ITEM 1. BUSINESS
Background - ----------
RAM Venture Holdings Corp. f/k/a Corrections Services, Inc. (the "Company") was incorporated in the State of Florida in 1984. The Company was organized for the purpose of developing and marketing a house arrest program to relieve the need for incarceration in a jail or similar facility. The Company was commercially active in that area until mid- 1998. On August 31, 1998, the Company sold its electronic monitoring business.
Since August 31, 1998 the Registrant has had no remaining commercial operations, intending to conserve its assets while seeking one or more opportunities for merger, acquisition or suitable commercial enterprise.
On July 14, 2000, the Company changed its name to RAM Venture Holdings Corp.
RAM Capital Management - ----------------------
On June 6, 2000, the Company reached agreement with RAM Capital Management and its principal, Mr. Steven Oshinsky ("Oshinsky"), to render significant management consultation to the Company, to acquire a substantial ownership interest in the Company's Common Stock and to potentially assume a vacant seat on the Company's Board of Directors.
RAM Capital Management purchased 5,000,000 shares of the Company's authorized but previously unissued Common Stock for the sum of Three Hundred Thousand ($300,000) Dollars or $.06 per share and agreed to immediate engagement as the Company's management consultant. RAM Capital Management informed the Company that it is a privately-held venture capital and advisory firm focused on undervalued growth companies and engaged in providing private financing, sales and marketing assistance and formation of strategic alliances. Its operations are, for the most part, carried out by Oshinsky as the firm's General Manager.
With issuance of the 5,000,000 shares purchased in the transaction, the Company had 15,000,000 shares of its Common Stock issued and outstanding. The result of that transaction was an increase in the shareholders' equity of $300,000 with a corresponding increase in its current assets.
On July 14, 2000 the Company changed its name to RAM Venture Holdings Corp. and confirmed the prior increase in its authorized capital stock to 25,000,000 shares of Common Stock, par value $.0001. Following change of the Company's name, the Company's OTC trading symbol was also changed to "RAMV".
New Systems, Inc./Tremor Entertainment, Inc. - --------------------------------------------
Following discussions with a control shareholder of New Systems, Inc., now known as Tremor Entertainment, Inc., a publicly held Nevada corporation located in Rancho Mirage, California during the first quarter of 2001, affiliates of the Registrant purchased a total of 459,984 shares of that company's issued and outstanding common stock for cash in the amount of $125,000, or $.27 per share. The shares purchased in the transaction, represented approximately 29% of the ownership interest in New Systems, Inc. In addition, the Registrant itself purchased 360,000
authorized but previously unissued shares of New Systems, Inc.'s restricted common stock from that company for $125,000. Upon conclusion of those transactions, the Registrant and its affiliates had acquired a total of 819,984 shares, or approximately 53% of the ownership interest in New Systems, Inc. for total consideration of $250,000, or approximately $.30 per share.
New Systems, Inc. was an inactive reporting company which had filed and was current with all periodic reporting to which it was subject under relevant provisions of the Securities Exchange Act of 1934. Following completion of the stock acquisition transactions that company's officers and Board of Directors were replaced with the officers and directors of the Registrant, rendering New Systems, Inc., in the process, under common control with the Registrant.
During the first week of May, 2001, the Registrant acquired an additional 1,500,000 shares of the authorized but previously unissued common stock of New Systems, Inc. in exchange for professional, administrative and managerial services rendered and to be rendered to that company by the Registrant's officers and directors. In addition, New Systems, Inc. issued a further 300,000 shares of its restricted common stock from authorized but previously unissued stock to KM Financial, Inc., an Arizona consulting firm, for management consultation services.
Upon completion of the new issuance of those 1,800,000 shares, the number of shares of New Systems, Inc. common stock issued and outstanding was 3,353,000. The Registrant's ownership interest in the company amounted to 1,860,000 shares. When aggregated with the New Systems, Inc. stock acquired by its affiliates, the Registrant could have been deemed to control 2,319,984 shares, or approximately 69% of that company.
