United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2004
-OR-
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number: 0-19154
AMERICAN ASSET MANAGEMENT CORPORATION
(Name of small business issuer in its charter)
NEW JERSEY 22-2902677
(State or other jurisdiction of) (IRS Employer Identification No.)
incorporation or organization)
1280 ROUTE 46 WEST, PARSIPPANY, NEW JERSEY 07054
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (973) 299-8713
Securities registered under Section 12(b) of the Exchange
Act: None
Securities registered under Section 12(g) of the Exchange Act:
NO PAR VALUE COMMON STOCK
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such report(s),
and (2) has been subject to such filing requirements for the past 90 days.
Yes __ No _X_
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. ( X )
For the year ended December 31, 2004, the issuer's revenues were $359,196.
As of March 31, 2005 the aggregate market value of the issuer's common
stock held by non-affiliates computed by reference to the average bid and
asked prices of such stock, was $105,478.
As of March 24, 2005 the issuer has 1,316,989 shares of its no par value
Common Stock issued and 1,316,989 shares outstanding.
Documents incorporated by reference: None
Transitional Small Business Disclosure Format: Yes ___ No _X_
10KSB REPORT
PART I
ITEM 1. DESCRIPTION OF BUSINESS
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: Certain statements and discussions contained in this report are
not based on historical facts and contain forward looking statements that
involve a number of known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward looking statements. Such
factors include, but are not limited to, those relating to competition, the
ability of the Company to successfully market new mortgage products and
services, the economic conditions in the markets served by the Company, the
possibility of increased interest rates which would adversely affect the real
estate market, the ability to hire and retain key personnel, and other risks
detailed in this report and in the Company's other filings with the
Securities and Exchange Commission. The words believe, expect, intend,
anticipate and plan and similar expressions identify forward looking
statements, readers are cautioned not to place undue reliance on these
forward looking statements, which speak only as of the date the statement
was made.
GENERAL
American Asset Management Corporation (the Company), conducts its
business through its wholly-owned subsidiary, Capital Financial Corp.
(Capital), a licensed mortgage banking company in New Jersey. Unless
otherwise indicated, all references to the Company in this report includes
the Company and its subsidiaries.
The Company was incorporated in the State of New Jersey on July 1, 1988.
CERTAIN BUSINESS DEVELOPMENTS DURING 2002, 2003 AND 2004
Between December 2001 and December 2002, the Company sold an aggregate
of $235,000 of its 10% Cumulative Convertible Participating Preferred Stock
to one of its directors and two non-affiliated accredited investors.
During 2004, the Company secured financing in the form of notes payable
from related parties in the amount of $320,000.
BUSINESS - CAPITAL FINANCIAL CORP.
The Company, through Capital, is primarily engaged in mortgage banking
activities which involves the origination and sale of residential first
mortgage loans collateralized by one to four family homes. The Company's
service area is the State of New Jersey and to date, its revenues have
primarily consisted of loan origination fees and interest received on
mortgage loans. Capital acts either as a "banker" or as a "banker acting
as a broker". When acting as a banker, Capital closes loans in its own
name. When acting as a broker, Capital does not make mortgage loans or
close loans in its own name, but receives compensation at closing from the
borrower for assisting in obtaining a mortgage from a third party investor
(purchaser of the mortgage) and/or from the investor for referring the loan
to such investor.
Capital originates mortgage loans through direct solicitation of
borrowers by its own sales force, through media advertising in its service
area and through referrals from mortgage bankers, credit unions, real estate
brokers, accountants and attorneys. Borrowers submit loan applications which
are processed by the Company's loan processors who conduct credit checks,
arrange for the property to be appraised and submit fully processed loan
application packages to potential investors for final approval and
commitment. After an investor commits to purchase the loan from Capital,
the Company either uses its own funds, its warehouse line of credit as
discussed below, to fund and close the loan or has the loan funded by the
investor. The loan documentation is then prepared and the loan is closed
in Capital's name at which time, if the loan has been funded by the
investor the loan is simultaneously assigned to the investor. When Capital
closes a loan using its own funds, or its warehouse line of credit,
the loan is delivered to the investor after the loan is closed.
The Company generally sells its loans on a loan-by-loan basis to
mortgage investors, which are usually savings banks. The Company
estimates that approximately 90% of its loan applications typically close
within 60 days from the date of application. During 2003, the Company sold
loans to 6 different investors two of which accounted for 94% of total
revenues. During 2004, the Company sold loans to 8 different investors,
three of which accounted for 60% of total volume. The Company believes
that there are numerous other investors to which the Company could readily
sell its loans if, for any reason, it was unable to sell its loans to the
above investors. As of March 24, 2005, the Company had agreements with
approximately 12 investors, to which the Company may sell its loans or
refer applications to.
As of December 31, 2004, the Company had a $7,000,000 warehouse line
of credit from a mortgage warehouse lender which provided the Company with a
facility to borrow funds secured by originated residential mortgage loans
which were temporarily warehoused and then sold. The warehouse line of
credit, which expired on March 31, 2005, was secured by the personal
guarantee of the Company's President. On March 31, 2005 the Company
renewed its agreement until June 30, 2005. However, the lender lowered
the amount to $4,000,000 at the request of the Company. The Company
believes that the amount of this new credit line will be sufficient to
meet the Companys mortgage warehouse needs at present.
The Company will borrow under its warehouse line of credit only
against takeout commitments issued by qualified investors who have
pre-approved the loans and committed to purchase the closed loan from
the Company. By using the warehouse funds instead of "table funding",
(funding provided by the investor who purchases the loan from the Company),
the Company has generally been able to receive more favorable pricing
from its investors which the Company believes has made it more competitive
in the market place. The warehouse line has also allowed the Company to
sell loans to investors which do not table fund and only purchase closed
loans from its correspondents, i.e. Capital.
The interest rate currently being charged to the Company on borrowed
warehouse funds outstanding is variable between 3/4% and 1 1/2% over the
prime lending rate as quoted by the Wall Street Journal. As of March 31,
2005, the Company had outstanding borrowings of $198,000 under the line
of credit.
On August 9, 2000 the Company was notified by U.S. Department of
Housing and Urban Development ("HUD") that its approval with the agency
as a non-supervised lender was upgraded to what is commonly referred to
as Full Eagle status. This approval allows the Company to act in the
capacity of a mortgage banker rather than a mortgage broker to underwrite
and close loans in its own name and HUD will insure these loans without
prior approval from the Company's sponsoring investors, as previously
required. This approval also allows the Company to expand its wholesale
product line to include third party origination of FHA loans through
this new delegated underwriting privilege. Additionally, this approval
allows the Company to be potentially more competitive in the market place
with these types of loans. The Company did not file the financial
statements of Capital with HUD by the required due date of March 31, 2005.
HUD allows for a 30 day extension of time after an approved lender first
receives written notice of a filing delinquency to come into compliance
when an annual report is not filed on time. The Company expects to fill
its annual report with HUD before April 22, 2005.
During 2004 the Company experienced a decrease in mortgage
refinancings. However, as a result of actions taken by Capital since
1994 to implement other methods of securing purchase loan originations,
including those discussed below, the Company, to a certain extent,
has lessened its prior dependence on mortgage refinancings. Nevertheless,
the Company believes that a significant increase in mortgage rates would
adversely affect its ability to close both the number of home purchase
loans and refinance loans, which would have an adverse effect on the
Companys financial position.
Since 2000 the Company had primarily focused its efforts in the
wholesale area of mortgage origination and since January 2002 to complement
its wholesale business, utilizes its own retail sales force of loan
originators. The Company decided during the fourth quarter of 2003 to
increase its own retail sales force as part of the Companys efforts to
increase its flow of business.
In October 2003, the Company was notified by its primary institutional
mortgage banker which it sold loans to that the institution would no longer
purchase loans on properties in New Jersey as a direct result of a new New
Jersey State law which went into effect on November 27, 2003. The law,
called The New Jersey Home Ownership Security Act of 2002 covers most of
the residential loans originated in the state and deals primarily with
lender fees and lender liability including secondary market lenders. The
Company, as well as other mortgage banking companies who do business in
New Jersey, had been notified during October and November of 2003 by
numerous institutional purchasers of mortgage loans originated in New
Jersey, that the language contained in the new law was unacceptable to
them in its original form.
