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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2014

 

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: 001-09370


RECEIVABLE ACQUISITION & MANAGEMENT CORPORATION

(Exact Name of Registrant as Specified in the Charter)


Delaware

 

13-3186327

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

 

60 E. 42nd Street, 46th Floor

 

 

New York, NY

 

10165

(Address of Principal Executive Offices)

 

(Zip Code)

 

 

(212) 796-4097

(Registrant’s telephone number, including area code)

 

 

(Former name and former address, if changed since last report)


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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]  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 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 [  ] (Do not check if a smaller reporting company)

Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):  Yes [  ]  No [X]


As of August 12, 2014, there were 197,488,959 shares of the registrant’s common stock outstanding.





TABLE OF CONTENTS


 

 

 

PART I

FINANCIAL INFORMATION

 

 

 

 

ITEM 1.

Financial Statements

3

 

 

 

 

Balance Sheets As Of June 30, 2014 (Unaudited) And December 31, 2013

F-1

 

Statements of Operations for the Three and Six Months ended June 30, 2014 and 2013 (Unaudited)

F-2

 

Statement of Stockholders’ Equity for the Six Months Ended June 30, 2014 (Unaudited)

F-3

 

Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013 (Unaudited)

F-4

 

Notes to Financial Statements (Unaudited)

F-5

 

 

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

4

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk.

7

ITEM 4.  

Controls and Procedures.

7

 

 

 

PART II

OTHER INFORMATION

8

 

 

 

ITEM 1.

Legal Proceedings.

8

ITEM 1A.

Risk Factors.

8

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

8

ITEM 3.

Defaults Upon Senior Securities

8

ITEM 4.

Mine Safety Disclosures

8

ITEM 5.

Other Information

8

ITEM 6.

Exhibits

8

 

 

 

SIGNATURES

9




























2




PART I


FINANCIAL INFORMATION


Item 1. Financial Statements



Receivable Acquisition and Management Corp.


Financial Statements

For the Six Months Ended

June 30, 2014












































3




Receivable Acquisition and Management Corp.


Balance Sheet



 

 

June 30,

2014

 

December 31,

2013

 

 

(unaudited)

 

 

ASSETS

 

 

 

 

Cash

$

7,385

$

347,877

Accounts receivable

 

319,778

 

203,445

Prepaid expenses

 

70,038

 

69,319

Total Current Assets

 

397,201

 

620,641

 

 

 

 

 

Intangible asset - license agreement

 

236,309

 

242,509

 

 

 

 

 

Total Assets

$

633,510

$

863,150

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Accounts payable and accrued expenses

$

402,050

$

573,052

Due to Licensor

 

187,000

 

187,000

Advances payable

 

0

 

17,833

Total Liabilities

 

589,050

 

777,885

 

 

 

 

 

Common stock, $0.001 par value: 325,000,000 shares

  authorized; 197,488,959 shares issued and outstanding

  at June 30, 2014

 

197,489

 

196,514

Additional paid-in capital

 

157,408

 

96,550

Retained earnings (deficit)

 

(310,437)

 

(207,800)

Total Stockholders’ Equity

 

44,460

 

85,264

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

$

633,510

$

863,150


















See notes to financial statements



F-1




Receivable Acquisition and Management Corp.


Statement of Operations

(Unaudited)



 

 

Three Months Ended

June 30

 

 

Six Months Ended

June 30

 

 

2014

 

2013

 

 

2014

 

2013

INCOME

 

 

 

 

 

 

 

 

 

Project Management

$

270,217

$

235,600

 

$

517,827

$

470,625

Other

 

-

 

-

 

 

-

 

-

 

 

 

 

 

 

 

 

 

 

Total Income

 

270,217

 

235,600

 

 

517,827

 

470,625

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Consulting fees

 

227,431

 

213,084

 

 

433,553

 

359,575

General and Administrative

 

28,822

 

8,036

 

 

64,791

 

15,478

Legal and other professional fees

 

54,587

 

5,600

 

 

122,121

 

90,948

 

 

 

 

 

 

 

 

 

 

Total Expenses

 

310,840

 

226,720

 

 

620,465

 

466,001

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) 

$

(40,623)

$

8,880

 

$

(102,637)

$

4,624

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) per Common Share

$

(0.00)

$

0.00

 

$

(0.00)

$

0.00

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding

 

196,889,849

 

185,977,011

 

 

197,188,069

 

181,290,058

























See notes to financial statements



F-2




Receivable Acquisition and Management Corp.