The Registrant intended, as the majority shareholder of New Systems, Inc., to guide, assist and direct that company's search for one or more merger and/or acquisition opportunities pursuant to which it might effect a business combination for the ultimate benefit of its shareholders, obviously including the Registrant and its affiliates. The Company intended to seek and identify one or more suitable candidates for combination in an appropriate form with New Systems, Inc. and to realize hopefully substantial benefits in the process.
In the course of its efforts, the Registrant relied on services and assistance rendered by KM Financial, Inc. by and through the consultation services arrangement between that company and New Systems, Inc. While the Company was optimistic that it would be able to benefit from those efforts, there was no assurance that any benefit would ultimately materialize, or that its efforts would be otherwise successful.
On July 25, 2001, the Registrant and KM Financial, Inc. sold an aggregate of 1,800,000 shares of their restricted common stock in New Systems, Inc. ("NEWY") to Tremor Entertainment, Inc., ("Tremor") a closely held California company engaged in interactive entertainment software development, for consideration totaling $505,000 and comprised of $5,000 in cash and a secured Promissory Note (the "Promissory Note") made by Tremor in the original principal amount of $500,000. The Registrant retained 360,000 of its NEWY shares. The Company anticipated that New Systems, Inc. would acquire Tremor in a reverse merger or some other suitable form of business configuration. In addition, in October, 2001, the Registrant loaned Tremor $250,000 at twelve (12%) percent interest in exchange for 250,000 Warrants to purchase Tremor common stock at $.30 per share. The loan was repaid with interest by February, 2002. The Company continues to hold the 250,000 Warrants at March 10, 2002.
Payment of the Promissory Note made by Tremor was collateralized by a possessory pledge of 5,000,000 shares of the Registrant's Common Stock by the Registrant's shareholder, RAM Capital Management, Inc. and its principal, Oshinsky, a control person of the Registrant who is also
Chairman and Chief Executive Officer of the Promissory Note maker, Tremor. Following a courtesy extension of the maturity date of the Promissory Note, Tremor defaulted, the Registrant notified the pledgor, essentially Oshinsky, took title to the pledged 5,000,000 shares of the Registrant's Common Stock and cancelled them. On or about December 12, 2001, Tremor Entertainment, Inc., merged with New Tremor Acquisition corp., a wholly owned subsidiary of New Systems, Inc. Subsequent to the merger New Systems, Inc. changed its name to Tremor Entertainment, Inc. and the company that was merged into the subsidiary of New Systems, Inc., formerly known as Tremor Entertainment, Inc., became Tremor Games, Inc. The Registrant continues to be optimistic that its retained NEWY, now Tremor, shares will increase in value.
As a result of the combined sale of 1,800,000 NEWY shares by the Registrant and KM Financial, Inc., the Registrant is at March 10, 2002, obligated to re-issue and deliver 833,500 shares of the Company's restricted Common Stock which, when issued, will bring the Registrant's issued and outstanding Common Stock to 12,808,500.
Creative Beauty Supply, Inc. - ----------------------------
On January 15, 2002, the Registrant secured and exercised an option to purchase 130,000 shares of the restricted Common Stock of Creative Beauty Supply, Inc., a publicly held New Jersey corporation with principal offices in Totowa, New Jersey. Through exercise of its Warrant, the Registrant acquired 130,000 shares of Creative Beauty Supply, Inc. common stock ("CVBS") at $.12 per Share or $15,600 in cash.
The Company's Warrant was acquired during earlier discussions with CVBS in contemplation of an exchange of stock so that the Registrant and Creative Beauty Supply, Inc. might obtain a significant position in each other's common stock.
On January 30, 2002, following completion of the exchange of stock discussions, the Registrant and Creative Beauty Supply, Inc. entered into an agreement for an exchange of stock pursuant to which the Registrant acquired 500,000 shares of the authorized but previously unissued common stock of Creative Beauty Supply, Inc. in exchange for issuance and conveyance of 2,000,000 shares of the Registrant's authorized but previously unissued Common Stock. Upon completion of the exchange of stock, CVBS had acquired 11.8% of the Company's issued and outstanding Common Stock. For its part, when its CVBS stock acquired through exercise of the option was aggregated with the 500,000 shares acquired under the exchange of stock agreement, the Company, post-closing, had acquired an 18.2% ownership interest in Creative Beauty Supply, Inc.