The law was amended by the NJ State Legislature during the September
2004 to clarify certain provisions of the law that primarily pertain to
subsequent lender liability. The language of the amended law became
satisfactory to the Companys primary fixed rate mortgage investor and
on September 13, 2004 the Company was notified by the investor that it
would resume the purchase of New Jersey closed loans originated by the
Company. Accordingly, during November 2004 the investor resumed the
purchase of New Jersey mortgage loans from the Company.
During the first quarter of 2004, the Company instituted strict
pricing guidelines and commission structures to its retail sales force
that should alleviate some of the major retail profitability risks the
Company experienced in the past, although there is no assurance the
Company will be successful with its retail sales force. As of March 31,
2005 the Company has 6 experienced mortgage loan officers and is
aggressively recruiting additional experienced sales personnel. It
believes that by having a larger amount of experienced sales people it
has a better chance of originating a sufficient amount of mortgage loans
necessary to become profitable. There can be no assurance that the
Company will be successful in recruiting additional sales personnel or
that its production goals will be met to become profitable.
In addition to having a steady flow of loans from its own retail
source, the Company has a goal of selling pools of mortgages, also referred
to as bulk sales, to institutional and other investors rather than one
mortgage loan at a time sales as it presently conducts its business. The
Company believes it can negotiate greater revenues per mortgage sold by
this pooling method. The Company believes there are numerous entities
that it may make bulk sales to. Further, the Company believes, though
there can be no assurance, that through pooling it can increase its retail
sales force, wholesale customers and overall business volume, as a result
of being able to offer more competitive rates and higher compensation to
its origination sources while still increasing its net revenues per loan
on a percentage basis.
There can be no assurance the Company will be successful in its
relationships with wholesale correspondents and retail loan originators
as it faces intense competition from the other lenders it competes with
for this business, many of which have greater resources and experience
than the Company.
During the fourth quarter of 2003 the Company contracted to purchase
borrower inquiry leads from a national internet source that provides
potential borrowers with 4 mortgage rate quotes from lenders who compete
with each other for the borrowers mortgage. The Company also began
accepting credit cards from borrowers for payment of application and
commitment fees in the first quarter of 2004.
In March 2004, the Company modified its website to include sub-prime
credit loans on a brokered basis to borrowers with impaired credit and has
increased its Internet exposure to potential borrowers by linking its
website to a sub-prime lender showcase of a national provider of consumer
loan statistics. The Company continues to be encouraged with this source
of loan originations and the results of its Internet marketing.
During the fiscal year ending December 31, 2004, the Company continued
marketing its services to the public through the Internet using its website
home page linked to a major website belonging to a national provider of
mortgage loans and other financial statistics. The national provider's
website provides the public with the Company's lending programs and interest
rates on a daily basis, in addition to the rates of other lenders that the
Company competes with. As a result of its marketing through the Internet,
the Company has received numerous inquiries which have resulted in mortgage
loan applications and closings from persons seeking mortgage financing.
To date, the number of domestic mortgages originated over the Internet,
relative to the total mortgage origination market, while small, is still
growing. Industry wide in 2002, only a small percentage of total mortgage
originations were generated via the Internet and in 2003 and 2004, the Company
saw an increase in Internet generated business as compared with earlier years.
However, according to certain mortgage banking industry sources, by end of
the year 2005 the Internet could comprise 25% to 30% of total mortgage
originations. The Company's marketing strategy is to supplement its
current retail personal relationship based origination business with
marketing conducted over the Internet. There can be no assurance that
the Company will be successful in the future in using the Internet as a
source of mortgage loan applications.
SEASONALITY
The mortgage banking industry and the sale of new homes and building
lots is generally subject to seasonal trends which reflect the pattern of
new home construction and resales of existing homes. These sales typically
peak during the spring and summer seasons and decline to lower levels in
the late fall and winter seasons.
COMPETITION
The market for mortgage based financing is highly competitive. The
Company competes with numerous entities, primarily savings institutions,
commercial banks, insurance companies and other mortgage bankers, many of
which have more experience in mortgage based loans and have substantially
greater financial and other resources than the Company. Competitive
factors include the ability to offer competitive interest rates, various
types of loan programs and services provided.
GOVERNMENT REGULATION AND ENVIRONMENTAL LAWS
The Company's mortgage origination activities are subject to a
variety of Federal regulations, including but not limited to, the Equal
Credit Opportunity Act, Federal Truth-In-Lending Act and the Real Estate
Settlement Procedures Act and the regulations promulgated thereunder which
prohibit discrimination and require the disclosure of certain basic
information to applicants concerning credit terms and settlement costs.
Additionally, pursuant to the regulations adopted by the State of New Jersey,
the state has the right to conduct financial and regulatory audits of loans
under its jurisdiction and to determine compliance with state disclosure
requirements and usury laws. If the Company decides to expand its operations
into other states, it is anticipated that it will have to obtain the
necessary permits and/or licenses before it can commence operations in such
states. There can be no assurance that the Company will be able to obtain
such permits and/or licenses in any additional state which the Company may
plan to operate.
EMPLOYEES
As of March 31, 2005, the Company had 9 employees, of whom 1 was
employed as executives or in administrative positions, 1 was employed in
the closing of mortgage loans and other clerical positions, 1 was an
underwriter of mortgage loans, and 6 were commission sales personnel.
None of the Company's employees are covered by collective bargaining
agreements and the Company believes that its relations with its employees
are satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's executive offices consist of 2,250 square feet of offices
in a building located in Parsippany, New Jersey and the offices are occupied
pursuant to a 36 month lease which commenced on January 1, 2003 at a rental
of $3,660 per month. The lease also provides the Company with a 2 year term
renewal option at a monthly rental of $3,880 per month.
ITEM 3. LEGAL PROCEEDINGS
On March 25, 1999, a derivative action on behalf of two New Jersey
Limited liability companies (the "LLC's") was commenced against certain
defendants, including the Company, its President, the Company's wholly-owned
subsidiaries (collectively, the "Company Defendants"), and one of the
Company's former directors, Theodore P. Rica, Jr. ("Rica") in the Chancery
Division of the Superior Court of New Jersey, Union County. The plaintiffs
allege that Rica and certain defendants other than the Company Defendants
("non-Company defendants"), misappropriated assets and opportunities of
the LLC's for their own use, engaged in self-dealing with respect to the
LLC's, breached the operating agreements of the LLC's, and converted and
embezzled assets and funds of the LLC's.
The Company Defendants are alleged to have aided and abetted Rica
in converting the assets of the LLC's by accepting loans and payments from
the LLC's and Rica and repaying the loans to Rica in the form of cash and
Company stock.
The plaintiffs seek declaratory and injunctive relief against the
Company Defendants; an accounting of (i) all shares of Company stock
purchased by Rica and certain non-Company defendants and (ii) all
payments to or from the Company and Rica and certain non-Company
defendants; imposition of a lien or equitable trust in favor of the
LLC's on shares of Company stock issued in the names of Rica and certain
non-Company defendants; and certain unspecified compensatory and
punitive damages, attorneys' fees and costs.
In April 1999, the Court granted a preliminary injunction, which,
among other things, enjoins the Company Defendants from allowing the
transfer of any Company stock held in the name of Rica and certain other
non-Company defendants and directs the Company Defendants to provide an
accounting of all such stock. The Company, while denying any wrongdoing,
did not oppose plaintiffs' application, as it did not adversely impact the
Company.
The case is scheduled for a June 2005 trial. The plaintiffs demanded
a payment of $588,000 from the Company and related defendants and have
currently reduced their demand to $300,000. There is no settlement offer
currently pending from the Company. The Company denies any wrongdoing
and believes that the claims against the Company are without merit and
that it has meritorious defenses and intends to defend the action
vigorously. However, at this time, the Company cannot predict their
ultimate liability, if any that might result from this action.
On May 18, 1999, Rica submitted to the Company his resignation
from the Company's Board of Directors.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of its security
holders during the fourth quarter of the year ended December 31, 2004.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded in the over-the-counter market
and since December 8, 1994, has been quoted on the OTC Bulletin Board of
the NASD under the symbol "AAMC".
The following table sets forth, for the periods indicated, the range of
the high and low bid prices for the Company's Common Stock as reported by
the OTC Bulletin Board. OTC Bulletin Board prices reflect inter-dealer
quotations, which do not reflect mark-ups, mark-downs or commissions and
may not represent actual transactions.