Statement of Stockholders’ Equity

For the Six Months Ended June 30, 2014

(Unaudited)


 

 

Common Stock

 

Additional

 

Retained

 

Total

 

 

Number of

Shares

 

Amount

 

Paid-in

Capital

 

Earnings

(Deficit)

 

Stockholders’

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2013

 

196,513,959

$

196,514

$

96,550

$

(207,800)

$

85,264

Shares issued in exchange

 for professional consulting services

 

975,000

 

975

 

30,775

 

-

 

31,750

Net Income (Loss)

 

-

 

-

 

-

 

(102,637)

 

(102,637)

Contributed Capital

 

 

 

 

 

30,083

 

 

 

30,083

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2014

 

197,488,959

$

197,489

$

157,408

$

(310,437)

$

44,460

































See notes to financial statements



F-3




Receivable Acquisition and Management Corp.


Statement of Cash Flows

(Unaudited)



 

 

Six Months Ended

June 30

 

 

2014

 

2013

 

 

 

 

 

NET INCOME (LOSS)

$

(102,637)

$

4,624

Adjustments to reconcile net income (loss) to net cash

provided by operating activities

 

 

 

 

Shares issued for legal and consulting services

 

31,750

 

-

Amortization - license agreement

 

6,200

 

-

 Changes in Assets and Liabilities

 

 

 

 

Accounts receivable

 

(116,333)

 

33,512

Accounts payable and accrued expenses

 

(171,002)

 

150,590

Prepaid expenses

 

(719)

 

(13,596)

Total Adjustments

 

(250,105)

 

170,506

 

 

 

 

 

Net Cash Provided (Used) by Operating Activities

 

(352,742)

 

175,130

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

License Agreement Payments

 

-

 

(8,000)

Cash received from reverse merger acquisition

 

-

 

51,580

 

 

 

 

 

Net Cash Provided by Investing Activities

 

-

 

43,580

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Distributions

 

-

 

(165,770)

Advances payable

 

12,250

 

1,788

Net Cash Provided (Used) by Financing Activities

 

12,250

 

(163,982)

 

 

 

 

 

Net increase (decrease) in cash

 

(340,492)

 

54,728

 

 

 

 

 

Cash, beginning of period

 

347,877

 

3,415

 

 

 

 

 

Cash, end of period

$

7,385

$

58,143

 

 

 

 

 

Non Cash Investing and Financing Activity

 

 

 

 

Advances payable converted to equity

 

30,083

 

-

Shares Issued in exchange for license agreement

 

-

 

48,709













See notes to financial statements



F-4




Receivable Acquisition and Management Corp.


Notes to Financial Statements

June 30, 2014

(Unaudited)


1.  Organization and Nature of Business


Receivable Acquisition and Management Corporation (the “Company” or “RAMCO”), a Delaware corporation, was in the business to purchase, manage and collect defaulted consumer receivables. RAMCO ceased investments in distressed consumer credit portfolios in September 2007 and since then was in the process of running off existing portfolios.


Sustainable Energy LLC (Sustainable LLC) is a New York limited liability company formed on July 26, 2010. Sustainable LLC is involved in developing and improving the efficiency of energy infrastructure using a combination of traditional and advanced technologies. On March 29, 2013, Sustainable LLC contributed certain assets and liabilities into a newly formed entity, Sustainable Energy Industries, Inc. (Sustainable). At the time, Sustainable LLC had only a license agreement with third party and limited asset, liabilities and operations.


Cornerstone Program Advisors LLC, (Cornerstone) is a Delaware limited liability company formed on January 5, 2009. The Company is an energy infrastructure project management company focused on healthcare and higher learning institutions.