Creative Beauty Supply, Inc. is a fully reporting company which was incorporated in the State of New Jersey on or about August 28, 1995. It operates as a cosmetic and beauty supply distributor at both the retail and wholesale levels. The company's product line is purchased by it from a number of unaffiliated suppliers and manufacturers and is sold on its premises to retail customers and directly to beauty salons. In general the company handles "national" brands carrying consumer recognition considered by the company to be of assistance with respect to sales of its product lines which is advanced by national brand media advertising at no cost to the company. Creative Beauty Supply distributes its products to more than 200 nail and beauty salons almost exclusively located within the northern and central portion of the State of New Jersey.
The Registrant anticipates acquiring additional ownership interest in Creative Beauty Supply, Inc. and intends to assist that company in seeking one or more opportunities for merger, acquisition or other form of combination for the purpose of expanding and enhancing the company's operations and its shareholder value. The Registrant views the stock
exchange agreement transaction as valued at approximately $400,000.
Subsequent Event - ----------------
On January 31, 2003, the Registrant entered into a note payable with Proguard Protection Services, Inc. in the amount of $50,000. Interest is payable quarterly beginning June 30, 2003 and the principal is due January 31, 2005. The note is convertible into 150,000 shares of the common stock of Proguard Protection Services, Inc. at anytime prior to January 31, 2005 at the option of RAM Venture Holdings Corporation only.
Employees - ---------
Mr. Norman H. Becker and Mr. Frank R. Bauer, are officers of the Company each of whom currently devotes approximately ten (10%) percent of their time to its activities. Ms. Diane Martini, an officer of the Company, currently devotes approximately eighty (80%) percent of her time to its activities. The Company has no other full-time employees See Part III., Item 10, Directors and Executive Officers of the Registrant.
ITEM 2.
ITEM 2. PROPERTIES
The Company occupies its principal office space on a month-to-month basis at a rental and administrative charge of $2,600 per month ($31,200 per annum), except for one month when $2,000 was paid.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company is not now a party to any litigation or, to its knowledge, threatened litigation.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's security holders during the fourth quarter of fiscal 2002, through solicitation of proxies or otherwise.
PART II -------
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following table sets forth the range of bid and asked prices for the Company's Common Stock on the Over-The-Counter Market for the period indicated, as reported by the National Quotation Bureau, Inc. The Common Stock is traded on the electronic bulletin board under the symbol RAMV. The figures shown represent inter-dealer quotations without retail mark- up, mark-down or commission and may not necessarily represent actual transactions.
(b) Holders. As of March 17, 2003, the approximate number of recordholders of Common Stock of the Registrant was 782.
The Company is unable to determine the actual number of beneficial holders of its Common Stock at March 17, 2003 due to Common Stock held for stockholders "in street name", but estimates the current total to be approximately 1215.
(c) Dividends. The Company has never paid a dividend and does not now anticipate paying cash dividends in the foreseeable future. See Item 7.(a) Financial Condition.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Summary of Statement of Operations: - ----------------------------------
Summary Balance Sheet Information - ---------------------------------
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
(a) Financial Condition. As of December 31, 2002, the Company had current assets of $642,318 compared to $1,162,906 at December 31, 2001, total assets of $847,387 compared to $1,803,356 at December 31, 2001 and shareholders equity of $847,387 as compared to $1,537,905 at December 31, 2001. The decrease in current assets, total assets and shareholders' equity was primarily the result of the operating losses incurred during the year ended December 31, 2002.
Liquidity. The Company had a net increase in cash and cash equivalents for the year ended December 31, 2002 of $53,189, and cash and cash equivalents at the end of the year of $142,443 as compared to a decrease in cash and cash equivalents of $272,227, and cash and cash equivalents of $89,254 for the year ended December 31, 2001. See Part II, Item 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See financial statements and supplementary data attached as Exhibit 1.
