EMPERIAL AMERICAS, INC - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - EMPERIAL AMERICAS, INC	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - EMPERIAL AMERICAS, INC	v239590_ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - EMPERIAL AMERICAS, INC	v239590_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2011

¨	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 106,354,625 of Common stock outstanding as of September 30, 2011.

AAA PUBLIC ADJUSTING GROUP, INC

TABLE OF CONTENTS

September 30, 2011

	Page

Consolidated Financial Statements

Balance Sheets	2

Statements of Operations	3 - 4

Statements of Cash Flows	5

Notes to Financial Statements	6 – 13

AAA PUBLIC ADJUSTING GROUP, INC

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2011 AND DECEMBER 31, 2010

	September30,			December 31,
	2011			2010
	(unaudited)
Assets

Current Assets
Cash and cash Equivalents	$	9,172		$	4,174
Accounts receivable – net		94,767			69,100
Prepaid expense		4,191			3.392
Total current assets		108,130			76,666

Property, plant, and equipment – net		15,648			25,255

Total Assets	$	123,778		$	101,921

Liabilities and Stockholders' Equity
Current Liabilities
Notes payable, vehicle - current portion	$	9,618		$	12,912
Note payable		5,000			5,000
Loan payable – related parties		15,000			-
Accounts payable and accrued liabilities		88,487			85,787
Deferred compensation		156,398			100,000
Accounts payable to insured		36,788			12,645

Total current liabilities		311,291			216,344

Long Term Liabilities
Notes payable, vehicle - net of current		13,651			19,936
Total long term liabilities		13,651			19,936

Total Liabilities		324,942			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, 106,354,625, and 103,747,980 shares issued and outstanding at September 30, 2011 and December 31, 2010		10,636			10,375
Additional paid in capital		407,166			149,713
Stock subscription receivable		(1,500	)		(1,500	)
Accumulated Deficit		(617,466	)		(292,947	)
Total Stockholders' Equity (Deficiency)		(201,164	)		(134,359	)

Total Liabilities and Stockholders' Equity (Deficiency)	$	123,778		$	101,921

The accompanying notes are an integral part of the financial statements

- 2 -

AAA PUBLIC ADJUSTING GROUP, IN,C,

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE 9 MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(unaudited)

	2011			2010

Revenues (net)	$	438,752		$	476,521

Operating Expenses:
Commissions to adjusters		282,535			302,561
Compensation		249,012			138,456
Other general and administrative expenses		203,901			153,517

Total operating expenses		735,448			594,534

Profit (Loss) from operations		(296,696	)		(118,013	)

Other income (expense)

Interest (expense)		(27,823	)		(10,127	)

Net Income/(Loss) Before Income Taxes		(324,519	)		(128,140	)

Provision for income tax		-			-

Net Income/(Loss)	$	(324,519	)	$	(128,140	)

Net income (loss) per common share, basic	$	(0.00	)	$	(0.00	)

Weighted average number of common shares outstanding		104,717,274			94,611,615

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 SEPTEMBER 30, 2011 AND 2010

(unaudited)

	2011			2010

Revenues (net)	$	138,334		$	185,957

Operating Expenses:
Commissions to adjusters		86,675			117,753
Compensation		38,469			45,637
Other general and administrative expenses		78,300			50,366

Total operating expenses		203,444			213,756

Profit (Loss) from operations		(65,110	)		(27,799	)

Other income (expense)

Interest (expense)		(4,405	)		(5,024	)

Net Income/(Loss) Before Income Taxes		(69,515	)		(32,823	)

Provision for income tax		-			-

Net Income/(Loss)	$	(69,515	)	$	(32,823	)

Net income (loss) per common share, basic	$	(0.00	)	$	(0.00	)

Weighted average number of common shares outstanding		105,987,096			102,247,980

The accompanying notes are an integral part of the financial statements

- 4 -

AAA PUBLIC ADJUSTING GROUP, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE 9 MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(unaudited)

	2011			2010
Cash Flows From Operating Activities:
Net Income (Loss)	$	(324,519	)	$	(128,140	)

Stock issued for services		141,500
Beneficial interest for below market conversion on common stock redeemed for convertible note payable.		17,714
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By (Used in) Operating Activities:
Depreciation		9,607			21,950
Gain on the disposal of equipment		-			6,000

Change in operating assets and liabilities:

Increase) in accounts receivable		(25,667	)		(47,240	)
(Increase) in prepaid expenses		(799	)		(2,060	)
Increase in deferred compensation		126,398			75,000
Increase in accounts payable and accrued liabilities		26,843			46,937

Net Cash (Used In) Operating Activities	$	(28,923	)	$	(27,553	)