On March 29, 2013, RAMCO entered into a definitive reverse merger agreement (the “Agreement”) with Cornerstone and Sustainable. Under the terms of the Agreement, RAMCO entered into a voluntary share exchange transaction with Cornerstone and Sustainable whereby approximately 90% of RAMCO’s common stock was issued to the members and shareholders of the Cornerstone and Sustainable and in exchange, RAMCO acquired the entire membership interest in the Cornerstone and all the issued and outstanding shares of Sustainable. At the closing of the Agreement on May 15, 2013, the management of Cornerstone and that of Sustainable assumed control of the RAMCO’s operations.


The transaction among RAMCO, Cornerstone, and Sustainable (the “Merger”) was accounted for as a reverse merger using the purchase method of accounting, with the former members and shareholders of Cornerstone and Sustainable controlling approximately 90% of the issued and outstanding common shares of RAMCO after the closing of the transaction. Cornerstone was deemed to be the acquirer for accounting purposes and the financial statements are presented as a continuation of Cornerstone and include the results of operations of Cornerstone since incorporation on January 9, 2009, and the results of operations of RAMCO and Sustainable since the date of acquisition on May 15, 2013. Also in August 2013, the Company changed its year end from September 30 to December 31.


Following the Merger, the Company adopted a business plan to build on the business of Cornerstone and Sustainable in energy infrastructure and alternative energy.


The Company believes that funds generated from operations, together with existing cash and cash infusions by major stockholders, will be sufficient to finance its operations for the next twelve months, but are likely to be insufficient to fund its contractual obligation and to fund growth.  The Company expects to seek additional capital to cover any working capital needs and its contractual obligation discussed below, and to fund growth initiatives in its identified markets. However, there can be no assurance that any new debt or equity financing arrangement will be available to the Company when needed on acceptable terms, if at all. The continued operations of the Company are dependent on its ability to collect its receivables and increase revenues.



2. Significant Accounting Policies


Basis of Presentation and Use of Estimates


The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include recognition of income for work completed and unbilled to customers and the allowance for doubtful accounts. Actual results could differ from those estimates.





F-5




Receivable Acquisition and Management Corp.


Notes to Financial Statements

June 30, 2014

(Unaudited)


2. Significant Accounting Policies (continued)


Unaudited Financial Statements


The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. The unaudited financial statements should be read in conjunction with those financial statements included in the Company’s Form 8-K/A filed with the SEC on August 5, 2013, and its Form 10-K for the year ended December 31, 2013.  In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.


Cash


The Company continually monitors its positions with, and the credit quality of, the financial institutions it invests with. From time to time, however briefly, the Company maintains balances in operating accounts in excess of federally insured limits.


Accounts Receivable


Receivables are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. At June 30, 2014, no allowance for doubtful accounts has been provided.


Income Recognition


The Company recognizes income from the sale of services and products when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the fee is fixed or determinable and the collectability of the related income is reasonably assured.


The Company principally derives income from fees for services generated on a project-by-project basis. Prior to the commencement of a project, the Company reaches agreement with the client on rates for services based upon the scope of the project, staffing requirements and the level of client involvement. It is the Company’s policy to obtain written agreements from new clients prior to performing services. In these agreements, the clients acknowledge that they will pay based upon the amount of time spent on the project or an agreed-upon fee structure. Income for services rendered is recognized on a time and materials basis or on a fixed-fee or capped-fee basis in accordance with accounting and disclosure requirements for income recognition.


Fees for services that have been performed, but for which the Company has not invoiced the customers, are recorded as unbilled receivables.  


Income for time and materials contracts are recognized based on the number of hours worked by the Company’s subcontractors at an agreed upon rate per hour, and are recognized in the period in which services are performed. Income for time and materials contracts is billed monthly or in accordance with the specific contractual terms of each project.


License Agreement


The cost of the license agreement (see Note 4) is being amortized on a straight-line basis over 20 years.  The license agreement is reflected in the accompanying June 30, 2014 balance sheet net of accumulated amortization of $12,400.






F-6



Receivable Acquisition and Management Corp.


Notes to Financial Statements

June 30, 2014

(Unaudited)


2. Significant Accounting Policies (continued)


Income Taxes


The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by the tax authorities. Management has analyzed the Company’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2010 - 2013).