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a)(b) Identification of Directors and Executive Officers --------------------------------------------------
(1)(e) Business Experience. -------------------
Norman H. Becker has been a director of the Company since July 1, 1987. On January 15, 1993, Mr. Becker was appointed the Company's President. Since January, 1985, Mr. Becker has also been self-employed in the practice of public accounting in Hollywood, Florida. Mr. Becker is a graduate of City College of New York (Bernard Baruch School of Business) and is a member of a number of professional accounting associations including the American Institute of Certified Public Accountants, the Florida Institute of Certified Public Accountants and the Dade Chapter of the Florida Institute of Certified Public Accountants.
Frank R. Bauer has been an Officer and a director of the Company since February 15, 1988 and its Vice President since January 4, 1993. Mr. Bauer was also President and Chief Executive Officer of Specialty Device Installers, Inc., a privately held Florida corporation engaged in outside plant utility and construction contracting. In September of 1996 Specialty Device Installers, Inc. was acquired by Guardian International, Inc. and Mr. Bauer is also presently employed as a manager at Guardian International, Inc. Mr. Bauer holds the Bachelor of Business Administration Degree from Stetson University in Deland, Florida.
Diane Martini has been Secretary/Treasurer and a director of the Company since January 12, 1993. Ms. Martini is also President and Chief Executive Officer of Financial Communications, Inc., a privately held Florida public relations and business consulting firm. Ms. Martini is married to the Company's principal shareholder, Ronald A. Martini. See Part IV., Item 12.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Compensation - ------------
Messrs. Norman H. Becker and Frank Bauer devote approximately 10% of their time, respectively, to the Company's affairs. Ms. Diane Martini currently devotes approximately 80% of her time to the Company's affairs. There are no employment agreements in effect or presently contemplated and there was no compensation paid to officers during the year ended December 31, 2002.
(1) Mr. Becker's firm received a total of $24,672 in accounting fees from the Company during 2002.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(b) Security of Ownership of Management -----------------------------------
(1) Based upon 15,308,500 shares outstanding at March 17, 2003.
(2) While Ronald A. Martini disclaims beneficial ownership of the shares of Common Stock owned by Diane Martini, Corporate Investment Associates and Professional Programmers, Inc., they may be deemed controlled by him. When aggregated, Mr. Martini may be deemed to be in control of 4,765,000 shares of the Company's Common Stock, or 31% of its ownership interest.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others - ---------------------------------------
On July 25, 2001, the Company sold 1,800,000 shares of its restricted common stock in New Systems, Inc. ("NEWY") to Tremor Entertainment, Inc. ("Tremor"), a closely-held California company, whose Chairman and Chief Executive Officer, Steven Oshinsky, is also the principal of the Company's control-person shareholder, RAM Capital Management, for consideration totalling $505,000. The consideration was comprised of $5,000 cash and a secured promissory note made by Tremor in the original principal amount of $500,000. The Note was due on February 7, 2002 and neither bore nor accrued interest. The Note, payable to the Registrant, was guaranteed by a certain pledge agreement by RAM Capital Management, the Company's shareholder and a private equity fund managed by Oshinsky pledging 5,000,000 shares of the Registrant's own Common Stock against default of the Promissory Note. Tremor defaulted on the note payable to the Registrant resulting in RAM Capital Management acquiring the Note. As a result, the Registrant exercised its rights under the pledge agreement and reacquired 5,000,000 shares of its Common Stock from RAM Capital Management in exchange for RAM Capital Management's acquisition of the defaulted Note and the reacquired 5,000,000 shares were cancelled by the Registrant. To the Company's knowledge and belief, RAM Capital Management, in the process, thereby terminated its ownership interest in the Company.
Certain Business Relationships - ------------------------------
During the year ended December 31, 2002, the Company paid a total of $52,250 to various affiliates of the Company's shareholder, Ronald A. Martini, in the nature of consulting fees, rentals and office and administrative services. See "Financial Statements - Notes to Consolidated Financial Statements, Note E".
