U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE
30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 333-56848
PRE-SETTLEMENT FUNDING CORPORATION
(Exact name of Company as specified in its charter)
Delaware 54-1965220
(State or jurisdiction of incorporation) (I.R.S. Employer or
organization Identification No.)
600 Cameron Street, Alexandria, VA 22314
(Address of principal executive offices) (Zip Code)
Company's telephone number: (703) 340-1629
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common
Stock, $0.001 Par Value
Indicate by check mark whether the Company (1) has filed all
Reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Company was required to file such reports),
and (2) been subject to such filing requirements for the past 90
days. Yes X No___
Indicate the number of shares outstanding of each of the
issuer's class of common stock. The Registrant had 5,368,000 shares of its
common stock outstanding as of August 10, 2003.
TABLE OF CONTENTS
Part I - Financial Information Page
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets at June 30, 2003 and December 31, 2002
Condensed Statement of Losses for the three and six months to June
30, 2003 and June 30, 2002 and the Period October 14, 1999
(Date of Inception) Through June 30, 2003
Condensed Statement of Cash Flows for the six months June 30,
2003 and 2002 and the Period October 14, 1999 (Date of Inception)
Through June 30, 2003
Notes to Condensed Financial Statements
Item 2. Management's Discussion And
Analysis Of Financial Condition
Or Plan Of Operations
Item 3. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission Of Matters To A Vote Of Security Holders
Item 5. Other Information
Item 6. Exhibits And Reports On Form 8-K
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED).
Index to Financial Statements Page No.
Condensed Balance Sheets at June 30, 2003 and
December 31, 2002 F-4
Condensed Statement of Losses for the three and six
months June 30, 2003 and June 30, 2002 and
the Period October 14, 1999 (Date of Inception)
Through June 30, 2003 F-5
Condensed Statement of Deficiency in Stockholders'
Equity for the Period October 14, 1999
(Date of Inception) Through June 30, 2003 F-6
Condensed Statement of Cash Flows for the six
months June 30, 2003 and 2002 and the Period
October 14, 1999 (Date of Inception) Through
June 30, 2003 F-7
Notes to Condensed Financial Statements F-8 to F-18
PRE-SETTLEMENT FUNDING CORPORATION
(A Development Stage Company)
CONDENSED BALANCE SHEETS
June 30, December 31,
2003 2002
ASSETS (Unaudited) (Audited)
Current assets:
Cash and equivalents $ 30 $ 18
Loans receivable - 3228
Claims advances 6,500 8000
Prepaid expenses and other - 43
Total current assets 6,530 11,289
LIABILITIES AND DEFICIENCY IN STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable and accrued liabilities 829,608 866,914
Advances from shareholder 95,236 28,889
Total current liabilities 924,844 895,803
Commitments and Contingencies - -
Deficiency in Stockholders' Equity
Preferred stock, par
value, $0.001 per share;
100,000 shares authorized;
none issued and outstanding
at June 30, 2003 and December
31, 2002 - -
Common stock, par value,
$0.001 per share; 19,900,000
shares authorized ; 5,368,000
shares issued and outstanding
at June 30, 2003 and December
31, 2002 5,368 5,368
Additional paid-in-capital 183,652 183,652
Deficit accumulated during development
stage (1,107,334) (1,073,534)
Deficiency in stockholder's equity (918,314) (884,514)
6,530 11,289
See accompanying notes to unaudited condensed financial information
PRE-SETTLEMENT FUNDING CORPORATION
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For The Three Months For The Six Months For The period
Ended Ended October 14, 1999
June 30 June 30 (Date of Inception)
through June 30,
2003 2002 2003 2002 2003
Revenues: $ 0 $ 751 $ 1,125 $ 3,727 $ 16,401
Costs and Expenses:
Selling, general