2004 PRICES FOR THE QUARTER ENDED
March 31 June 30 Sept. 30 Dec. 31
High Low High Low High Low High Low
Common Stock 0.55 0.40 0.40 0.40 0.74 0.22 0.30 0.22
2003 PRICES FOR THE QUARTER ENDED
March 31 June 30 Sept. 30 Dec. 31
High Low High Low High Low High Low
Common Stock 0.45 0.40 0.55 0.40 0.40 0.40 0.40 0.40
HOLDERS
The number of record holders of the Company's Common Stock was
approximately 125 as of March 22, 2005. The Company believes that, in
addition, there are in excess of 300 beneficial owners of its Common
Stock whose shares are held in street name.
DIVIDENDS
To date, the Company has not paid any cash dividends on its Common
Stock. The payment of dividends, if any, in the future is within the
discretion of The Board of Directors and will depend upon the Companys
earnings and will also be subject to the rights of any holders of stock,
such as the Companys Cumulative Convertible Participating Preferred
Stock, and any other preferred stock that may be issued that have
preference of payment of dividends over holders of Common Stock. The
Companys Board does not intend to declare any dividends on the Common
Stock in the foreseeable future, but instead intends to retain all
earnings, if any, for use in the Company's business operations.
See Item 11 for a certain information concerning the Companys equity
compensation plans as of December 31, 2004.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
CRITICAL ACCOUNTING POLICIES
Estimates and assumptions are required in the determination of mortgage
loans held for sale. Some of these judgments can be subjective and complex,
and, consequently, actual results may differ from these estimates. For any
individual estimates or assumptions made by the Company, there may be other
reasonable estimates or assumptions. The Company believes, however, that
given facts and circumstances, it is unlikely that applying any such other
reasonable judgment would cause a material adverse effect on the Companys
consolidated results of operations, financial position or cash flows for
the periods represented in this section. The Companys most critical
accounting policy is described below.
MORTGAGE LOANS HELD FOR SALE - Mortgage loans held for sale represent
mortgage loans originated and held pending sale to interim and permanent
investors. The mortgages are carried at the lower of cost or market. The
Company generally sells whole loans without servicing rights retained.
Gains or losses on such sales are recognized at the time legal title
transfers to the investor based upon the difference between the sales
proceeds from the final investor and the basis of the loan sold, adjusted
for net deferred loan fees and certain direct costs and selling costs.
The Company defers net loan origination fees as components of mortgage
loans held for sale on the balance sheet. Such costs are not amortized
and are recognized into income as a component of the gain or loss upon sale.
YEAR ENDED DECEMBER 31, 2004 COMPARED TO THE YEAR ENDED DECEMBER 31, 2003
Total revenues for the year ended December 31, 2004 were $359,196
compared to $1,144,228 for the year ended December 31, 2003, a decrease
of $785,032 or approximately 68.6%. The decrease is attributable to a
high turnover of retail sales personnel, increased interest rates and a
change in New Jersey law that adversely affected the Companys ability
to sell loans during most of 2004 which resulted in a significantly lower
amount of closed loans during 2004, and absence of land sales during 2004
as compared to $175,000 in land sales during the year ended December 31,
2003. Capital, the Companys wholly owned mortgage banking subsidiary,
had a decrease of $659,735 or approximately 90.2% in net gains from sales
of mortgages. This was off set in part by origination fees of $249,131 that
were derived from broker revenue. In addition there was a decrease in
mortgage interest income from Capital of $199,428 or approximately 83.8%
from $237,899 during 2003 to $38,471 during the year ended December 31,
2004. The reason interest income declined was a result of a greater amount
of loans being brokered than closed using the Company mortgage warehouse
where the Company received interest on the mortgage while it is awaiting
sale to an investor. The decrease in mortgage related originations was
the result of a decrease in amount of $41,748,501, or approximately 61.9%,
to $25,687,146 in total loan closings for the year ended December 31, 2004
from $67,435,647 in closings for 2003 and a decrease in the number of
closings by 212 to 109 or an approximately 66.1% decrease for 2004 from
321 mortgage closings during 2003. The Company experienced these declines
in its business due to its primary fixed rate investor ceasing the purchase
of all loans in New Jersey until late in the fourth quarter of 2004 due to
the effects of a New Jersey law described below and the high turnover of
the Companys retail sales force throughout the year and increased interest
rates which adversely affected mortgage refinancing. The decrease in
mortgage interest income was a direct result of a lesser amount of mortgage
loans held for sale to institutions and other investors, and to a lesser
extent the Company holding a smaller number of second mortgages in its
warehouse facility which carry higher interest rates and generate greater
rates of interest to the Company than first mortgages.
For the year ended December 31, 2004, Capital closed 109 residential
mortgage loans in the principal amount of approximately $25,687,146 compared
to 321 loans in the principal amount of approximately $67,435,647 in the
prior year, a decrease in number of 212 or approximately 66.1% and a
decrease in amount of $41,748,501 or approximately 61.9%. At December 31,
2004, the Company had approximately 10 mortgage loan applications in
process in the amount of approximately $2,562,250 compared to approximately
20 mortgage loan applications in process in the approximate amount of
$4,938,959 at December 31, 2003, a decrease in number of 10 or approximately
50.0% and a decrease in dollar amount of approximately $2,376,709 or 48.2%.
The decrease in amount of loans was due to the Companys primary investor of
fixed rate loans suspending all business activity in New Jersey during the
fourth quarter of 2003 and not resuming the purchase of mortgage loans in
New Jersey until late in the fourth quarter of 2004, as a direct result of
a new, New Jersey law which took effect in November 2003 and was not amended
until late November 2004. Of the 10 loans in process as of December 31,
2004, 8 loans in the approximate amount of $2,042,250, or 79.7% were
brokered retail originations and 2 loans in the approximate amount of
$520,000 or 20.3% were originated by the Company's retail sales personnel
and are to be closed using the Companys warehouse credit line. As of
March 24, 2005, the Company has 13 mortgage loan applications in process
in the approximate amount of $3,760,000. Of the 13 loans in process as of
March 31, 2005, all 13 were originated by the Companys retail sales
personnel or from the Companys executive staff.
Total operating expenses for the year ended December 31, 2004 were
$782,654, a decrease of $436,797 or 35.8% from the $1,219,451 incurred in
the prior year. The $436,797 decrease in operating expenses was the result
of an absence of land development costs for the year ended December 31, 2004
compared to $186,765 in land development costs in the prior year, a decrease
in interest expense of $218,337 or approximately 82.3% to $46,911 from
$265,248 in the prior year due to interest charged on a lesser amount of
closed loans and borrowed funds, a decrease of $77,212 or approximately
20.0% in employee compensation and commissions to $308,634 from $385,846
in the prior year, and a decrease in other expenses of $30,432 or 8.01% to
$344,609 from $375,041 in the prior year, and an $82,500 net loss on
derivative instruments compared to a net loss of $6,551 in the prior year.
Other expenses are primarily attributable to legal and accounting fees,
associated warehouse and loan processing fees, and rent. Expressed as a
percentage of revenues, operating expenses increased to approximately
217.9% in 2004 from 106.6% in 2003, reflecting an increase in expenses and
a decrease in revenues discussed above.
Due to the foregoing, the Company incurred a net loss of $423,458
for 2004 compared to a net loss of $75,223 for 2003 and, after payment
and accrual of preferred stock dividends of $23,500 in 2004 and $23,500
in 2003, a loss attributable to common stockholders of $446,958, or a
$0.34 loss per basic and diluted share, for the year ended December 31,
2004 compared to a loss of $98,723, or $.08 per basic and diluted share
for the year ended December 31, 2003.
The Company had a deferred tax asset at December 31, 2004, arising from
federal and state net operating loss ("NOL") carryforwards of approximately
$4,088,000 and $3,205,000 respectively. The NOL carryforwards expire between
2005 and 2022. A valuation allowance has been recorded in the amount of
$1,582,247 at December 31, 2004, due to the uncertainty of future utilization
of the Company's NOL carryforwards.
No provision for income taxes was made in 2004 and 2003 due to net
operating losses.