During the year ended December 31, 2002, the Company paid the accounting firm of its President and director, Norman H. Becker fees of $24,672. In addition, the Company paid the accounting firm of David A. Becker, P.A. accounting fees of $2,150. David Becker is the son of Norman H. Becker.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
Financial Statements: --------------------
Report of Independent Certified Public Accountant.
Consolidated Balance Sheet - December 31, 2002 and December 31, 2001.
Consolidated Statement of Operations - Three Years Ended December 31, 2002.
Consolidated Statement of Shareholders' Equity - Three Years Ended December 31, 2002.
Consolidated Statement of Cash Flows - Three Years Ended December 31, 2002.
Notes to Consolidated Financial Statements.
2. Schedules: ---------
All other financial statements not listed have been omitted since the required information is included in the financial statements or the notes thereto, or is not applicable or required.
Exhibits:
Articles of Incorporation and By-Laws:
Articles of Incorporation and By-Laws incorporated by reference to the filing of the original registration statement on Form S-18.
Instruments defining the rights of security holders, including indentures:
Not applicable.
Voting Trust Agreement:
Not applicable.
Material Contracts:
Not applicable.
Statement Re: Computation of per share income (loss):
See Note "A"., Notes to Consolidated Financial Statements and Statement of Operations Three Years Ended December 31, 2002.
Statements RE: Computation of Ratios:
Not applicable.
Annual Report to Security Holders, Form 10-Q or quarterly report to security holders:
Not applicable.
Letter re: Change in accounting principles:
Not applicable.
Previously unfiled documents:
Not applicable.
Other Documents or Statements to Security Holders:
Not applicable.
Subsidiaries of the Registrant:
Corrections Services International, Inc.
Published report regarding matters submitted to vote of Security Holders:
Not applicable.
Consents of experts and counsel:
Not applicable.
Power of Attorney:
Not applicable.
Additional Exhibits:
There were no current reports on Form 8-K filed by the Registrant during the fourth quarter of 2002.
On January 30, 2002, the Registrant filed a Current Report on Form 8-K dated January 30, 2002, reporting that the Registrant had entered into an agreement for an exchange of common stock with Creative Beauty Supply, Inc.
ITEM 14.
ITEM 14. CONTROL AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. ------------------------------------------------
Within the 90 days prior to the date of this report, RAM Venture Holdings Corp.. ("the Company") carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's President and Secretary/Treasury, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the President and Secretary/Treasurer concluded that the Company's disclosure controls and procedures are effective in timely alerting the Company to material information required to be included in the Company's periodic SEC filings relating to the Company (including its consolidated subsidiaries).
(b) Changes in Internal Controls ----------------------------
There were no significant changes in the Company's internal controls or in other factors that could significantly affect these internal controls subsequent to the date of our most recent evaluation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RAM VENTURE HOLDINGS CORP.
March 26, 2003 By: /s/Norman H. Becker ------------------------------- Norman H. Becker, President
In accordance with the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
Signature Capacity Date - --------- -------- ----
/s/Norman Becker President March 26, 2003 - ------------------------- and Director Norman Becker
/s/Frank Bauer Vice President March 26, 2003 - ------------------------- and Director Frank Bauer
/s/Diane Martini Secretary/Treasurer March 26, 2003 - ------------------------- and Director Diane Martini
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Annual Report on Form 10-K of RAM Venture Holdings Corp. for the period ended December 31, 2002, Norman H. Becker, President and Principal Financial Officer of RAM Venture Holdings Corp., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our knowledge and belief, that:
1. Such Annual Report on Form 10-K for the period ended December 31, 2002, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in such Annual Report on Form 10-K for the period ended December 31, 2002, fairly presents, in all material respects, the financial condition and results of operations of RAM Venture holdings Corp.
RAM VENTURE HOLDINGS CORP.