and administrative (14,725) 93,847 34,925 212,690 1,126,231
Total Cost and Expense (14,725) 93,847 34,925 212,690 1,126,231
Other Income:
Interest and other 0 0 0 11 2,493
Income (Loss) from operations 14,725 (93,096) (33,800) (208,952) (1,107,334)
Income (taxes) benefit - - -
Net Income (Loss) 14,725 (93,096) (33,800) (208,952) (1,107,334)
Income (Loss) per
common share (basic
and assuming dilution) 0.00 (0.02) (0.01) (0.04) (0.23)
Weighted average
shares outstanding
Basic and Diluted 5,368,000 5,368,000 5,368,000 5,368,000 4,876,755
See accompanying notes to the unaudited condensed financial information
PRE-SETTLEMENT FUNDING CORPORATION
(A Development Stage Company)
STATEMENT OF DEFICIENCY IN STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 14, 1999 (Date of Inception) TO JUNE 30, 003
( UNAUDITED )
Deficit
Additional Accumulated
Common Stock Paid In During
Shares Amount Capital Development
Stage Total
Net loss - $ - $ - $ (1,291) $ (1,291)
Balance at December 31, 1999 - - - (1,291) (1,291)
Common stock issued on
September 30, 2000 in
exchange for
convertible debt at
$.50 per share 78,000 78 38,922 - 39,000
Common stock issued on
November 27, 2000 in
exchange for
convertible debt at
$.50 per share 26,000 26 12,974 - 13,000
Net loss at December
31, 2000 - - - (157,734) (157,734)
Balance at December 31, 2000 104,000 104 51,896 (159,025) (107,025)
Common stock issued on
January 1, 2001 in
exchange for
convertible debt at $
..50 per share 174,000 174 86,826 - 87,000
Common stock issued on
January 2, 2001 to
founders in exchange
for services valued at
$ .001 per share 5,000,000 5,000 20 - 5,020
Common stock issued on
January 2, 2001 in
exchange for services
at $.50 per share 90,000 90 44,910 - 45,000
Net Loss at December
31, 2001 - - - (556,921) (556,921)
Balance at December 31, 2001 5,368,000 5,368 183,652 (715,946) (526,926)
Net Loss at December
31,2002 - - - (357,588) (357,588)
Balance at December 31, 2002 5,368,000 5,368 183,652 (1,073,534) (884,514)
Net loss for the six
months ended June 30, 2003 - - - (33,800) (33,800)
Balance at June 30, 2003 5,368,000 5,368 183,652 (1,107,334) (918,314)
PRE-SETTLEMENT FUNDING CORPORATION
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Six Months For the Period
Ended June 30 October 14, 1999
(Date of Inception)
to
June 30,
2003 2002 2003
Net cash from operating activities (66,335) (7,290) (234,206)
Cash flows from investing activities - - -
Net cash from financing activities 66,347 7,462 234,236
Net increase (decrease) in
cash and equivalents 12 172 30
Cash and cash equivalents at
beginning of period 18 1,003 -
Cash and cash equivalents at
end of period 30 1,175 30
Supplemental Information:
Cash paid during the
period for interest - - -
Cash paid during the
period for taxes - - -
Common Stock issued
in exchange for capital notes - - 139,000
Common Stock issued
to founders in exchange for
services - - 5,020
Common Stock issued
in exchange for Services - - 45,000
See accompanying notes to unaudited condensed financial information
PRE-SETTLEMENT FUNDING CORPORATION
(A Development Stage Company)
Notes to Financial Statements
( Unaudited )
NOTE A-SUMMARY OF ACCOUNTING POLICIES
General
The accompanying unaudited condensed financial statements have been
prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial information and
with the instructions to Form 10QSB. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, all adjustments ( consisting of normal
recurring accruals ) considered necessary for a fair presentation
have been included. Accordingly, the results from operations for the
three months period ended June 30, 2003, are not necessarily
indicative of the results that may expected for the year ending
December 31, 2003. The unaudited condensed financial statements
should be read in conjunction with the December 31, 2002 financial
statements and footnotes thereto included in the Company's SEC Form 10 QSB.