LIQUIDITY AND CAPITAL RESOURCES
From 2002 through 2004 the Company continued to take actions that it
believes are necessary to improve future operating results. Such actions
included, but were not limited to, moving its offices to Parsippany, New
Jersey during April 2002 and expanding its space within the same building
in January 2003 which has enabled the Company to reduce the cost of rent as
compared to the expired lease costs in its former office lease that expired
in 2002, added additional outside sources of mortgage loans from wholesale
accounts such as other mortgage bankers and brokers. During December 2002,
the Company's warehouse line was increased from $6,000,000 to $8,000,000 and
during January 2003, the warehouse credit line was increased to $9,000,000,
and again during April 2003 increased to $10,000,000 as the Company's
mortgage closings had increased to require a greater credit line available
to fund its monthly mortgage closing obligations. As of March 31, 2004, the
Company allowed the $10,000,000 warehouse credit line to expire. On March 11,
2004 the Company was approved and commenced utilizing a new $7,000,000
warehouse credit line with a different commercial lending institution. The
terms of this new credit line provide the Company with lower interest rate
and fees charged than with the previous credit line. The Company has renewed
this credit line effective April 1, 2005 and it expires June 30, 2005. The
Company has requested that the line be reduced to $4,000,000 as the present
$7,000,000 line has been under utilized and the Company wishes to avoid
paying the non-use fees. The Company believes that it could increase the
line to $7,000,000 again should its business warrant an increase.
The Companys capital resources during the year ended December 31, 2004,
have primarily been derived from revenues generated by its mortgage banking
operations. The Company's cash position decreased in 2004 primarily as a
result of a loss from operations of $423,458. The loss from operations was
partially offset by an increase of $93,682 in accounts payable and accrued
expenses and a $309,495 increase in notes payable.
On December 31, 2004, the Company had a working capital deficiency
of $262,627 compared to positive working capital of $179,718 on December
31, 2003.
As of December 31, 2004, the Company had cash and cash equivalents of
$308,387 compared to $345,947 at December 31, 2003, a decrease of $37,560 or
approximately 10.8%. The decrease was primarily attributable to net cash
used in investing activities of $103,260 and net cash used in operating
activities of $217,420. These decreases were partially offset by the net
cash provided by financing activities of $290,620.
Net cash used in operating activities was the result of a net loss of
$423,458, and a decrease in the warehouse finance facility of $456,905.
These amounts were partially offset by an addback for a derivative loss
of $82,500, an increase in prepaid expenses and other current assets of
$6,113 and a decrease in mortgage loans held for sale of $469,493 and an
absence of land development costs as compared to $163,590 of such assets
during 2003, depreciation and amortization of $3,655, and an increase in
accounts payable, accrued expenses and other current liabilities of $93,682
and non-cash interest expense of $7,500.
Net cash used in investing activities during the year ended December
31, 2004 were an increase in other assets of $958, cash used in purchase of
derivative instrument of $104,218, which was offset by the absence of
purchases of property and equipment and an absence of proceeds from
derivative instrument.
Net cash used in financing activities during the year ended December 31,
2004 were $18,005 of payments on notes payable and $18,875 in preferred stock
dividends paid and $320,000 of proceeds from issuance of notes payable.
The Company incurred a loss of approximately $423,000 during the year
ended December 31, 2004. Also, as of December 31, 2004, the Company had its
current liabilities exceeding current assets by approximately $262,627.
These matters caused the Companys auditors to add an explanatory paragraph in
Their auditors report which raises substantial doubt about the Companys
ability to continue as a going concern.
Managements plans include raising additional proceeds from debt
transactions with related parties to fund operations and to increase revenue
and cut expenses to reduce the loss from operations. However, there can be
no assurances that the Company will be successful in this regard or will be
able to eliminate both its working capital deficit and its operating losses.
The accompanying consolidated financial statements do not contain any
adjustment which may be required as a result of this uncertainty.
EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS
In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities, which amends and clarifies
financial accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities under SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 149 requires that contracts with comparable
characteristics be accounted for similarly and clarifies under what
circumstances a contract with an initial net investment meets the
characteristics of a derivative and when a derivative contains a financing
component. SFAS No. 149 also amends the definition of an underlying to
conform it to language used in FIN No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. SFAS No. 149 was effective for contracts entered
into or modified after June 30, 2003, with certain exceptions. The
adoption of SFAS No. 149 did not have a impact on the Companys
historical financial position or results of operations.
In March, 2004 the Securities and Exchange Commission issued Staff
Accounting Bulletin No.105- Application of Accounting Principles to Loan
Commitments. The staff accounting bulletin summarizes the view of the SEC
staff regarding the application of generally accepted accounting principles
to loan commitments accounted for as derivative instruments. The bulletin
indicates that loan commitments should be accounted for as derivative
instruments and measured at fair value. The staff also indicated a Company
should disclose it accounting policy for loan commitments pursuant to APB
Opinion no. 22 Disclosure of Accounting Policies. The staff also
indicates that they would expect all loan commitments accounted for as
derivatives and entered into after March 31, 2004 to apply the accounting
described in this bulletin. This interpretation by the SEC staff did not
have a material effect on the Companys consolidated results of operations
and financial condition.
ITEM 7. FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
PAGE NO.
Report of Independent Registered Public Accounting Firm F-1
Consolidated Balance Sheets - December 31, 2004 and 2003 F-2
Consolidated Statements of Operations -
for the years ended December 31, 2004 and 2003 F-3
Consolidated Statements of Stockholders' Equity (Deficit)-
for the years ended December 31, 2004 and 2003 F-4
Consolidated Statements of Cash Flows - for the years
ended December 31, 2004 and 2003 F-5
Notes to Consolidated Financial Statements F-6 - F-16
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
Item 8A. Controls and Procedures.
An evaluation was carried out under the supervision and with the
participation of the Company's management, including the Chief Executive
Officer (CEO) who also serves as the Companys Chief Financial Officer (CFO),
of the effectiveness of the Company's disclosure controls and procedures as
of December 31, 2004. Based on that evaluation, the CEO/CFO has concluded
that the Company's disclosure controls and procedures are effective to
provide reasonable assurance that information required to be disclosed by
the Company in reports that it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.
During the quarter ended December 31, 2004, there were no changes in the
Company's internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, its internal control
over financial reporting.
Item 8B. Other Information
During March 2004 the Company borrowed a total amount of $100,000 in
demand notes at an annual interest rate of 10% from two directors of the
Company, Bernard Gitlow and Russell Frayko, in the amount of $50,000 each.
During the quarter ended September 30, 2004, the Company borrowed an
additional $25,000 from a board member in the form of a demand note bearing
interest at 10% per annum.
During December 2004 the Company borrowed $125,000 for one year at a
variable rate of interest indexed to the Prime Rate from one of its
directors, Bernard Gitlow. As of March 31, 2005 the rate was 6.5% per
annum. Additionally, the Company borrowed $20,000 and $50,000 from the
Companys President and a relative of the Companys President
respectively, through the issuance of demand notes at 10% per annum.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF
THE REGISTRANT; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Company's executive officers and directors are as follows:
POSITION WITH
NAME AGE THE COMPANY
Richard G. Gagliardi 58 Chairman of the Board, President,
Chief Executive Officer and Chief
Financial Officer
Bernard Gitlow 78 Director
Russell D. Frayko 42 Director
RICHARD G. GAGLIARDI has been Chairman, President, Chief Executive
Officer and Chief Financial Officer of the Company since its inception
on July 1, 1988.Mr. Gagliardi was employed as a Registered Representative
at the investment banking firm of L. C. Wegard & Co., Inc. ("Wegard")
from October 1989 to September 1991, and served as a Vice President of
Wegard from October 1989 to July 1991.
BERNARD GITLOW has been a director of the Company since June 1993. He
has been Executive Vice President of Victor Kramer, Co., Inc. a consulting
company in the laundry and linen supply industry since August 1990. Since
January 1988, Mr. Gitlow has also served as a consultant to the linen supply,
laundry, and dry cleaning industry.
RUSSELL FRAYKO has been a director of the Company since June 2002.
He has been employed as President of Joint Venture Antiques since 1983, a
company in the antique and modern furniture restoration and sales business.
Mr. Frayko is also President of Joint Venture Promotions, an affiliate
company involved in the promotion of furniture and antique dealer trade shows.
Directors are elected to serve until the next annual meeting of
shareholders or until their respective successors are elected and qualified.
The executive officers of the Company are elected by the Company's Board
of Directors. Each executive officer will hold office until his successor is
duly elected and qualified, until his resignation or until he shall be removed
in the manner provided by in the Company's By-Laws.
The Company has an Audit Committee of the Board of Directors, which
supervises the audit and financial procedures of the Company. The members
of the Audit Committee are Messrs. Gitlow (Chairman) and Frayko, each of
whom is an independent director as defined under the rules of the NASD.