Dated: March 26, 2003 By: /s/Norman H. Becker ------------------------------- Norman H. Becker, President and Principal Financial Officer
CERTIFICATIONS --------------
I, Norman H. Becker, President and Principal Financial Officer of RAM Venture Holdings Corp., hereby certify that:
1. I have reviewed this Annual Report on Form 10-K of RAM Venture Holdings Corp.;
2. Based on my knowledge, this Annual 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 Annual Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I 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 me by others within those entities, particularly during the period in which this Annual 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 Annual Report (the "Evaluation Date"); and
(c) presented in this Annual Report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's auditors and to the audit committee of registrant's board of directors (or persons performing the equivalent function):
(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. I have indicated in this Annual 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 my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Dated: March 26, 2003 By: /s/Norman H. Becker -------------------------------- Norman H. Becker, President and Principal Financial Officer
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002
CONTENTS --------
PAGE ----
INDEPENDENT AUDITORS' REPORT . . . . . . . . . . . . . . . . . . 1
CONSOLIDATED BALANCE SHEETS. . . . . . . . . . . . . . . . . . . 2
CONSOLIDATED STATEMENTS OF OPERATIONS. . . . . . . . . . . . . . 3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY. . . . . . . . . 4
CONSOLIDATED STATEMENTS OF CASH FLOWS. . . . . . . . . . . . . . 5 - 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . 7 - 16
GRASSANO ACCOUNTING P.A. Certified Public Accountants & Business Consultants 900 North Federal Highway, Suite 160 Boca Raton, Florida 33432-2754
Board of Directors Ram Venture Holdings Corp. and Subsidiary Fort Lauderdale, Florida
INDEPENDENT AUDITORS'REPORT
We have audited the accompanying consolidated balance sheets of Ram Venture Holdings Corp. and Subsidiary as of December 31, 2002 and 2001, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years ended December 31, 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Ram Venture Holdings Corp. and Subsidiary as of December 31, 2002 and 2001, and the results of its consolidated operations and its consolidated cash flows for the years ended December 31, 2002, 2001 and 2000, in conformity with accounting principles generally accepted in the United States of America.
/s/ Grassano Accounting, P.A.
Boca Raton, Florida March 3, 2003
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2002 AND 2001
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
RAM VENTURE HOLDINGS CORP. & SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS THREE YEARS ENDED DECEMBER 31, 2002
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY THREE YEARS ENDED DECEMBER 31, 2002
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS THREE YEARS ENDED DECEMBER 31, 2002
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS THREE YEARS ENDED DECEMBER 31, 2002
(Continued)
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
As of December 31, 2001, the Company, together with KM Financial, Inc., had a note receivable of $500,000 from Tremor Entertainment, Inc. This note was collateralized by 5,000,000 shares of the Company's common stock. The Company's share of the note was $416,666. The note was in default and the Company took possession of the collateral, cancelled the 5,000,000 shares and issued 833,500 shares of its common stock to KM Financial, Inc. on April 17, 2002, in settlement of the Company's obligation to KM Financial, Inc. in the amount of $83,334.
On January 30, 2002, following completion of the exchange of stock discussions, the Registrant and Creative Beauty Supply, Inc. entered into an agreement for an exchange of stock pursuant to which the Registrant acquired 500,000 shares of the authorized but previously unissued common stock of Creative Beauty Supply, Inc. in exchange for issuance and conveyance of 2,000,000 shares of the Registrant's authorized but previously unissued common stock.
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Capitalization - RAM Venture Holdings Corp. (the ------------------------------- "Company") was incorporated under the laws of the State of Florida on September 14, 1984. The Company's articles of incorporation originally provided for the issuance of 100 shares of common stock, with a par value of $5 per share. On November 13, 1985, the authorized number of shares was increased to 10,000,000 shares, with a par value of $.0001 per share. In that connection, the 100 shares of common stock outstanding prior to that date were exchanged for 2,115,000 shares.
General - On August 31, 1998, the Company sold its interest in its ------- electronic monitoring business and is presently seeking merger opportunities.