Business and Basis of Presentation
Pre-Settlement Funding Corporation ("Company") was formed on October
14, 1999 under the laws of the state of Delaware. The Company is a
development stage enterprise, as defined by Statement of Financial
Accounting Standards No. 7 ("SFAS No. 7"). The company's initial
business was seeking to provide financing to plaintiffs who are
involved in personal injury claims. From its inception through the
date of these financial statements the Company has recognized limited
revenues and has incurred significant operating expenses. As of this
quarter the personal injury settlement business is discontinued and
the company is pursuing alternative business opportunities.
Consequently, its operations are subject to all risks inherent in the
establishment of a new business enterprise. For the period from
inception through June 30, 2003, the Company has accumulated losses
of $ 1,107,334.
New Accounting Pronouncements
Effective January 1, 2002, the Company adopted SFAS No.142. Under the
new rules, the Company will no longer amortize goodwill and other
intangible assets with definitive lives, but such assets will be
subject to periodic testing for impairment. On an annual basis, and
when there is reason to suspect that their values have been
diminished or impaired, these assets must be tested for impairment, and write
downs to be included in results from operations may be necessary.
SFAS No.142 also requires the Company to complete a transitional goodwill
impairment test six months from the date of adoption. Any goodwill
impairment loss recognized as a result of the transitional goodwill
impairment test is recorded as a cumulative effect of a change in
accounting principle. The adoption of SFAS 142 had no material impact
on the Company's condensed financial statements.
SFAS No. 143 establishes accounting standards for the recognition and
measurement of an asset retirement obligation and its associated
asset retirement cost. It also provides accounting guidance for legal
obligations associated with the retirement of tangible long-lived
assets. SFAS No. 143 is effective in fiscal years beginning after
June 15, 2002, with early adoption permitted. The Company expects that the
provisions of SFAS No. 143 will not have a material impact on its
consolidated results of operations and financial position upon
adoption. The Company plans to adopt SFAS No. 143 effective January
1, 2003.
SFAS No. 144 establishes a single accounting model for the impairment
or disposal of long-lived assets, including discontinued operations.
SFAS No. 144 superseded Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS No. 121), and APB Opinion
No. 30, "Reporting the Results of Operations - Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions". The Company adopted
SFAS No. 144 effective January 1, 2002. The adoption of SFAS No. 144
had no material impact on Company's consolidated financial statements.
In April 2002, the FASB issued Statement No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections." This Statement rescinds FASB Statement No. 4,
"Reporting Gains and Losses from Extinguishment of Debt", and an
amendment of that Statement, FASB Statement No. 64, "Extinguishments
of Debt Made to Satisfy Sinking-Fund Requirements" and FASB Statement
No. 44, "Accounting for Intangible Assets of Motor Carriers". This
Statement amends FASB Statement No. 13, "Accounting for Leases", to
eliminate an inconsistency between the required accounting for sale-
leaseback transactions and the required accounting for certain lease
modifications that have economic effects that a similar to sale-
leaseback transactions. The Company does not expect the adoption to
have a material impact to the Company's financial position or results
of operations.
In June 2002, the FASB issued Statement No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities." This Statement
Addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force (EITF)
Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)." The provisions of this
Statement are effective for exit or disposal activities that are
initiated after December 31, 2002, with early application encouraged.
The Company does not expect the adoption to have a material impact to
the Company's financial position or results of operations.