Basic and Diluted Net Income (Loss) per Share


The Company computes income (loss) per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted income (loss) per share on the face of the statement of operations. Basic income (loss) per share is computed by dividing net income available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive income (loss) per share excludes all potential common shares if their effect is anti-dilutive.  


The Company has no potential dilutive instruments and accordingly basic income (loss) and diluted income per share are the same.


The weighted average number of shares used in computing the income (loss) per share in 2013 has been adjusted to give effect to the reverse merger described in Note 1.


Recent Accounting Pronouncements


In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2014-09 "Revenue from Contracts with Customers" (Topic 606) ("ASU 2014-09"). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. The Company will adopt ASU 2014-09 during the first quarter of fiscal 2017. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company's financial position or results of operations.


All other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.


Subsequent Events


Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued.


3. Related Party Transactions


Consulting Fees


Certain stockholders of the Company and entities affiliated with management perform services to customers and were compensated at various rates. Total consulting expenses incurred by these entities amounted to $421,723 and $359,575 for the six months ended June 30, 2014 and 2013, respectively.


Advances Payable


Advances payable were due to officers of the Company with no specified repayment terms.  Previously outstanding advances were cleared in the current quarter by contributions of capital by these officers.



F-7




Receivable Acquisition and Management Corp.


Notes to Financial Statements

June 30, 2014

(Unaudited)


4. License Agreement


On November 15, 2012, Sustainable LLC entered into a renewable 20-year engine technology license agreement (the “Agreement”) with a third party licensor (the “Licensor”) that developed engines capable of converting low grade heat into other forms of energy.  Under the terms of the Agreement, Sustainable LLC obtained certain exclusive license rights in the engines developed by the Licensor which would permit Sustainable LLC to develop, manufacture and integrate such engines into its projects.


The exclusive market rights of the Agreement provide that Sustainable LLC make a cash payment of $200,000 and issue common stock in Sustainable representing a small minority ownership position in the Company (see Note 1), along with periodic quarterly payments of $25,000 commencing six months after the initial $200,000 payment.  These payments reset to $50,000 per quarter after three payments, and are subject to further resets to up to $100,000 depending on engine sales volume.  Under certain circumstances, engine royalty fees and referral fees can increase the quarterly payment from time to time.  In the event of non-payment, Sustainable, LLC retains a non-exclusive license subject to royalty fees.


On May 15, 2013, in connection with the Merger (see Note 1), the Company, after acquiring 100% ownership interest in Sustainable, LLC issued 2,435,430 shares to the Licensor which represents a small minority position in the Company as required under the terms of the Agreement.  At the time of issuance, these shares were valued at $48,709 representing the fair value of the RAMCO shares.


In addition, during the fiscal year ended December 31, 2013, the Company made payments of $13,000 that were applied against the required initial $200,000 cash payment as stated under the terms of the Agreement.


In connection with a November 5, 2013, proceeding commenced by the Securities Division of the Arizona Corporation Commission (the “ACC”) the Company learned that the Licensor had been classified as dissolved by the Delaware Division of Corporations after March 1, 2010 for failure to pay franchise taxes to the State of Delaware, and similarly classified by the ACC as of approximately the same time.


In performing due diligence in regard to the status of the Licensor, the Company subsequently learned also that two United States patents that were licensed to the Company under the Agreement have been classified as expired due to the Licensor’s failure to pay maintenance fees thereon. The Company has confirmed that Licensor is taking steps to have the corporate charters of each, as well as the patents, reinstated, but may not be successful in such reinstatements, and is in discussions with the Licensor regarding these matters.


To the best of the Company’s knowledge at present, none of these issues presents a near-term hindrance to the Company’s continued focus on establishing and growing its engine technology business.


Pursuant to the Agreement, the Company has obtained previously described rights to all forms of intellectual property covering certain engine technology that is the subject of the Agreement and is not relying on the two U.S. patents to be reinstated in order to maintain the ability and knowhow to use such technology.  At this time, there can be no assurance that the foregoing matters will not have a material adverse effect on the Company’s operations.