The Companys Audit Committee does not have a member that qualifies as a
financial expert under the federal securities laws. Each of the members
of the Audit Committee have been active in the business community and have
broad and diverse backgrounds, and financial experience. The Company believes
that the current members of the Audit Committee are able to fully and
faithfully perform the functions of the Audit Committee and that the Company
does not need to install a financial expert on the Audit Committee.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10 percent
of a registered class of the Company's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (SEC). Officers, directors, and greater than 10 percent
stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Companys knowledge, based solely on a review of the copies
of such reports furnished to the Company, all reports under Section 16(a)
required to be filed by its officers, directors and greater than ten-percent
beneficial owners were timely filed.
Code of Business Conduct and Ethics
The Company has not adopted a code of ethics that applies to its
principal executive officer, principal financial officer, principal
accounting office (controller) and persons performing similar functions.
In light of the fact that the Company's Chief Executive Officer acts
as the Company's principal executive, accounting and financial officer and
the relatively small number of persons employed by the Company, the Company
did not previously adopt a formal written Code of Business Conduct and
Ethics but is in the process of developing a comprehensive Code of Business
Conduct and Ethics to cover all of its employees. Copies of the Company's
Code of Business Conduct and Ethics, which is expected to be adopted during
2005 can be obtained, when available, upon written request, addressed to:
American Asset Management Corporation
1280 Route 46 West
Parsippany, New Jersey 07054
Attention: Chief Executive Officer
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth for the periods presented the
compensation paid by the Company and its subsidiaries for services rendered
during the fiscal year ended December 31, 2004 to the Company's Chief
Executive Officer (the named executive). No other executive officer of
the Company received an annual salary, bonus or other compensation in excess
of $100,000 for the fiscal year ended December 31, 2004.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Name and Principal Other Annual
Position Year Salary Compensation
Richard G. Gagliardi 2004 $121,154(3) $12,225(2)
Chairman of the Board, 2003 139,970 12,225(2)
President, Chief 2002 110,000 11,225(2)
Executive Officer and
Chief Financial Officer
(1) The 2004 salary of Mr. Gagliardi was $150,000. As of December 24, 2004
the Company owed Mr. Gagliardi approximately $28,846 in salary. This amount
has been forgiven by Mr. Gagliardi as of December 31, 2004.
(2) Represents the approximate reimbursement cost of an automobile leased
and insured by Mr. Gagliardi for business purposes. Also includes a 2%
contribution aggregating approximately $2,680 during 2003 and $2,000 during
2002 in the Simple IRA retirement plan established in June 1998 by Capital
for all employees.
OPTION GRANTS IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
No options were granted to the named executive during fiscal 2004.
The following table sets forth information concerning the number of
options owned by the named executive and the value of any in-the-money
unexercised options owned by the named executive as of December 31, 2004.
No options were exercised by the named executive during the year ended
December 31, 2004 and no options were owned by the named executive at
December 31, 2004:
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options/SARs at 12/31/2004 Options/SARs at 12/31/2004
Exercisable Unexercisable Exercisable Unexercisable
Richard G. Gagliardi 0 0 $0 $0
COMPENSATION OF DIRECTORS
Directors of the Company receive $200 for each regular meeting they
attend and $400 for attending an annual meeting. During 2004 the Company
paid a total of $800 in director fees for Board of Director meeting
attendance. There were no options granted to directors during the year
ended December 31, 2004.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of March 31, 2005
based on information obtained from the persons named below, with respect to
the beneficial ownership of shares of Common Stock by (i) each person known
by the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock, (ii) the named executive, (iii) each of
the Company's directors and (iv) all directors and executive officers as a
group:
AMOUNT AND NATURE PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OUTSTANDING
BENEFICIAL OWNER OWNERSHIP (2) SHARES OWNED
Richard G. Gagliardi(1) 503,490 (1) 38.2%
Bernard Gitlow 180,751 (1)(5) 13.7%
Nathan Low 149,000 (1)(3) 11.3%
Sunrise Foundation Trust 68,000 (1)(4) 5.1%
Brian Gonnelli 68,000 (1) 5.1%
Russell Frayko 61,301 (6)(7) 4.7%
All directors and executive
officers as a group (three persons) 745,542 (5),(6),(7) 56.7%
---------------------------------
(1) The address of Mr. Gagliardi is 1280 Route 46 West, Parsippany, New Jersey
07054. The address of Mr. Low and Sunrise Foundation Trust is 135 E. 57th
Street, New York, NY 10022. The address of Mr. Gonnelli is 22 Kathryn Drive,
Whippany, NJ 07981. The address of Mr. Gitlow is 1280 Route 46 West,
Parsippany, NJ 07054.
(2) Unless otherwise noted, the Company believes that all persons named in
the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them.
(3) According to a joint Schedule 13D filed with the Securities and Exchange
Commission represents (i) 31,000 shares of Common Stock owned by Mr. Low (ii)
68,000 shares of Common Stock owned by the Sunrise Foundation Trust, of which
Mr. Low is a trustee and (iii) 50,000 shares of Common Stock owned by the
Nathan Low Individual Retirement Account f/b/o Low.
(4) According to a joint Schedule 13D filed with the Securities and Exchange
Commission these shares are also beneficially owned by Nathan Low as
Reflected in footnote 3 (iii) above.
(5) Includes 175,000 shares of Common Stock issuable upon conversion of
150,000 shares of the Companys 10% Series A Cumulative Convertible
Participating Preferred Stock and 25,000 shares of the Company 10% Series B,
Cumulative Convertible Participating Preferred Stock.
(6) Includes 26,301 shares of Common Stock owned by Mr. Fraykos family.
(7) Includes 10,000 shares of Common Stock issuable upon conversion of 10,000
shares of the Companys 10% Series A Cumulative Convertible Participating
Preferred Stock.
EQUITY COMPENSATION PLAN
The following table provides certain information with respect to all of the
Companys equity compensation plans in effect as of December 31, 2004:
Number of Securities Weighted Average Number of Securities
to be issued upon exercise price of remaining available
exercise of out- outstanding for issuance under
standing options, options, warrants compensation plans
warrants and rights and rights (excluding securi-
ties reflected in
column (a))
Plan Category: (a) (b) (c)
Equity compensation
Plans approved by
security holders: 0 $0.00 0
Equity compensation
Plans not approved by
Security holders: 0 $0.00 0
Total 0 $0.00 0
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During March 2004 the Company borrowed a total amount of $100,000 in
demand notes at an annual interest rate of 10% from two directors of the
Company, Bernard Gitlow and Russell Frayko, in the amount of $50,000 each.
During the quarter ended September 30, 2004, the Company borrowed an
additional $25,000 from a board member in the form of a demand note bearing
interest at 10% per annum.
During December 2004 the Company borrowed $125,000 for one year at a
variable rate of interest indexed to the Prime Rate from one of its
directors, Bernard Gitlow. As of March 31, 2005 the rate was 6.5% per
annum. Additionally, the Company borrowed $20,000 and $50,000 from the
Companys President and a relative of the Companys President respectively,
through the issuance of demand notes at 10% per annum.
ITEM 13. EXHIBITS
(a) EXHIBITS
*3.1(a) Certificate of Incorporation as Amended
**3.1(b) Amendment to Certificate of Incorporation filed
February 1995
***3.1(c) Amendment to Certificate of Incorporation filed
January 1998
***3.1(d) Amendment to Certificate of Incorporation filed
December 2001
***3.1(e) Amendment to Certificate of Incorporation filed
December 2002
*3.2 By-Laws
***10.1 Executive Office Lease
21 Subsidiaries of the Company
31.1 Certification of the Principal Executive Officer and
Chief Financial Officer, pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Principal Executive Officer and
Chief Financial Officer, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
99.1 Warehouse Credit Line Extension
99.2 Demand Notes From Officer and Directors
_________________________
* Incorporated by reference to the corresponding exhibits in
the Company's Registration Statement of Form S-1 (SEC File
No. 33-34145).
** Incorporated by reference to the corresponding exhibit in the
Company's Form 10-KSB for the year ended December 31, 1994.90
*** Incorporated by reference to the corresponding exhibit in the
Companys Form 10-KSB for the year ended December 31, 2002.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Independent Auditor Fees
Fees for professional services provided by the Companys independent
auditors, WithumSmith + Brown, P.C., for the years ended December 31, 2004
and 2003 are as follows:
2004 2003
Audit Fees $62,500 $46,000
Audit-related fees $ 1,500 $ 1,500
Tax fees -0- -0-
All other fees -0- -0-
Totals $64,000 $47,500
Audit Fees
Audit fees consist of fees relative to the audit of the Companys
year-end financial statements and review of the Companys quarterly reports
on Form 10-QSB.