In October 2002, the FASB issued Statement No. 147, "Acquisitions of
Certain Financial Institutions-an amendment of FASB Statements No. 72
and 144 and FASB Interpretation No. 9", which removes acquisitions of
financial institutions from the scope of both Statement 72 and
Interpretation 9 and requires that those transactions be accounted
for in accordance with Statements No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. In addition, this Statement
amends SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, to include in its scope long-term customer
relationship intangible assets of financial institutions such as
depositor- and borrower-relationship intangible assets and credit
cardholder intangible assets. The requirements relating to
acquisitions of financial institutions are effective for acquisitions
for which the date of acquisition is on or after October 1, 2002. The
provisions related to accounting for the impairment or disposal of
certain long-term customer-relationship intangible assets are
effective on October 1, 2002. The adoption of this Statement did not
have a material impact to the Company's financial position or results
of operations as the Company has not engaged in either of these
activities.
In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure", which amends
FASB Statement No. 123, Accounting for Stock-Based Compensation, to
Provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure
requirements of Statement 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method
used on reported results. The transition guidance and annual
disclosure provisions of Statement 148 are effective for fiscal years
ending after December 15, 2002, with earlier application permitted in
certain circumstances. The interim disclosure provisions are
effective for financial reports containing financial statements for interim
periods beginning after December 15, 2002. The adoption of this
statement did not have a material impact on the Company's financial
position or results of operations as the Company has not elected to
change to the fair value based method of accounting for stock-based
employee compensation.
In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities." Interpretation 46 changes the
criteria by which one company includes another entity in its consolidated
financial statements. Previously, the criteria were based on control
through voting interest. Interpretation 46 requires a variable
interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest
entity's activities or entitled to receive a majority of the entity's
residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity. The
consolidation requirements of Interpretation 46 apply immediately to
variable interest entities created after January 31, 2003. The
consolidation requirements apply to older entities in the first
fiscal year or interim period beginning after June 15, 2003. Certain of the
disclosure requirements apply in all financial statements issued
after January 31, 2003, regardless of when the variable interest entity was
established. The Company does not expect the adoption to have a
material impact to the Company's financial position or results of
operations.
In April 2003, the FASB issued Statement No.149, " Amendment of
Statement of 133 on Derivative Instruments and Hedging Activities".
Which amends Statement 133, Accounting for Derivative Instruments and
Hedging Activites. The adoption of this statement did not have a
material impact on the Company's financial position.
In May 2003, the FASB issued Statement No. 150, " Accounting for
certain Financial Instruments with Characteristics of both
Liabilities and Equity. The adoption of this statement did not have a
material impact on the Company's financial position.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND PLAN OF OPERATIONS.
When used in this Form 10-QSB and in our future filings with the
Securities and Exchange Commission, the words or phrases will likely
result, management expects, or we expect, will continue, is
anticipated, estimated or similar expressions are intended to
identify forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Readers are cautioned not
to place undue reliance on any such forward-looking statements, each
of which speak only as of the date made. These statements are
subject to risks and uncertainties, some of which are described below.
Actual results may differ materially from historical earnings and those
presently anticipated or projected. We have no obligation to
publicly release the result of any revisions that may be made to any forward-
looking statements to reflect anticipated events or circumstances
occurring after the date of such statements.
The following discussion contains forward-looking statements that are
subject to significant risks and uncertainties about us, our current
and planned products, our current and proposed marketing and sales,
and our projected results of operations. There are several important
factors that could cause actual results to differ materially from
historical results and percentages and results anticipated by the
forward-looking statements. We have sought to identify the most
significant risks to its business, but cannot predict whether or to
what extent any of such risks may be realized nor can there be any
assurance that we have identified all possible risks that might
arise. Investors should carefully consider all of such risks before
making an investment decision with respect to our stock. The
following discussion and analysis should be read in conjunction with
the financial statements of our Company and notes thereto. This
discussion should not be construed to imply that the results
discussed herein will necessarily continue into the future, or that
any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents
only the best present assessment from our Management.
Plan of Operation
Pre-settlement Funding Corp is still in the development stage and has
earned only a small amount of revenue, approximately $16,000, from
operations. We have funded approximately 40 cases to date. Due to
the down turn in the financial markets and consequent lack of outside
investment interest in the business of advancing cash to plaintiffs
involved in personal injury claims, as well as to plaintiffs involved
in other types of claims such as divorce cases, we are not seeking to
continue this business line.