The accompanying June 30, 2014, balance sheet presents the carrying value of the license fee at $236,309, consisting of the $200,000 required payments under the Agreement and $48,709, representing the fair value of shares issues to the Licensor, net of $12,400 in accumulated amortization. In addition, the accompanying balance reflects $187,000 due to the Licensor, representing the remaining liability from the initial $200,000 required payment.


The Company periodically performs an analysis of its contractual rights and arrangements and establishes asset value based on that analysis.




F-8




Receivable Acquisition and Management Corp.


Notes to Financial Statements

June 30, 2014

(Unaudited)


5. Concentrations


The Company grants credit in the normal course of business to its customers.  The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk.


Two customers accounted for 62.6% and 37.4% during the six months ended June 30, 2014, and two customers accounted for 62.9% and 37.1% during the six months ended June 30, 2013, respectively, of total project management income.


Two customers accounted for 74.4% and 25.6% of total accounts receivable at June 30, 2014.



6. Stock Issuance


In February 2014, the Company issued 375,000 shares of common stock to the former chief executive officer and 50,000 shares to a lawyer as compensation for services provided to the Company.


In February 2014, the Company issued 300,000 shares of common stock to a law firm as partial compensation for certain services provided to the Company.


In March 2014, the Company issued 250,000 shares of common stock to an industry consultant as partial compensation for services being rendered.

























* * * * *







F-9




Item 2.  Management’s Discussion & Analysis of Financial Condition and Results of Operations.


The following management’s discussion and analysis should be read in conjunction with the Company’s historical consolidated financial statements and the related notes thereto included in our audited financial statements for the year ended December 31, 2013, and the notes thereto.  The management’s discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this quarterly report. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this quarterly report.


Overview


On May 15, 2013, Receivable Acquisition & Management Corporation, a Delaware corporation (the “Company”) completed the acquisition of Cornerstone Program Advisors LLC, a Delaware limited liability company (“Cornerstone”) and Sustainable Energy Industries, Inc., a Delaware corporation (“Sustainable”), and the Company assumed the operations of each of these entities (the “Merger”).  Receivable Acquisition & Management Corporation had operated as a business purchasing and collecting upon defaulted consumer receivables and its operations were spun off by the Company.  Cornerstone has been in the business of managing energy infrastructure projects, specializing in the non-profit marketplace.  Sustainable is in the business of developing, marketing, and implementing clean tech technologies.  The Company has refocused on managing energy infrastructure projects and developing applications for a licensed environmentally benign heat engine with particular focus on the geothermal and independent power production markets.


On May 7, 2014 the Company filed its audited financial statements for the fiscal year ended December 31, 2013.  In addition, the Company filed unaudited financial statements for the three month period ended March 31, 2014 and had earlier filed unaudited financial statements for the three month periods ended September 30, 2013 and June 30, 2013.  On August 5, 2013, the Company filed Amendment No. 1 to its Current Report on Form 8-K (the “Form 8-K/A”), which included the audited Financial Statements of Cornerstone for the fiscal years ended December 31, 2012 and December 31, 2011, as well as the unaudited Financial Statements of Cornerstone as of June 30, 2013 and for the three months ended March 31, 2013 and 2012. In addition, the Company provided the audited Financial Statements of Sustainable Energy, LLC, a New York limited liability company (“Sustainable LLC”), for the fiscal years ended December 31, 2012 and December 31, 2011, and the unaudited financial statements of Sustainable LLC, as of March 31, 2013, and for the three months ended March 31, 2013 and 2012. The Financial Statements of Sustainable LLC were provided in lieu of those of Sustainable because Sustainable LLC had transferred to Sustainable substantially all of its assets pursuant to a May 15, 2013 Assignment and Assumption Agreement. In addition, the Company provided the unaudited pro forma condensed combined financial information of the Company, Cornerstone, and Sustainable, as of and for the six months ended June 30, 2013 and for the fiscal year ended September 30, 2012.