Audit Related Fees
Audit Related Fees consists of the Companys agreed upon procedures
engagement relating to the Companys HUD filing for the years ended December
31, 2004 and 2003.
Audit Committee Pre-Approval Policy
It is the policy of the Companys audit committee to approve all
engagements of the Companys independent auditors to render audit or
non-audit services prior to the initiation of such services.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant cause this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMERICAN ASSET MANAGEMENT CORPORATION
(Registrant)
/S/_Richard G. Gagliardi________
04/15/05 Richard G. Gagliardi
Date President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
/S/_Richard G. Gagliardi________
04/15/05 Richard G. Gagliardi
Date President
(Principal Executive,
Financial and Accounting
Officer)
(Signature)
04/15/05 /S/_Bernard Gitlow______________
Date Bernard Gitlow
Director
(Signature)
04/15/05 /S/_Russell Frayko______________
Date Russell Frayko
Director
(Signature)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders,
American Asset Management Corporation and Subsidiaries:
We have audited the accompanying consolidated balance sheets of
American Asset Management Corporation and Subsidiaries as of
December 31, 2004 and 2003, and the related consolidated
statements of operations, stockholders' equity (deficit) and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of American
Asset Management Corporation and Subsidiaries as of December 31, 2004 and
2003, and the consolidated results of their operations and their cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
discussed in Note 1 to the financial statements, the Company has
suffered significant losses in 2004 and 2003 and has a working capital
deficiency of $262,627 and a stockholders deficit of $200,137 as of
December 31, 2004. These conditions raise substantial doubt about
the Companys ability to continue as going concern. Managements plans
in regard to these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that may result from
the outcome of this uncertainty.
/s/ WithumSmith+Brown, P.C.
New Brunswick, New Jersey
February 25, 2005, except for Note 12 as to
which the date is April 1, 2005
F-1
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
2004 2003
ASSETS
Current Assets:
Cash $ 308,387 $ 345,947
Mortgage loans held for sale 360,400 829,893
Prepaid expenses and other current assets 8,174 14,287
Total Current Assets 676,961 1,190,127
Property and Equipment, Net 4,524 8,179
Other Assets 57,966 58,924
TOTAL ASSETS $ 739,451 $1,257,230
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
Current Liabilities:
Warehouse line of credit $ 356,796 $ 813,701
Derivative instrument -- 21,718
Accounts payable, accrued expenses and
other current liabilities 255,292 156,985
Notes payable -- 18,005
Notes payable related parties 327,500 --
Total Current Liabilities 939,588 1,010,409
Stockholders Equity (Deficit):
Series A Cumulative Convertible Participating
Preferred stock, no par value (liquidation
preference $210,000); 600,000 shares authorized,
210,000 shares issued and outstanding 205,000 205,000
Series B Cumulative Convertible Participating
Preferred stock, no par value; (liquidation
Preference $25,000); 300,000 shares authorized,
25,000 shares issued and outstanding 25,000 25,000
Common stock, no par value; 10,000,000 shares
authorized; 1,316,989 shares issued and outstanding 3,852,825 3,852,825
Additional paid-in capital 171,998 171,998
Accumulated deficit (4,454,960) (4,008,002)
Total Stockholders Equity (Deficit) (200,137) 246,821
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) $ 739,451 $1,257,230
The Notes to Consolidated Financial Statements are an integral part of
these statements.
F-2
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 2003
Revenues:
Net gain from sale of mortgages $ 71,594 $ 731,329
Broker revenue 249,131 --
Interest income 38,471 237,899
Land sales -- 175,000
Total Revenues 359,196 1,144,228
Expenses:
Employee compensation and commissions 308,634 385,846
Other expenses 344,609 375,041
Land and development costs -- 186,765
Losses on derivative instruments, net 82,500 6,551
Interest expense 46,911 265,248
Total Expenses 782,654 1,219,451
Net Loss (423,458) (75,223)
Dividends on Preferred Stock 23,500 23,500
Net Loss Attributable to Common Stockholders $ (446,958) $ (98,723)
Net Loss Per Common Share:
Basic $(0.34) $(0.08)
Diluted $(0.34) $(0.08)
Weighted Average Number of Shares of Common
Stock Outstanding:
Basic 1,316,989 1,301,225
Diluted 1,316,989 1,301,225
The Notes to Consolidated Financial Statements are an integral part of
these statements.
F-3
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
Series A Series B Additional
Preferred Stock Preferred Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit
Treasury Stock
Shares Amount Total
Balance, January 1, 2003
210,000 $205,000 25,000 $25,000 1,316,989 $3,852,825 $231,207 $(3,909,279)
(21,019) $(71,145) $333,608
Sale of Treasury Stock
-- -- -- -- -- -- (59,209) --
21,019 71,145 11,936
Preferred Stock Dividends
-- -- -- -- -- -- -- (23,500)
-- -- (23,500)
Net Loss
-- -- -- -- -- -- -- (75,223)
-- -- (75,223)
Balance, December 31, 2003
210,000 205,000 25,000 25,000 1,316,989 3,852,825 171,998 (4,008,002)
-- -- 246,821
Preferred Stock Dividends
-- -- -- -- -- -- -- (23,500)
-- -- (23,500)
Net Loss
-- -- -- -- -- -- -- (423,458)
-- -- (423,458)
Balance, December 31, 2004
210,000 $205,000 25,000 $25,000 1,316,989 $3,852,825 $171,998 $(4,454,960)
-- $ -- $(200,137)
The Notes to Consolidated Financial Statements are an integral part of
these statements.
F-4
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 2003
Cash Flows From Operating Activities:
Net loss $ (423,458) $ (75,223)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation 3,655 2,795
Non-cash interest expense 7,500 --
Losses on derivative instrument 82,500 6,551
Changes in:
Mortgage loans held for sale 469,493 3,939,621
Prepaid expenses and other current assets 6,113 (8,900)
Land and development costs -- 163,590
Warehouse line of credit (456,905) (3,837,600)
Accounts payable, accrued expenses and other
current liabilities 93,682 (23,060)
Net Cash Provided by(Used in)Operating Activities (217,420) 167,774
Cash Flows From Investing Activities:
Purchases of property and equipment - (8,796)
Purchases of derivative instrument (104,218) --
Proceeds from derivative instrument -- 15,167
Decrease (increase) in other assets 958 (40,680)
Net Cash Used In Investing Activities (103,260) (34,309)
Cash Flows From Financing Activities:
Payments on notes payable (18,005) (141,068)
Proceeds from issuance of notes payable
related parties 320,000 --
Payment of preferred stock dividends (18,875) (22,875)
Net Cash Provided by(Used In) Financing Activities 283,120 (163,943)
Net Decrease In Cash (37,560) (30,478)
Cash at Beginning of Year 345,947 376,425
Cash at End of Year $308,387 345,947
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $ 46,911 $ 275,176
Income taxes $ -- $ 10,133
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Sale of treasury stock resulting in
reduction of note payable $ -- $ 11,936
Accrued preferred stock dividends $ 10,500 $ 5,875
The Notes to Consolidated Financial Statements are an integral part of
these statements.
F-5
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES- NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS.
Note 1 - Significant Accounting Policies:
Nature of Business Operations
American Asset Management Corporation (the Company) through its wholly
owned subsidiary, Capital Financial Corp. (CFC) is engaged in originating
and selling loans secured primarily by first mortgages on one-to-four family
residential properties. CFC is a licensed mortgage banker in the State of New
Jersey. CFC also acts as mortgage broker, in that CFC does not make mortgage
loans or close loans in its own name, but receives compensation at closing
from the borrower for assisting in obtaining a mortgage from a third part
investor (purchase of the mortgage) and/or from the investor for referring
the loan to such investor.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All intercompany accounts and transactions
have been eliminated in consolidation.
Going Concern Uncertainty
The Company has incurred operating losses over the past two years in the
amount of approximately $498,681. During the year ended December 31, 2004
the Company incurred a net loss $423,458 and used $217,420 of cash to fund
operating activities. As of December 31, 2004, the Company had a working
capital deficiency $262,627 and a stockholders deficit of $200,137. These
conditions raised substantial doubt about the Companys ability to continue as
a going concern. Managements plans include raising additional cash in the
form of related party loans payable and increased revenue to generate
profitable operations. However, there can be no assurances that management
will be successful in this regard. The accompanying consolidated financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue as going concern.