During the next twelve months, to the extent it is feasible and
profitable, we intend to develop other business interests and
investment opportunities, which are not likely to be related to the
existing line of business. The further development of the other
businesses may include, but may not be limited to, changing the name
of the corporation, developing marketing materials, renting
additional office space, and interviewing and hiring administrative,
marketing and claims personnel. Also, where appropriate we will seek
outside financing for new activities in the forms of loans and equity
investment.
We may experience fluctuations in operating results in future periods
due to a variety of factors including, but not limited to, market
acceptance of our services, our ability to obtain additional
financing in a timely manner and on terms favorable to us, our
ability to successfully integrate prospective asset acquisitions to
our existing business operation, delays or errors in our ability to
upgrade and develop our systems and infrastructure in a timely and
effective manner, technical difficulties, system downtime or utility
brownouts, our ability to attract customers at a steady rate and
maintain customer satisfaction, seasonality of advertising sales, the
amount and timing of operating costs and capital expenditures
relating to the expansion of our business, operations and
infrastructure and the implementation of marketing programs, key
agreements and strategic alliances, the number of products offered or
type of investment entered into.
For the period from our inception through June 30, 2003, we have:
- Formed our company and established our initial structure
- Entered the market for litigation funding services and decided
to discontinue that business.
- Issued cash advances to 40 clients
- Settled and received proceeds with respect to 29 cases
We remain focused on pursuing collection on the outstanding 11 cases
where advances to plaintiffs are still outstanding. We know of no
reason with respect to these cases why they should not be collected.
Some revenue may still result from the litigation funding line of
business as a result.
Comparison of Financial Results
Three Months and Six Months Ended June 30, 2003 versus Three and Six
Months Ended June 30, 2002 and
Revenues
Revenue represents the net proceeds to Pre-settlement Funding from
The settlement of cases. We have generated modest revenues of
approximately $16,400 from the now discontinued operations of
litigation funding from the inception of our business. During the
quarter ended June 30, 2003, we have generated $0 revenue from
monetary settlements, as compared to $751 in revenue for the quarter
ended June 30, 2002. In the six months ended June 30, 2003 we
generated $1,125 in revenue compared to $3,727 in the six months
ending June 30, 2002. We began advancing funds to personal injury
plaintiffs in February 2001. We began recognizing revenues from the
realization and receipt of monetary settlements related to the
settlement of these specific litigation claims during the last six
months of 2001. In the six months ending June 30, 2003 no advances
were made due to the discontinuance of the business line, but 3 cases
were settled with a value of $2,625. The margin achieved on net
settlements, of 42% -45%, has remained relatively constant.
Costs and Expenses
From our inception through June 30, 2003, we have incurred expenses
of $1,126,232 during this period. These expenses were associated
principally with stock issuances to our founders, legal, consulting
and accounting fees and costs in connection with the development of
our business plan, market research, and the preparation of our
registration statement as well as the accrual of salary to our
directors. In the quarter ended June 30, 2003 a surplus of $14,725
was generated principally due to the settlement of approximately
$65,000 and consequent reversal of expenses for legal fees associated
with our establishment as public company. This compares with expenses
of $93,847 in the quarter to June 30,2002. Expenses for the six
months ended June 30, 2003 were $34,925, compared to $212,690 for the
six months ending June 30, 2002, and include the offsets for the
forementioned settlement. The principal expense in the periods under
review are for the accrual of salary for employees.
Liquidity and Capital Resources
As of June 30, 2003, we had a working capital deficit of $ 918,314.
