OPERATING EXPENSES. Our operating expenses consist primarily of payroll and related taxes, professional and consulting services, expenses for executive and administrative personnel and insurance, telephone and communications, facilities expenses, travel and related expenses, and other general corporate expenses. Our operating expenses for fiscal 2010 were $771,344 compared to fiscal year 2009 operating expenses of $1,127,096 a decrease of $355,752 related mainly to a decrease in commissions payable which corresponds to lower revenue achieved.
ASSETS. At December 31, 2010, we had total assets of $101,921 compared to total assets of $171,756 as of December 31, 2009. The decrease is mainly attributable to lower accounts receivable and the disposal of an automobile.
During 2010, net cash provided by financing activities was $21,048 compared to ($15,442) used in financing activities in 2009.
As shown in the accompanying financial statements, the Company incurred net losses for the years ended December 31, 2010 and 2009 of $ 185,229, and $37,157, respectively. Cumulative losses since inception are $ 292,947. The Company has a working capital deficit at December 31, 2010 of $ 139,678. 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.
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 is applied when in management’s view it is more likely than not (50%) that such deferred tax will not be utilized.
In our opinion, these financial statements present fairly, in all material respects, the financial position of AAA Public Adjusting Group, Inc. as of December 31, 2010 and 2009 and the results of its operations and its cash flows for the years ended in conformity with accounting principles generally accepted in the United States of America.
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.
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.
As shown in the accompanying financial statements, the Company incurred net losses for the years ended December 31, 2010 and 2009 of $ 185,229, and $37,157, respectively. Cumulative losses since inception are $ 292,947. The Company has a working capital deficit at December 31, 2010 of $139,678. 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.
The Company had leased for $ 1,000 a month, an apartment and storage facility from an officer and a major stockholder of the company under a lease commencing January 01, 2009 through December 31, 2010. This lease was cancelled on July 1, 2009 with no future rents or penalties were due.
Accounts receivable reflects net funds due the company for its services and gross funds due the company and which are offset by any funds any 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 December 31, 2010 and December 31, 2009 were:
This agreement allows for interest at 5%, no specific maturity date and for the conversion of debt into shares of common stock at a 25% discounted price of the 5 day average closing bid price prior to the day of execution.
Concurrent with this liability conversion, an independent firm purchased $28,500 of this note from the officer/director. The AAA Public Adjusting Group agreed for this $28,500 component, that the conversion rights of this note would be retained, the maturity of the note was established at 1 year from April 1, 2011, and the interest rate was adjusted to 8%. The $28,500 proceeds of this note sale were loaned by the officer/director to the company, at no interest and no specific maturity date.