Geographic and Customer Concentration and Significant Risks
The Company's mortgage banking activities are primarily concentrated in the
New Jersey market.
The Company's origination and premium fees are derived from loan sales to
various investors. During 2004, the Company sold loans to eight different
investors, three of which accounted for 60 percent of total volume. During
2003, the Company sold loans to six different investors, two of which
accounted for 94 percent of total volume.
The Company receives certain of its funds for mortgage banking activities
from one mortgage warehouse lending facility (see Note 7).
Use of Estimates
In preparing financial statements in conformity with accounting principals
generally accepted in the United States of America, management makes
estimates and assumptions in determining the reported amounts of assets and
liabilities and disclosures 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.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are
computed by using the straight-line method over the estimated useful lives of
three to five years for computer equipment, furniture and fixtures and office
equipment and over the life of the lease for leasehold improvements. Repairs
and maintenance expenditures are expensed as incurred. Expenditures for
betterments and major renewals are capitalized and, therefore, are included
in property and equipment.
Reclassifications
During 2004, the Company completed a review of its operating statement
classifications and determined that changes were required to conform its
presentation to industry and accounting standards. The following represents
the effects of these changes on the Companys previously reported 2003
operating statement:
Operating Statement Caption As Previously Reported As Adjusted
Mortgage Origination Fees $1,561,396 $-
Net Gain from Sale of
Mortgages $- $731,329
Interest Income $408,521 $237,899
Application and Loan
Commitment Fees $204,792 $-
Employee Compensation $363,516 $385,846
Commissions $1,081,834 $-
Other Expenses $521,018 $375,041
There was no effect on the Companys loss for 2003 as a result of the above
reclassifications. The Company also made certain reclassifications to its
December 31, 2003 consolidated balance sheet. However, these
reclassifications were immaterial.
Derivative Instruments
The Company had purchased in 2003, derivative instruments to stabilize its
risk associated with market fluctuations in interest rates. Such derivative
instruments do not constitute an effective hedging strategy in accordance
with generally accepted accounting principles and therefore these purchases
are treated as speculative investments. The fair market value of the
derivative instruments are marked to market at each reporting date on the
Companys balance sheet and all unrealized gains and losses are recognized in
earnings currently. The unrealized loss on the Companys freestanding
derivative contract was $21,718 as of December 31, 2003. There were no open
derivative contracts at December 31, 2004.
Mortgage Loans Held for Sale
Mortgage loans held for sale represent mortgage loans originated and held
pending sale to interim or permanent investors. The mortgages are carried at
the lower of cost or market as determined by outstanding commitments from
investors or current investor yield requirements calculated on the aggregate
loan basis. The Company defers net loan origination fees as a component of
mortgage loans held for sale on the balance sheet.
Revenue and Cost Recognition
Net Gain from Sale of Mortgages
The Company records gain on sale of mortgages in accordance with SFAS No.
140, which provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities. This
statement also provides standards for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. The
Company does not engage in servicing mortgages held for sale.
Gains or losses resulting from sales of mortgage loans are recognized at the
date of settlement and are based on the difference between the selling price
and the carrying value of the related loans sold. Nonrefundable fees and
direct costs associated with the origination of mortgage loans are deferred
and recognized when the loans are sold. Loan sales are accounted for as
sales when control of the loans is surrendered.
Interest Recognition
Interest income is accrued as earned. Loans are placed on a nonaccrual
status when any portion of the principal or interest is 90 days past due or
earlier when concern exists as to the collectibility of principal or
interest. The Company had no loans on nonaccrual status at December 31, 2004
and 2003. Loans return to accrual status when principal and interest become
current and are anticipated to be fully collectible.Interest expense is
recorded on outstanding borrowings on the Companys warehouse line of credit
based on the lines effective interest rate.
Broker Revenue
In 2004, the Company began generating revenue by acting as a broker of sub-
prime credit quality loans. The Company does not fund these loans from their
warehouse line, and therefore, does not sell them to investors. The Company
recognizes revenue from these loans when it receives its broker fee, which is
typically when the loan closes.
Concentration of Credit Risk
The Company maintains cash balances, at times, with financial institutions in
excess of amounts insured by the Federal Deposit Insurance Corporation.
Management monitors the soundness of these institutions and considers the
Companys risk negligible.
Net Loss Per Common Share
Net loss per share is computed by dividing net loss attributable to common
stockholders by the weighted number of common shares outstanding. Diluted
loss per share reflects the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then shared in
the earnings of the Company. Basic and diluted net loss per common share for
2004 and 2003 are the same because the effect of the preferred stock
conversions would be anti-dilutive.
Income Taxes
Deferred income tax assets and liabilities are computed for differences
between financial statement and tax basis of assets and liabilities that will
result in future taxable or deductible amounts, based on the enacted tax laws
and rates to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amount expected to be realized. The
primary deferred tax items are net operating loss carryforwards. All
deferred tax assets are fully reserved for because it is more likely than not
that the benefit will not be realized.
Effects of Recent Accounting Pronouncements
In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, which amends and clarifies
financial accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities under SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 149 requires that contracts with comparable
characteristics be accounted for similarly and clarifies under what
circumstances a contract with an initial net investment meets the
characteristics of a derivative and when a derivative contains a financing
component. SFAS No. 149 also amends the definition of an underlying to
conform it to language used in FIN No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. SFAS No. 149 was effective for contracts entered
into or modified after June 30, 2003, with certain exceptions. The adoption
of SFAS No. 149 did not have a impact on the Companys historical financial
position or results of operations.
In March 2004, the Securities and Exchange Commission issued Staff Accounting
Bulletin No.105 - Application of Accounting Principles to Loan Commitments.
The staff accounting bulletin summarizes the view of the SEC staff regarding
the application of generally accepted accounting principles to loan
commitments accounted for as derivative instruments. The bulletin indicates
that loan commitments should be accounted for as derivative instruments and
measured at fair value. The staff also indicated a Company should disclose
its accounting policy for loan commitments pursuant to APB Opinion no. 22
Disclosure of Accounting Policies. The staff also indicates that they
would expect all loan commitments accounted for as derivatives and entered
into after March 31, 2004 to apply the accounting described in this bulletin.
The interpretation by the SEC staff did not have a material effect on the
Companys consolidated results of operations and financial condition.
Note 2 - Fair Value of Financial Instruments:
The fair value of the Companys mortgage loans held for sale, warehouse line
of credit, notes payable and derivative instrument approximate carrying value
as of December 31, 2004 and 2003 due to the short term maturity of these
items.
Note 3 - Property and Equipment:
Property and equipment at December 31 consist of:
2004 2003
Computer equipment $ 79,529 $ 79,529
Furniture and fixtures 19,291 19,291
Office equipment 46,080 46,080
Leasehold improvements 2,240 2,240
147,140 147,140
Less: Accumulated depreciation and amortization 142,616 138,961
Property and Equipment, Net $4,524 $8,179
Depreciation and amortization expense was $3,655 and $2,795 for the years
ended December 31, 2004 and 2003, respectively.
Note 4 - Retirement Plan:
The Company maintains a SIMPLE individual retirement account plan under
section 408(p) of the Internal Revenue Code whereby eligible employees are
permitted salary reduction contributions. The Company may make nonelective
contributions equal to 2 percent of compensation for the calendar year to the
SIMPLE IRA of each eligible employee. For the years ended December 31, 2004
and 2003, the Company contributed $130 and $3,450 to employee retirement
plans.
Note 5 - Accounts Payable, Accrued Expenses and Other Current Liabilities:
Accounts payable, accrued expenses and other current liabilities consist of
the following at December 31:
2004 2003
Accounts payable $ 60,792 $102,646
Legal and accounting fees 130,629 16,613
Accrued expenses and other current liabilities 53,371 31,851
Preferred stock dividends 10,500 5,875
Total $255,292 $156,985
The Companys Chairman has forgiven $28,846 of salary owed to him for
services provided during 2004. This reduced his annual compensation
from $150,000 to $121,154.
Note 6 - Notes Payable:
Notes payable consists of the following at December 31:
2004 2003
Note payable (face amount $8,750 as
of December 31, 2003) - imputed interest
at 7.5 percent per annum, personally
guaranteed by the Companys President, final
payment made September 2004 $ -- $ 18,500
Related party notes payable, unsecured, interest
at various fixed and variable rates per annum,
payable on demand 327,500 --
Related party notes payable consist of the following at December 31, 2004:
Notes payable to Chairman of the Board $ 20,000
Notes payable to relative of Chairman 50,000
Notes payable to other Board Members 250,000
Accrued interest payable 7,500
Total $327,500
Interest expense on the related party notes payable amounted to $7,500
for the year ended December 31, 2004.