As a result of our operating losses from our inception through June
30, 2003, we generated a cash flow deficit of $234,206 from operating
activities. We met our cash requirements during the six months ended
June 30, 2003 through $66,347 in advances from our principal
shareholder. Our accounts payable, which was composed predominantly
of liabilities to our accountants and lawyers in connection with our
registration statement, was reduced by $128,698 during the six months
ended June 30, 2003 to $25,290 at June 30, 2003. The reductions were
the result of payments made by our principal shareholder of some
$66,000 on behalf of the company and settlements of approximately
$65,000. Accrued payroll, representing liabilities to our two
employees, stands at $ 757,723 at June 30, 2003. In an agreement made
dated July 2003, approximately $330,000 of the liability to employees
will be eradicated from the books. Additionally, accrued liabilities
which stands at $50,500 at June 30, 2003 was reduced in an agreement
in July 2003 on further legal fees resulting in a reduction in that
balance of $24,000.
While we have raised the capital necessary to meet our working
Capital and financing needs in the past, additional financing is required if
we are to grow alternative business interests. We currently do not
have any commitments for financing. There are no assurances we will
be successful in raising the funds required.
While we develop our new business strategy we plan to use our
existing capital resources, collection of receivables from the
discontinued litigation funding business and loans from our principal
shareholder to fund our current level of operating activities,
capital expenditures, debt and other obligations through the next 12
months.
If during that period or thereafter, we are not successful in
generating sufficient liquidity from operations or in raising
sufficient capital resources, on terms acceptable to us, this could
have a material adverse effect on our business, results of operations
liquidity and financial condition.
Our independent certified public accountants have stated in their
report included in our December 31, 2002 Form 10-KSB, that we have
incurred operating losses since its inception, and that we are
dependent upon management's ability to develop profitable operations.
These factors among others may raise substantial doubt about our
ability to continue as a going concern.
Product Research and Development
We do anticipate reviewing other lines of investment and business
that could ultimately replace the existing line of business.
Acquisition or Disposition of Plant and Equipment
We do not anticipate the sale of any significant property, plant or
equipment during the next twelve months. We do not anticipate the
acquisition of any significant property, plant or equipment during
the next 12 months, other than computer equipment and peripherals used in
our day-to-day operations. We believe we have sufficient resources
available to meet these acquisition needs.
Number of Employees
As of June 30, 2003, we have two employees. In a July 2003 agreement
terminating Darryl Reed as a director and employee that will be
reduced to one employee. In order for us to attract and retain
quality personnel, we anticipate we will have to offer competitive
salaries to future employees. Any future increase in personnel will
depend upon the line of business or investment entered into and the
availability of funding for those operations.
Trends, Risks and Uncertainties
We have sought to identify what we believe to be the most significant
risks to its business as discussed in "Risk Factors" above, but
cannot predict whether or to what extent any of such risks may be realized
nor can there be any assurances that we have identified all possible
risks that might arise. Investors should carefully consider all of
such risk factors before making an investment decision with respect
to our stock.
Limited operating history; anticipated losses; uncertainly of future
results
We have only a limited operating history upon which an evaluation of
our business and its prospects can be based. Our prospects must be
evaluated with a view to the risks encountered by a company in an
early stage of development, particularly in light of the
uncertainties relating to our future operations and line of business and
investment.
Potential fluctuations in quarterly operating results
Our quarterly operating results may fluctuate significantly in the
future as a result of a variety of factors, most of which are outside
our control, including: the level of public acceptance of our
litigation support services and products, the demand for our
litigation support services and products; seasonal trends in demand;
the amount and timing of capital expenditures and other costs
relating to the expansion of our operations; the introduction of new services
and products by Pre-settlement Funding or its competitors; price
competition or pricing changes in the industry; technical
difficulties; general economic conditions, and economic conditions
specific to the litigation funding market. Our quarterly results may
also be significantly affected by the impact of the accounting
treatment of acquisitions, financing transactions or other matters.
Particularly at our early stage of development, such accounting
treatment can have a material impact on the results for any quarter.
Due to the foregoing factors, among others, it is likely that our
operating results will fall below our expectations or investors'
expectations in some future quarter.