Principles of Consolidation - The consolidated financial statements --------------------------- include the accounts of the Company, and its wholly-owned subsidiary, Corrections Systems International, Inc. All significant intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents - For purposes of the balance sheet and ------------------------- statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Marketable Securities - The Company's marketable securities consists --------------------- of trading securities which are carried at market value in the accompanying balance sheets. Unrealized gains and losses resulting from fluctuations in market price are reflected in the statement of operations.
Property and Equipment - Property and equipment are recorded at ---------------------- cost. Depreciation is computed using the straight-line method three-to-five year estimated useful lives of the assets.
Estimates - The preparation of financial statements in conformity --------- with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes - The Company accounts for income taxes under the ------------ Financial Accounting Standards Board of Financial Accounting Standard No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Earnings (Loss) per Share - The Company presents "basic" earnings ------------------------- (loss) per share and, if applicable, "diluted" earnings per share pursuant to the provisions of Statement of Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128"). Basic earnings (loss) per share is calculated by dividing net income or loss by the weighted average number of shares outstanding during each period. The calculation of diluted earnings (loss) per share is the same as the basic earnings (loss) per share.
Recent Accounting Pronouncements - In June 2001, the Financial -------------------------------- Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141 "Business Combinations" and No. 142 "Goodwill and Other Intangible Assets." SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for under the purchase method. For all business combinations for which the date of acquisition is after June 30, 2001, SFAS No. 141 also established specific criteria for the recognition of intangible assets separately from goodwill and requires unallocated negative goodwill to be written off immediately as an extraordinary gain, rather than deferred and amortized. SFAS No. 142 changes the accounting for goodwill and other intangible assets after an acquisition. The most significant changes made by SFAS No. 142 are: (1) goodwill and intangible assets with indefinite lives will no longer be amortized; (2) goodwill and intangible assets with indefinite lives must be tested for impairment at lease annually; and (3) the amortization period for intangible assets with finite lives will no longer be limited to forty years. At this time, the Company does not believe that the adoption of either of these statements will have a material effect on its financial position, results of operations, or cash flows.
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligations." SFAS No. 143 establishes accounting requirements for retirement obligations associated with tangible long-lived assets, including (1) the timing of the liability recognition, (2) initial measurement of the liability, (3) allocation of asset retirement cost to expense, (4) subsequent measurement of the liability and (5) financial statement disclosures. SFAS No. 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. The adoption of SFAS No. 143 is not expected to have a material effect on the Company's financial position, results of operations, or cash flows. In August 2001, the FASB also approved SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 replaced SFAS No. 121. The new accounting model for long-lived assets to be disposed of by sale applies to all long-lived assets, including discontinued operations, and replaces the provisions of Accounting Principles Board (APB) Opinion No. 30, "Reporting Results of Operations Reporting the Effects of Disposal of A segment of a Business," for the disposal of segments of a business. SFAS No. 144 requires that those long- lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. SFAS No. 144 also broadens the reporting of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and that will be eliminated from the ongoing operations of the entity in a disposal transaction. The provisions of SFAS No. 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively. At this time, the Company does not believe that the adoption of SFAS No. 144 will have a material effect on its financial position, results of operations, or cash flows.
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment consists of the following as of December 31:
NOTE C - NOTES RECEIVABLE - RELATED PARTIES
Notes receivable related parties consists of the following as of December 31:
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001
NOTE C - NOTE RECEIVABLE - RELATED PARTIES (Cont'd)
Interest earned on notes amounted to $20,225 in 2001 and $9,233 in 2002.
NOTE D - MARKETABLE SECURITIES
Marketable securities consists of the following as of December 31:
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001
NOTE D - MARKETABLE SECURITIES (Continued)
Securities available for sale consists of the following as of December 31:
The unrealized gain (loss) on securities amounted to $127,756 for 2000, $145,042 for 2001, and $118,867 for 2002.
NOTE E - COMMON STOCK TRANSACTIONS
As of December 31, 2001, the Company, together with KM Financial, Inc., had a note receivable of $500,000 from Tremor Entertainment, Inc. This note was collateralized by 5,000,000 shares of the Company's common stock. The Company's share of the note was $416,666. The note was in default and the Company took possession of the collateral, cancelled the 5,000,000 shares and issued 833,500 shares of its common stock to KM Financial, Inc. on April 17, 2002, in settlement of the Company's obligation to KM Financial, Inc. in the amount of $83,334.