Cornerstone is considered to be the “acquiring entity” in the Merger strictly from an accounting perspective.  Accordingly, under the applicable accounting rules, in the Quarterly Report on Form 10-Q for the period ended June 30, 2013, the Company reported the financial results for Cornerstone through March 31, 2013, and then the financial results of the all of the entities that were combined as a result of the Merger from January 1, 2013 through the end of the June 30, 2013 quarterly period.  

 

As reported in the Form 8-K/A, the Company changed its fiscal year from September 30 to December 31 to correspond with the fiscal years of each of Cornerstone and Sustainable.  


Results of Operations


During the three and six month periods ended June 30, 2014, the Company had a net (loss) of ($40,623) and ($102,637), respectively, on revenues of $270,217 and $517,827, respectively, versus net profits of $8,880 and $4,624 on revenues of $235,600 and $470,625, in the three and six month periods ended June 30, 2013.  Net profits in the most recent three and six month periods in 2014 turned to a loss as compared to the corresponding periods last year due, in part, to the cost of professional services, particularly those associated with the conversion of Company operations from a limited liability company to a corporation (see Notes to the financial statements) and to support the activities required of a public company.  In addition, the most recent period had higher marketing expenses as compared to the same period in 2013, due to a more aggressive marketing and public relations effort.




4




Revenue


Although revenues from the Company’s two customers show improvement, the margin of project management revenue over the corresponding cost of subcontracted consultants for such projects has declined from 2013 to 2014.  This gross profit for the six month period ended June 30, 2014, was 16% of revenues, down from 24% for the corresponding period in 2013.  This is due to a change in the arrangement with these subcontractors to attract and retain talent, providing them a larger share of revenues received.


The revenue increase for the three and six month periods ended June 30, 2014, over the corresponding periods from 2013 is a consequence of growing business activity with clients.   


Operating Expenses


Total operating expenses for the six month period ended June 30, 2014 were $620,465, versus $466,001 during the six month period ended June 30, 2013.  The 33% increase in operating expenses in the six month period in 2014, against the corresponding period in 2013, is primarily due to the costs of professional fees and public filing requirements, including related activity as a result of being a public reporting company, as well as increased expenditures for marketing and public relations.  The Company’s expenses for consulting contractors increased in line with revenues.


Consulting Expenses  


The Company outsources a significant portion of its project management, oversight and advisory activities to a carefully selected group of small firms, individuals and subcontractors with expertise specific to the projects underway.  As of the quarter ended June 30, 2014, the Company was using five to six such consulting resources. Consulting expenses consistently constitute the bulk of operating costs for the project advisory and management business activities of the Company, and accordingly generally track revenue.  


Liquidity and Capital Resources


As of June 30, 2014, the Company had a working capital deficit (that is, total current assets minus total liabilities) of ($191,849) versus a working capital deficit of ($157,244) as of the year ended December 31, 2013.   Most of this change is due to a reduction in cash, partly in connection with the growth of the business, but most of which were expenses related to the Merger and subsequent professional services work.


At the end of period ended June 30, 2014, the Company had net cash of $7,385 versus $347,877 at December 31, 2013. At the end of the six months ended June 30, 2014, net cash provided (used) by operating activities was ($352,742) versus $175,130 at the end of the six months ended June 30, 2013.  The decrease in net cash from operating activities was primarily due to the decrease in accounts payable and accrued expenses, and increase in accounts receivable.  In addition, the increased revenues resulting from the growth in the business over that time were more than offset by increasing costs for subcontractors, as well as charges for marketing efforts and professional fees.  


At the end of the six months ended June 30, 2014, there was $12,250 net cash provided (used) by financing activities versus ($163,982) during the six months ended June 30, 2013.  This was primarily due to distributions paid prior to the Merger.


The Company believes that funds generated from operations, together with existing cash and cash infusions by major stockholders, will be sufficient to finance its operations for the next twelve months, but are likely to be insufficient to fund its contractual obligation and to fund growth.  The Company expects to seek additional capital to cover any working capital needs and its contractual obligation discussed below, and to fund growth initiatives in its identified markets. However, there can be no assurance that any new debt or equity financing arrangement will be available to the Company when needed on acceptable terms, if at all. The continued operations of the Company are dependent on its ability to collect its receivables and increase revenues.