Management of Growth
Our future success will be highly dependent upon our ability to
successfully manage the expansion of our operations. Our ability to
manage and support our growth effectively will be substantially
dependent on our ability to implement adequate financial and
management controls, reporting systems, and other procedures and hire
sufficient numbers of financial, accounting, administrative, and
management personnel. We are in the process of establishing and
upgrading its financial accounting and procedures. There can be no
assurance that we will be able to identify, attract, and retain
experienced accounting and financial personnel. Our future operating
results will depend on the ability of our management and other key
employees to implement and improve our systems for operations,
financial control, and information management, and to recruit, train,
and manage its employee base. There can be no assurance that we will
be able to achieve or manage any such growth successfully or to
implement and maintain adequate financial and management controls and
procedures, and any inability to do so would have a material adverse
effect on our business, results of operations, and financial
condition.
Our future success depends upon our ability to address potential
market opportunities while managing our expenses to match our ability
to finance our operations. This need to manage our expenses will
place a significant strain on our management and operational
resources. If we are unable to manage our expenses effectively, our
business, results of operations, and financial condition will be
materially adversely affected.
Risks associated with acquisitions
As part of our business strategy in the future, we could acquire
assets and businesses relating to or complementary to our operations.
Any acquisitions by Pre-settlement Funding would involve risks commonly
encountered in acquisitions of companies. These risks would include,
among other things, the following: we could be exposed to unknown
liabilities of the acquired companies; we could incur acquisition
costs and expenses higher than it anticipated; fluctuations in our
quarterly and annual operating results could occur due to the costs
and expenses of acquiring and integrating new businesses or
technologies; we could experience difficulties and expenses in
assimilating the operations and personnel of the acquired businesses;
our ongoing business could be disrupted and its management's time and
attention diverted; we could be unable to integrate successfully.
The foregoing Managements Discussion and Analysis of Financial
Condition and Results of Operations "forward looking statements"
within the meaning of Rule 175 under the Securities Act of 1933, as
amended, and Rule 3b-6 under the Securities Act of 1934, as amended,
including statements regarding, among other items, the Company's
business strategies, continued growth in the Company's markets,
projections, and anticipated trends in the Company's business and the
industry in which it operates. The words "believe," "expect,"
"anticipate," "intends," "forecast," "project," and similar
expressions identify forward-looking statements. These forward-
looking statements are based largely on the Company's expectations and are
subject to a number of risks and uncertainties, including but not
limited to, those risks associated with economic conditions generally
and the economy in those areas where the Company has or expects to
have assets and operations; competitive and other factors affecting
the Company's operations, markets, products and services; those risks
associated with the Company's ability to successfully negotiate with
certain customers, risks relating to estimated contract costs,
estimated losses on uncompleted contracts and estimates regarding the
percentage of completion of contracts, associated costs arising out
of the Company's activities and the matters discussed in this report;
risks relating to changes in interest rates and in the availability,
cost and terms of financing; risks related to the performance of
financial markets; risks related to changes in domestic laws,
regulations and taxes; risks related to changes in business strategy
or development plans; risks associated with future profitability; and
other factors discussed elsewhere in this report and in documents
filed by the Company with the Securities and Exchange Commission.
Many of these factors are beyond the Company's control. Actual results
could differ materially from these forward-looking statements. In
light of these risks and uncertainties, there can be no assurance
that the forward-looking information contained in this Form 10-QSB will,
in fact, occur. The Company does not undertake any obligation to revise
these forward-looking statements to reflect future events or
circumstances and other factors discussed elsewhere in this report
and the documents filed or to be filed by the Company with the Securities
and Exchange Commission.
ITEM 3. CONTROLS AND PROCEDURES
The Company's management including the President and Treasurer, have
evaluated, within 90 days prior to the filing of this quarterly
report, the effectiveness of the design, maintenance and operation of
the Company's disclosure controls and procedures. Management
determined that the Company's disclosure controls and procedures were
effective in ensuring that the information required to be disclosed
by the Company in the reports that it files under the Exchange Act is
accurate and is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and regulations.