Note 7 - Warehouse Line of Credit:
The Company has a warehouse line of credit of $7,000,000 with a financial
institution, which was scheduled to expire on March 31, 2005 (see Note 12).
This line bears various interest rates from prime plus 3/4 to prime plus
1 1/2 percent, based on the type of loan written. The prime rate at December
31, 2004 was 5.25 percent. Funds from this line of credit are used for
short-term financing of mortgage loans held for sale, and are secured by
residential mortgage loans and a personal guarantee of the Companys
President. The investor pays the line of credit at the time of the closing.
As of December 31, 2004, two loans, amounting to $360,400 had yet to be
delivered to investors, resulting in a warehouse loan payable of $356,796.
As of December 31, 2003, three loans, amounting to $829,893, had yet to be
delivered to investors, resulting in a warehouse loan payable of $813,701.
The Company is required to maintain several financial covenants including:
1) maintaining a minimum adjusted net worth of $550,000 and 2) not exceeding
a maximum leverage ratio of 20 to 1. The Company did not meet the minimum
adjusted net worth requirement as of March 11, 2004 (the inception date of
the agreement) and December 31, 2004. The bank has informed the Company in
writing that they will not consider a net worth deficiency as an event of
default under the line of credit.
Note 8 - Income Taxes:
There was no provision for income taxes for the years ended December 31, 2004
and 2003, due to the losses generated in each year. All deferred tax assets
are fully reserved for because it is more likely than not that the deferred
tax asset will not be realized.
Deferred income taxes, consisting primarily of net operating loss
carryforwards, are summarized as follows at December 31:
2004 2003
Deferred Income Tax Asset $1,582,247 $1,418,202
Valuation Allowance (1,582,247) (1,418,202)
Net Deferred Income Tax Asset -- --
Deferred Income Tax Liability -- --
Net Deferred Income Tax Liability $ -- $ --
The Company has federal net operating loss carryforwards available to offset
future taxable income of approximately $4,088,000 at December 31, 2004, which
expire in 2006 through 2018, and state net operating loss carryforwards of
approximately $3,205,000 which expire in 2006 through 2011. The use of New
Jersey net operating loss carryforwards is partially suspended until 2005.
For the years ended December 31, 2004 and 2003, the Companys effective tax
rate differs from the federal statutory rate principally due to net operating
losses and other temporary differences for which no benefit was or has been
recorded.
Note 9 - Stockholders Equity:
The Company has also authorized the issuance of 600,000 shares of Series A
Cumulative Convertible Participating Preferred Stock with no par value. The
holder is entitled to annual dividends of $.10 per preferred share, accruing
from the date of original issue and payable in cash on a quarterly basis at a
rate of $.025 per preferred share. Preferred shares rank senior to the
common stock with respect to dividends and liquidating distributions or any
future capital stock that ranks junior to the preferred shares. Each
preferred share may be converted by the holders thereof, at any time, into
one share of common stock of the Company at a conversion price equal to
$1.00, subject to certain adjustments, which include: payment of stock
dividends on common stock, common stock splits, or combinations affecting the
common stock and recapitalizations, mergers or reorganizations. Preferred
stock holders have no voting rights, except where required by law or upon
conversion to common stock.
The Company authorized the issuance of 300,000 shares of Series B Cumulative
Convertible Participating Preferred Stock with no par value. The holder is
entitled to annual dividends of $.10 per preferred share, accruing from the
date of original issuance and payable in cash on a quarterly basis at a rate
of $.025 per preferred share. Series B Preferred shares rank senior to the
common stock and are on parity with the Series A Preferred Stock with respect
to dividends and liquidating distributions or any future capital stock that
ranks junior to the preferred shares. Each preferred share may be converted
by the holders thereof, at any time, into one share of common stock of the
Company at a conversion price equal to $1.00, subject to certain adjustments,
which include: payment of stock dividends on common stock, common stock
splits, or combinations affecting the common stock and recapitalizations,
mergers or reorganizations. Preferred stock holders have no voting rights,
except where required by law or upon conversion to common stock.
Cumulative unpaid declared dividends on all preferred stock totaled $10,500
and $5,875 as of December 31, 2004 and 2003, respectively.
In August 2001, the Company issued a note payable (See Note 6) to purchase
21,019 shares of its outstanding common stock as part of a settlement. In
2003, the treasury stock was sold by a state government and the proceeds were
remitted directly to the noteholder to reduce the balance of the note
payable.
Note 10 - Commitments and Contingent Liabilities:
Operating Leases
The Company has entered into various operating lease agreements for office
space and office equipment. The leases expire periodically through December
2006.
The future minimum rental commitments under non-cancelable operating leases
are as follows:
Year Amount
2005 $54,111
2006 6,528
Thereafter --
Total $60,639
Rental costs under operating leases included in other expenses amounted to
$56,382 and $56,646 for the years ended December 31, 2004 and 2003,
respectively.
Pending Litigation
On March 25, 1999, the Company, its President, and the Companys wholly owned
subsidiaries Capital Financial Corp. and American Asset Development
Corporation (the Company Defendants) and one of the Companys former
directors together with other individuals were named in an action filed in
the Superior Court of New Jersey, Chancery Division by two New Jersey limited
liability companies (the LLCs). The plaintiffs allege the Companys former
director and other defendants other than the Company Defendants (Other
Defendants) misappropriated assets and opportunities of the LLCs for their
own use, engaged in self-dealing with respect to the LLCs, breached the
operating agreements of the LLCs and converted and embezzled assets and funds
of the LLCs. The Company Defendants are alleged to have aided and abetted
the Companys former director in converting the assets of the LLCs by
accepting loans and payments from the LLCs and the Companys former director
and repaying loans to the Companys former director in the form of cash and
Company stock.
The LLCs seek declaratory and injunctive relief against the Company
Defendants; an accounting of (1) all shares of Company stock purchased by
the Companys former director and Other Defendants and (2) all payments to
or from the Company and the Companys former director and Other Defendants;
imposition of a lien or equitable trust in favor of the LLCs on shares of the
Companys stock issued to the Companys former director and Other Defendants;
and certain unspecified compensatory and punitive damages, attorneys fees
and costs.
Pending Litigation
In April 1999, the Court granted a preliminary injunction, which among other
things, enjoins the Companys Defendants from allowing the transfer of any
Company stock held in the name of the Companys former director and Other
Defendants and directs the Company Defendants to provide an accounting of all
such stock. The case is scheduled for a June 2005 trial. The plaintiffs had
previously demanded a payment of $588,000 from the Company and related
Defendants and have currently reduced their demand to $300,000. There is no
settlement offer currently pending from the Company.
The Company denies any wrongdoing and believes that the claims against the
Company Defendants are without merit, and that it has meritorious defenses
and intends to defend the action vigorously. However, at this time the
Company cannot predict their ultimate liability, if any, that may result from
this action.
Minimum Net Capital Requirements
CFC is a HUD non-supervised mortgagee, and as such is required to maintain
certain levels of minimum net worth and is subject to certain report filing
requirements. CFC was in compliance with the minimum net worth requirement
as of December 31, 2004. The Company did not file the financial statements
of CFC with HUD by the required due date of March 31, 2005.
Note 11 - Stock Based Compensation:
The Company adopted a 1992 Stock Option Plan, whereby the Company may grant
incentive and new qualified options to eligible participants that vest upon
grant date. The plan provided for the issuance of options with terms of not
more than ten years. The plan included a provision whereby stock options
granted by the Company may not exceed 100,000 shares of common stock, and
accordingly has reserved 100,000 shares for this purpose. The plan was
terminated on May 22, 2002. All outstanding options that had been granted
under this plan expired in 2003.
Note 12 - Subsequent Event
On April 1, 2005, the Company renewed its existing warehouse line of credit at
substantially the same terms, except the amount available under the line was
reduced to $4,000,000. This line has an expiration date of June 30, 2005. The
line contains various financial covenants including the maintenance of a
minimum adjusted net worth of $250,000 and a maximum permitted debt to
adjusted net worth ratio of 20 to 1.
Exhibit No. 21
SUBSIDIARIES OF THE COMPANY
JURISDICTION
NAME OF INCORPORATION
American Asset Development Corporation New Jersey
Capital Financial Corp. New Jersey