On January 30, 2002, following completion of the exchange of stock discussions, the Company and Creative Beauty Supply, Inc. entered into an agreement for an exchange of stock pursuant to which the Company acquired 500,000 shares of the authorized but previously unissued common stock of Creative Beauty Supply, Inc. in exchange for issuance and conveyance of 2,000,000 shares of the Company's authorized but previously unissued common stock.
On November 4, 2002, the Company sold 2,500,000 shares of common stock to certain officers, directors, and related parties for $22,000.
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001
NOTE F - COMPREHENSIVE INCOME (LOSS)
The Company adopted SFAS No. 130, "Reporting Comprehensive Income," at the beginning of 1998. The adoption had no impact on net income or total stockholders' equity. Comprehensive income consists of net income and other comprehensive income.
In January 2002, the Company acquired 630,000 shares of Beauty Supply, Inc. (See Note E). These stocks represent available for sale securities according to SFAS No. 115. The following is the comprehensive income for the years ended December 31:
NOTE G - INCOME TAXES
Components of deferred tax benefits are as follows as of December 31:
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001
NOTE G - INCOME TAXES (Continued)
At December 31, 2002, management is unable to predict profitable operations for the Company in the future. Accordingly, a 100% valuation allowance has been provided.
At December 31, 2002, the Company had available net operating loss carryforwards, for tax reporting purposes, of approximately $1,079,000 expiring through 2017.
NOTE H - RELATED PARTY TRANSACTIONS
Professional and Consulting Fees - the Company paid officers, -------------------------------- directors, stockholders and affiliates professional and consulting fees amounting to $43,669 in 2000, $40,848 in 2001 and $27,270 in 2002.
Office Expense - Office expenses were paid to stockholders and/or -------------- entities affiliated through common officers, directors and shareholders amounting to $10,200 in 2000, $10,200 in 2001, and $9,600 in 2002.
Accounting Fees - Accounting fees paid to a CPA firm owned by the --------------- Company's President amounted to $17,296 in 2000, $23,235 in 2001, and $24,672 in 2002.
Rent Expense - Rentals paid to entities having officers, directors ------------ and shareholders in common with the Company amounted to $21,000 in 2000, $21,000 in 2001 and $21,000 in 2002.
NOTE I - CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments, investments in marketable securities and accounts receivable. The Company places its cash investments and investments in marketable securities with high quality institutions and limits the amount of credit exposure to any one institution or investee.
NOTE J - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following summarizes the major methods and assumptions used in estimating the fair values of financial instruments:
Cash and Cash Equivalent - The carrying amount approximates fair value due to the liquidity of these financial instruments.
RAM VENTURE HOLDINGS CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 AND 2001
NOTE J - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Investments - The fair value of investments are based upon quoted ----------- market prices for those investments.
NOTE K - RESTATEMENT OF ASSETS AT DECEMBER 31, 2001
On the originally filed balance sheet at December 31, 2001, the 360,000 shares of common stock of Tremor Entertainment, Inc. ("Tremor") valued at $360,000 was classified as a long term investment. During the year ended December 31, 2002, 343,000 shares of Tremor were sold. Consequently, the $360,000 long-term investment in marketable securities has been reclassified to marketable securities at December 31, 2001. This reclassification increased the 2001 marketable securities from $590,390 to $950,390 and increased the total current assets from $802,906 to $1,162,906.
NOTE L - FINANCIAL INFORMATION BY QUARTER (UNAUDITED)
NOTE M - SUBSEQUENT EVENT
On January 31, 2003, the Company lent $50,000 to a corporation whose president is the Company's Vice President. The loan is evidenced by an unsecured promissory note with interest, payable quarterly at a rate of eight percent (8%) per annum and due on January 31, 2005. The note is convertible into 150,000 shares of the corporation's common stock anytime prior to January 31, 2005 at the option of the Company.