Cash Flows From Investing Activities:
					.
Net Cash Provided (Used) in Investing Activities		-			-

Cash Flows From Financing Activities:
Repayment of vehicle notes payable		(9,579	)		(24,449	)
Sale of Common stock		28,500			35,500
Proceeds from loans and notes payable		15,000			15,000
Net Cash Provided in Financing Activities		33,921			26,051

Net increase (decrease) in Cash and Cash Equivalents		4,998			(1,502	)

Cash and Cash Equivalents at beginning of period		4,174			12,404

Cash and Cash Equivalents at end of period	$	9,172		$	10,902

Other Cash Flow Items:
Cash payments for:
Income tax	$	-		$	-
Interest expense	$	4,924		$	3,803
Issuance of 500,000 shares of common stock for convertible note	$	50,000		$	-
Issuance of 240,385 shares of common stock for convertible note	$	20,000		$	-

The accompanying notes are an integral part of the financial statements

- 5 -

AAA PUBLIC ADJUSTING GROUP, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 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 nine months ended September 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

SEPTEMBER 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 September 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

SEPTEMBER 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 nine months ended September 30, 2011 and 2010 were $4,574 and $7,865 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

SEPTEMBER 30, 2011

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, the Company incurred a net loss for the nine months ended September 30, 2011 of $324,519, a $185,229 net loss for the year ending December 31, 2010, and cumulative losses since inception are approximately $617,466. The Company has a working capital deficit at September 30, 2011 of $203,161. 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 September 30, 2011 and December 31, 2010:

	Sept 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		108,829		108,887

Net Property and Equipment	$	15,649	$	59,748

Depreciation expense for the nine months ended September 30, 2011 and 2010 was $9,607 and $14,744 respectively.

- 9 -

AAA PUBLIC ADJUSTING GROUP, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 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	$	3,180
2012		4,240
	$	7,420

Rent expense for the nine months ended September 30, 2011 and 2010 was $13,290 and $11,752 respectively.

NOTE 5 -

NOTES PAYABLE-Vehicle

Notes payable consists of:

	Sept 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	$	2,523	$	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		20,746		26,034

Total Notes Payable	$	23,269	$	32,848

The future scheduled payments of notes payable are:

2011	$	6,223
2012		9,383
2013		7,663
2014
Total	$	23,269

NOTE 6 -

NOTES PAYABLE-Investor

	Sept 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
				-
	$	5,000	$	5,000

- 10 -

AAA PUBLIC ADJUSTING GROUP, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

NOTE 7 -

LOAN PAYABLE-related party

	Sept 30,		Dec. 31,
	2011		2010

Loan payable from officer - $15,000 loan with no interest and on demand	$	15,000	$	-

	$	15,000	$	-

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 September 30, 2011 and December 31, 2010 were:

	Sept 30,			December 31,
	2011			2010

Total funds receivable – net of allowance	$	94,767		$	69,100
Payable to insured		(36,788	)		(12,645	)
Payable to adjusting agents		(35,124	)		(37,389	)
Net of offsetting payable	$	22,855		$	19,066

Allowances for doubtful accounts for the periods ended September 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 valued at $117,500.

In June 2011, 500,000 shares of common stock were converted from $50,000 of deferred compensation

In June 2011, an interest charge was made for stock conversion options below market price of $17,714

In August 2011, 240,000 shares of common stock were issued for $24,000 of services

In August 2011, 240,385 shares of common stock, were issued pursuant to a convertible note valued at $20,000

- 11 -

AAA PUBLIC ADJUSTING GROUP, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 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 September 30, 2011 and December 31, 2010 was $156,398 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.

In April 2011, $50,000 of deferred compensation was converted into a convertible note payable, which was subsequently converted in June 2011 into 500,000 shares of common stock In June 2011, $20,000 of deferred compensation was converted into a convertible note payable, which was subsequently converted in August 2011 into 240,385 shares of common stock.

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 September 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 September 30, 2011, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $532,000 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.

- 12 -

AAA PUBLIC ADJUSTING GROUP, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 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	$	3,792
2012		3,790

Total payments	$	7,582

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.

- 13 -

Consent of Independent Registered Public Accounting Firm

The Board of Directors

AAA Public Adjusting Group, Inc.

Hollywood, Fl

We consent to the incorporation by reference in the Form 10Q of AAA Public Adjusting Group, Inc. of our report dated November 10, 2011, with respect to the balance sheets of AAA Public Adjusting Group, Inc. ( the Company ) as of September 30, 2011 and the related statements of operations and cash flows for the three and nine periods then ended which is review report.

/s/Baum & Company, P.A.

Miami Beach, Florida

November 14, 2011

- 14 -

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.