Disclosure controls and procedures, no matter how well designed and
implemented, can provide only reasonable assurance of achieving an
entity's disclosure objectives. The likelihood of achieving such
objectives is affected by limitations inherent in disclosure controls
and procedures. These include the fact that human judgment in
decision making can be fully faulty and that breakdowns in internal control
can occur because of human failures such as errors or mistakes or
intentional circumvention of the established process.
There have been no significant changes in internal controls or in
other factors that could significantly affect these controls
subsequent to the date of the evaluation thereof, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
PART II.
ITEM 1. LEGAL PROCEEDINGS.
Other than as set forth below, the Company is not a party to any
material pending legal proceedings and, to the best of its knowledge,
no such action by or against the Company has been threatened.
The Company is subject to other legal proceedings and claims that
arise in the ordinary course of its business. Although occasional
adverse decisions or settlements may occur, the Company believes that
the final disposition of such matters will not have material adverse
effect on its financial position, results of operations or liquidity.
ITEM 2. CHANGES IN SECURITIES.
Sales of Unregistered Securities.
The Registrant had no sales of unregistered securities during the
three-month period ending March 31, 2003.
Use of Proceeds.
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were not any matters submitted requiring a vote of security
holders during the three- month period ending March 31, 2002.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Reports on Form 8-K. No reports on Form 8-K were filed
during the three-month period covered in this Form 10-QSB.
(b) Exhibits. There have not been any documents that are to be
attached as Exhibits entered into during the three-month period
covered in this Form 10-QSB other than those as provided below and
therefore, all Exhibits have been previously filed by the Company.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Pre-Settlement Funding Corp.
Dated: By: /s/ Darryl Reed
Darryl Reed, President
Exhibit
99.1 Certification pursuant of President to 18 U.S.C. Section 1350,
as adopted to Section 906 of the Sarbanes Oxley Act of 2002.
99.2 Certification pursuant of Treasurer to 18 U.S.C. Section 1350,
as adopted to Section 906 of the Sarbanes Oxley Act of 2002.
CERTIFICATIONS
I, Darryl Reed, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pre-
Settlement Funding Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations, and cash flows of the registrant as of, and for the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14 for the
registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or
persons performing the equivalent functions);
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize, and report financial
data and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions, with regard to significant deficiencies and material
weaknesses.
Date: August 13, 2003
/s/ Darryl Reed
Darryl Reed, President
CERTIFICATIONS
I, Joel Sens, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pre-
Settlement Funding Corporation;
2. Based on my knowledge, this quarterly report does not contain
any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations, and cash flows of the registrant as of, and for the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14 for
the
registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or
persons performing the equivalent functions);
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize, and report financial
data and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions, with regard to
significant deficiencies and material weaknesses.
Date: August 13, 2003
/s/ Joel Sens
Joel Sens, Treasurer
Exhibit 99.1
In connection with the Quarterly Report of Pre-Settlement Funding
Corporation (the "Company") on Form 10-QSB for the period ending June
30, 2003 as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), I, Darryl Reed, President, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes Oxley Act, that:
(1) The Report fully complies with Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The Information contained in the Report fairly represents, in
all material aspects, the financial condition and result of operations on
the Company.
By: /s/ Darryl Reed
Darryl Reed, President
Exhibit 99.2
In connection with the Quarterly Report of Pre-Settlement Funding
Corporation (the "Company") on Form 10-QSB for the period ending June
30, 2003 as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), I, Joel Sens, Treasurer, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes Oxley Act, that:
(1) The Report fully complies with Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The Information contained in the Report fairly represents, in
all material aspects, the financial condition and result of operations on
the Company.
By: /s/ Joel Sens
Joel Sens, Treasurer