Income Taxes


The Company did not record any income tax provision for the six month period ended June 30, 2014, and does not expect any material income tax liability for the period.  Income and related taxes for 2013 paid in the quarter ended June 30, 2014, totaled $1,235.  








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Contractual Obligation


As previously disclosed, the Company has entered into a renewable 20-year engine technology license agreement (the “Agreement”) with a third party licensor (the “Licensor”) that developed engines capable of converting low grade heat into other forms of energy.  Under the terms of the Agreement, the Company obtained certain exclusive license rights in the engines developed by the Licensor which will permit the Company to develop, manufacture and integrate such engines into its projects.  An upfront payment of $200,000 and escalating volume-related quarterly payments are contractually required in order to maintain certain exclusive markets.  The payments, taken as whole, are expected to obligate the Company to amounts of $250,000 to $400,000 per year depending upon the growth in revenue from this source.  If the expected revenues do not materialize, the Company may elect not to pay these sums, and in the event of non-payment, the Company retains a non-exclusive license subject to royalty fees.  As of June 30, 2014, the Company has begun payments under this Agreement.


Critical Accounting Policy & Estimates


Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the condensed consolidated financial statements included in this quarterly report.


Off-Balance Sheet Arrangements


The Company has no off-balance sheet arrangements.



Item 3. Quantitative and Qualitative Disclosures about Market Risk.


The Issuer is not required to provide the information called for in this item due to its status as a Smaller Reporting Company.



Item 4. Controls and Procedures.


Evaluation of disclosure controls and procedures


The term “disclosure controls and procedures” is defined in Rules 13(a)-15e and 15(d) - 15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s principal executive officer and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2014. He has concluded that, as of June 30, 2014, our disclosures, controls and procedures were effective to ensure that:


(1) Information required to be disclosed by the Company in reports that it files or submits under the act is recorded, processed, summarized and reported, within the time periods specified in the Commissions’ rules and forms; and


(2) Controls and procedures are designed by the Company to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management including the principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding financial disclosure.





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This term refers to the controls and procedures of a Company that are designed to ensure that information required to be disclosed by a Company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the required time periods. Management continues to take steps to improve its controls and procedures, and expects, further, that the growing scale of the business will enable the Company to obtain additional resources to assist in that effort.


Changes in Internal Control over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting or in any other factors that could significantly affect these controls during the quarter ended June 30, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.








 









































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PART II


OTHER INFORMATION


Item 1.  Legal Proceedings


The Company is not a party to any material pending legal proceedings or a proceeding being contemplated by a governmental authority nor is any of the Company’s property the subject of any pending legal proceedings or a proceeding being contemplated by a governmental authority except as set forth in our Annual Report on Form 10-K for December 31, 2013 from which there have been no material changes.


Item 1A. Risk Factors.


The Issuer is not required to provide the information called for in this item due to its status as a Smaller Reporting Company.


Item 2.  Unregistered Sale of Equity Securities and Use of Proceeds


None.


Item 3.  Defaults Upon Senior Securities


None.


Item 4.  Mine Safety Disclosure


Not Applicable.


Item 5.  Other Information


None.


Item 6.  Exhibits


Exhibit

Number

 

Exhibit Title

31.1

 

Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

  

32.1

 

Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 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 Schema

 

 

  

101.CAL *

 

XBRL Taxonomy Calculation Linkbase

 

 

  

101.DEF *

 

XBRL Taxonomy Definition Linkbase

 

 

  

101.LAB *

 

XBRL Taxonomy Label Linkbase

 

 

  

101.PRE *

 

XBRL Taxonomy Presentation Linkbase


In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.


* Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.




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SIGNATURES


In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed by the undersigned, thereunto duly authorized.


 

 

RECEIVABLE ACQUISITION & MANAGEMENT CORPORATION

 

 

 

Date:  August 18, 2014      

By:

/s/ Thomas Telegades

 

Name:

 Thomas Telegades

 

Title:

Chief Executive Officer

 

 

Interim Chief Financial Officer

 

 

(Principal Executive Officer, Principal Financial Officer

and Principal Accounting Officer)















































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