We anticipate that there will be significant increase is revenue do renewed marketing efforts in the Orlando market. We see this is the largest underserved market in the industry. Additionally we expect to grow through recent recruitment efforts. These efforts focused on revenue producing positions. The first is experienced Public Adjusters who a will established referral network and the second is Apprentices who are licensed by state to work under the supervision of fully licensed Public Adjuster and who create revenue opportunities at a significantly decreased cost to the company by virtue of the fact that they work for a significant lower commission rate.

Results of Operations – Nine Months Ended September 30, 2011

Revenue

For the nine months ended September 30, 2011 revenue was $438,752 compared with $476,521 for the nine months ended September 30, 2010. This decrease of $37,769 or approximately 8% is primarily due to a decrease in settlements from prior years’ hurricane related claims.

Commission to Adjusters

Commission expenses for adjusters for the nine months ended September 30, 2011 was $282,535 or approximately 64% of revenue compared with $302,861 or approximately 63% of revenue for nine months ended September 30, 2010. This decrease is due to the reduction in related prior years revenues from hurricane related claims.

Compensation

Compensation expense for the nine months ended September 30, 2011 was $249,012 compared to $138,456 for the nine months ended September 30, 2010, an increase of $110,556 or 80%. The increase is primarily the result of an additional officer starting in February, 2011. In recognition of the working capital position , the majority of officers 2011 and 2010 compensation has been deferred. As of September 30, 2011, this deferred compensation is $156,398.

Other General and Administration Expenses

For the nine months ended September 30, 2011 other general and administration expenses were $203,901 compared to $153,517 for the nine months ended September 30, 2010. This increase of $50,384 (33%) resulted from an increase in legal fees attributable to “public company” expenses, net of cost reductions in advertising, rent, consulting, auto, and other expenses.

- 15 -

Interest Expense

Interest expense for the nine months ending September 30, 2011 was $27,823 compared with and expense of $10,127 for the comparable 2010 period... The increase of $17,696 was primarily due to an imputed beneficial interest charge for a below

market conversion provision on common stock redeemed for a convertible note payable

Net Income

The net loss for the nine months ended September 30, 2011 was ($324,519) compared with a loss of ($128,140) for the nine months ended nine 30, 2010. This ($196,379) (153%) higher loss was due to the factors enumerated above.

Results of Operations – Three Months Ended September 30, 2011

Revenue

For the three months ended September 30, 2011 revenue was $138,334 compared with $185,957 for the three months ended September 30, 2010. This decrease of $47,623 or approximately 26% is primarily due to a decrease of settlements of prior year hurricane related claims.

Commission to Adjusters

Commission expenses for adjusters for the three months ended September 30, 2011 was $86,675 or approximately 68% of revenue compared with $117,753 or approximately 63% of revenue for three months ended September 30, 2010. This decrease is due to the increase in related prior years revenues from hurricane related claims.

Compensation

Compensation expense for the three months ended September 30, 2011 was $38,469 compared to $45,637 for the three months ended September 30, 2010, a decrease of $7,168 or 16%. The decrease is primarily the result of a reduction in office staff.

Other General and Administration Expenses

For the three months ended September 30, 2011 other general and administration expenses were $78,300 compared to $50,366 for the three months ended September 30, 2010. This increase of $27,934 resulted from higher legal fees and accounting 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 September 30, 2011 was ($69,515) compared with a loss of ($32,823) for the three months ended September 30, 2010. This ($36,692) higher loss (112%) was attributable to the items listed above.

Liquidity and Capital Resources

For the nine months ending September 30, 2011, funds were primarily used by the net loss of $324,519 and a decrease in accounts receivable of $ 25,667. Funds were provided by the use of $141,500 of common stock for services, an increase in deferred compensation of $ 126,398, $28,500 sale of common stock and $15,000 of related party (officer) loans payable.

For the comparable period in 2010, funds were used by the net loss of $ 128,140, reduction of $24,449 of vehicle notes payable and a decrease in accounts receivables of $47,240. Funds were provided by an increase in accounts and accrued expense payable of $46,937, $75,000 of higher deferred compensation, $35,500 from the sale of common stock and $15,000 of proceeds from notes payable.

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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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable

Item 4. Controls and Procedures.

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

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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 until sufficient working capital is available.

Item 6. Exhibits

Exhibit 31.1

Certification of the Chief Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1

Certification of the Chief Executive Officer and Principal 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.

Date: November 14, 2011	AAA Public Adjusting Group, Inc.

	By:	/s/ Christopher Lombardi

	President, Chief Executive Officer and Principal Financial Officer

Attached files

EMPERIAL AMERICAS, INC Reports

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