   
$
5,000
 

NOTE 7 -
NOTES PAYABLE-related party

   
June 30,
   
Dec. 31,
 
   
2011
   
2010
 
             
Note payable - $15,000 loan with no interest and on demand
 
$
15,000
   
$
-
 
                 
   
$
15,000
   
$
-
 

 
- 10 -

 

AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011

NOTE 8 -
CONCENTRATION OF RISK

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.

NOTE 9 -
ACCOUNTS RECEIVABLE and OFFSETTING PAYABLES
 
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 June 30, 2011 and December 31, 2010 were:
      
   
June 30,
   
December 31,
 
   
2011
   
2010
 
             
Total funds receivable – net of allowance
 
$
69,019
   
$
69,100
 
Payable to insured
   
(12,070)
     
(12,645
)
Payable to adjusting  agents
   
(34,365)
     
(37,389
)
Net of offsetting payable
 
$
22,584
   
$
19,066
 

Allowances for doubtful accounts for the periods ended June 30, 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.
 
NOTE 10 -
CAPITAL TRANSACTIONS

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 were sold for $28,500.
In April 2011, 470,000 shares of common stock were issued for services for $117,500.
In June 2011, 500,000 shares of common stock were converted from deferred compensation for $50,000
In June 2011, an interest charge was made for stock conversion options below market price of $17,714

 
- 11 -

 
 
AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011

NOTE 11-
DEFERRED COMPENSATION
Commencing in the first quarter 2010, some officers’ salaries are being deferred until there is sufficient working capital. Deferred compensation at June 30, 2011 and December 31, 2010 was $111,776 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 an 8% interest rate, no specific maturity date and for the conversion of related debt into shares of common stock at the lower of a 25% discounted price of the 5 day average closing bid price prior to the day of execution or $.175 per share.

NOTE 12 -
INCOME TAXES
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 June 30, 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:

Federal income taxes at statutory rate
   
34
 %
State tax rate, net of federal income tax
   
4
 
Offsetting Valuation Adjustment
   
(38
)
Effective income tax rate
   
0
%

As of June 30, 2011, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $490,000 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.

 
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AAA PUBLIC ADJUSTING GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
.
NOTE 13 -
LEASED VEHICLES

The company leases two vehicles with a monthly cost of $1,264. These leases expire in February and April 2012.

Future payments are:

2011
  $ 7,584  
2012
    3,790  
         
Total payments
  $ 10,374  

NOTE 14 -
NEW ACCOUNTING PRONOUNCEMENTS
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, 2011, 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.
 
NOTE 15 -
SUBSEQUENT EVENTS

Management has evaluated subsequent events from June 30,2011 through the date whereupon the financial statements were issued and has determined that the are no items to disclose

 
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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 June 30, 2011

Revenue

For the three months ended June 30, 2011 revenue was $169,225 compared with $140,446 for the three months ended June 30, 2010. This increase of $28,779 or approximately 20% is primarily due to an increase of settlements of non-hurricane related claims.

Commission to Adjusters

Commission expenses for adjusters for the three months ended June 30, 2011 was $115,512 or approximately 68% of revenue compared with $85,643 or approximately 61% of revenue for three months ended June 30, 2010. This increase is due to the increase in related prior years revenues from hurricane related claims.

 Compensation

Compensation expense for the three months ended June 30, 2011 was $83,348 compared to $47,100 for the three months ended June 30, 2010, an increase of $36,248 or 77%. The increase is primarily the result of an additional officer starting in February, 2011.In recognition of the working capital position for the three months ended June 30, 2011, compensation of $43,750 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 June 30, 2011 other general and administration expenses were $51,258 compared to $55,247 for the three months ended June 30, 2010. This decrease of $3,989 resulted from 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 June 30, 2011 was ($102,911) compared with a loss of ($51,323) for the three months ended June 30, 2010. This ($51,588) higher loss resulted from higher compensation, an imputed interest charge on a notes payable conversion option below market price, and higher commissions to adjusters.

 
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Results of Operations – Six Months Ended June 30, 2011

Revenue

For the six months ended June 30, 2011 revenue was $300,418 compared with $290,564 for the six months ended June 30, 2010. This increase of $9,854 or approximately 3% is primarily due to an increase in total settlements amounts for daily claims.

Commission to Adjusters

Commission expenses for adjusters for the six months ended June 30, 2011 was $195,860 or approximately 65% of revenue compared with $184,808 or approximately 64% of revenue for six months ended June 30, 2010. This increase is due to the reduction in related prior years revenues from hurricane related claims.

Compensation

Compensation expense for the six months ended June 30, 2011 was $210,543 compared to $92,819 for the six months ended June 30, 2010, an increase of $117,724. 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 $111,776 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 six months ended June 30, 2011 other general and administration expenses were $125,601 compared to $103,151 for the six months ended June 30, 2010. This increase of $22,450 resulted from increases in legal fees attributable to “public company” expenses, net of cost reductions in advertising, rent, consulting and other expenses.

Interest Expense

Interest expense for the six months ending June 30, 2011 was $23,418 compared with and expense of $5,107. The increase of $18,311 was primarily an imputed interest and charge for a notes payable stock conversion option below market.

 
- 15 -

 

Net Income

The net loss for the six months ended June 30, 2011 was ($255,004) compared with a loss of ($95,317) for the six months ended June 30, 2010. This ($159,687) higher loss resulted from higher compensation, a charge to interest expense for a note payable conversion option below market price, 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 June 30, 2011, the Company had $11,990 in available cash, an increase of $7,816 from December 31, 2010. Net cash provided by operating activities decreased $49,367 due to lower revenues. This shortfall was more than offset by net cash provided in financing activities that increased $57,183 due to new notes and sales of securities.

In March, 2011 the Company sold 1,125,000 shares of common stock for $28,500

In April, 2011 the Company converted 500,000 shares of common stock from $50,000 of deferred compensation and issued 470,000 shares of common stock for services for $117,500.
  
In June, 2011 the Company issued an 8%, 60 day convertible note for $20,000 to an investor. The note also resulted in a charge to interest expense of $17,714 for a stock conversion option below market price.

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.

 
- 16 -

 

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
   
Exhibit 31.1*
Certification of the Principal Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
Exhibit 32.1*
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
   
101.INS XBRL
Instance Document**
   
101.SCH XBRL
Taxonomy ExtensionSchema**
   
101.CAL XBRL
Taxonomy Extension Calculation Linkbase**
   
101.DEF XBRL
Taxonomy Extension Definition Linkbase**
   
101.LAB XBRL
Taxonomy Extension Label Linkbase**
   
101.PRE XBRL
Taxonomy Presentation Linkbase**


* These exhibits were previously included or incorporated by reference in AAA PUBLIC ADJUSTING GROUP’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, filed with the Securities and Exchange Commission on August 15, 2011.


 
- 17 -

 

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.

Date: September 14, 2011
AAA Public Adjusting Group, Inc.
   
 
By:
/s/ Christopher Lombardi
   
 
President, Chief Executive Officer and Principal Financial Officer

 
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