Free Motion for Miscellaneous Relief - District Court of Arizona - Arizona

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Lomrence J. lJ.Jorfie|cJ, CPH"'i*A@
Kurt J. Heinzei, (PH*@
Mory H. Moshow, CPFi*
Sherri Fi. Fieber, CPB*
Pomelo J. Holrnoos, CPS"`
Corole Fl. Cozine, CPR*
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§§QLQ‘iQ'§§? Lawrence J. Warfield, Receiver
Receivership Estate of international Funding Association, et al
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i€¤¤S5¤¤*€=~¤’<*°i*S“ We have compiled the accompanying statement of sources and uses of
cash — modified cash basis of the Receivership Estate of International
Funding Association, et al for the six months ended June 30, 2006 in
accordance with Statements on Standards for Accounting and Review
Services issued by the American institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of the Receiver. We have not
audited or reviewed the accompanying financial statement and,
accordingly, do not express an opinion or any other form of assurance on
it.
The 3CCOlTlp3l`lyil'lQ STEITGITIGDT WHS |0l'€p8l'€Ci '[O pl’€S€l'iil SOLITCGS 3l`lCi USGS
of cash — modified cash basis pursuant to the regulatory provision
described in Note 1, and is not intended to be a complete presentation of
gross income and expenses.
This report was intended solely for the information and use of the
Receiver of the United States District Court for the District of Arizona.
This restriction is not intended to limit the distribution of this report, which
is a matter of public record.
We are not independent with respect to the Receivership Estate of
international Funding Association, etal.
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Warfield and Company, CPAs
August 10, 2006
Exhibit "A"
Case 2:03-cv—01825—PGR Document 320-2 Filed 10/27/2006 Page 1 of 4

RECEIVERSHIP ESTATE OF INTERNATIONAL FUNDING ASSOCIATION, etal
Statement of Sources and Uses of Cash - Modified Cash Basis
January 1 - June 30, 2006
January 1 - June 30, 2006
SOURCES OF CASH;
Interest Income $ 5.300.99
Interest on T-Bills 1,968.46
Dividend Income 41.04
TOTAL SOURCES OF CASH $ 7,310.49
USES OF CASH:
ASSET INVESTIGATION & RECOVERY EXPENSES
Accounting Fees $ 31,955.50
Attorneys Fees 27,675.76
Investigative Fees 4,440.00
Receivers Fees 3,217.51
Attorneys Costs - Research Costs 298.19
Attorneys' Costs - Document Production 129.70
Attorneys‘ Costs — Travel 31.00
TOTAL ASSET INVESTIGATION & RECOVERY EXPENSES $ 67,747.66
ADMINISTRATIVE EXPENSES
Attorneys Fees 9,225.24
Receiver's Fees 1,072.49
Storage Expense 1,053.08
Attorneys' Costs - Copies & Faxes 809.51
Receiver's Costs - Copies & Faxes 559.70
Attorneys‘ Costs - Telephone Expense 382.52
Attorneys Costs - Postage & Delivery 255.57
Receivers Costs - Travel 74.25
Receivers Costs - Website Hosting 37.11
Receivers Costs ~ Office Supplies 26.18
Receiver's Costs — Postage & Delivery 23.17
ReceIver‘s Costs - Computer 2.03
Receivers Costs - Telephone 1.26
TOTAL ADMINISTRATIVE EXPENSES 13,522.11
ENCUMBRANCES & DIRECT EXPENSES
Property at 3719 E Leonora St, Mesa AZ
2004 Utilities/Maintenance Expenses 110.00
TOTAL ENCUMBRANCES & DIRECT EXPENSES 110.00
TOTAL USES OF CASH $ 81,379.77
NET INCREASE (DECREASE) IN CASH FOR PERIOD (74,069.28)
CASH AT THE BEGINNING OF PERIOD - JANUARY 1, 2006 667,738.44
CASH AT THE END OF PERIOD - JUNE 30, 2006 593,669.16
Case 2:03-0%-01825-PGR Document 320-2 Filed 10/27/2006 Page 2 of 4
( ee Accountants Compu ation Report and Notes to Financial Statements)

Receivership Estate of International Funding Association, etal
Notes to Financial Statements
January 1, 2006 through June 30, 2006
NOTE 1 — NATURE OF OPERATIONS
International Funding Association, et al, a Receivership was created as a result of
actions brought by the United States Securities and Exchange Commission,
entitled SEC v. Ronald Stephen Holt and International Funding Association, et al,
cause number CV 03-1825—Pl—lX—PGR ("SEC Action") and by the Commodity
Futures Trading Commission v. International Funding Association, et al, cause
number CV03—1826—Pl—lX—PGR ("CFTC Action"). A Receiver was appointed by the
United States District Court for the District of Arizona (Receivership Court) and
serves at the Receivership Court’s direction. Pursuant to the orders of the
Receivership Court, the Receiver has been charged with the responsibility of
taking possession of and managing all of the assets of the defendants and relief
defendants in the SEC Action and the CFTC Action.
The Receiver serves as an equity receiver on behalf of the Receivership Court.
The nature and scope of the Receiver’s powers and duties are established in the
written opinions of the courts of the United States and in the orders of the
Receivership Court entered in the SEC Action and the CFTC Action. The
Receiver is also engaged in tracing the flow of investor funds through the accounts
ofthe defendants and others to locate other Receivership Assets that the Receiver
has been directed to take possession of. This process involves interviewing
witnesses, analyzing receivership records and subpoenaing and analyzing bank
records. The Receiver is also required to deal with various claimants who claim to
be owed money by the defendants and relief defendants.
NOTE 2 — BASIS OF ACCOUNTING
The financial statement has been prepared on the modified cash basis of
accounting, which is an other comprehensive basis of accounting. Under this
basis, revenues are generally recognized when received rather than when earned,
and expenses are recognized when cash is disbursed rather than when the
obligation is incurred.
ln the accompanying statement of sources and uses of cash — modified cash
basis, interest earned on U.S. Treasury Bills is recognized when earned rather
than when received.
Cash — International Funding Association, et al has included U.S. Treasury Bills
with a maturity of less than four months in the caption cash on the statement of
sources and uses of cash — modified cash basis.
Estimates — The preparation of the statement of sources and uses of cash —-
modified cash basis and notes thereto require International Funding Association,
et al to make estimates and assumptions that affect certain disclosures.
Accordingly, actual amounts may differ. “
Case 2:03-cv—01825—PGR Document 320-2 Filed 10/27/2006 Page 3 of 4

A A . . . .. 1. 4 A
Receivership Estate of International Funding Association, etal
Notes to Financial Statements
January 1, 2006 through June 30, 2006
NOTE 3 -— CHANGE IN BASIS OF ACCOUNTING
In previous years, International Funding Association, et al prepared the statement
of sources and uses of cash on the cash basis of accounting. During the current
period, International Funding Association, et al changed its basis of accounting to
the modified cash basis of accounting. The Receiver believes that the change
more accurately reflects the financial situation of the Receivership.
NOTE 4 — RELATED PARTY TRANSACTIONS
The Receiver under the direction of the Receivership Court has engaged a public
accounting firm, owned by the Receiver, to assist the Receiver in peiforming
various administrative and accounting functions related to the Receivership
Assets. Fees paid to Warfield & Company, CPAs for the period ending June 30,
2006 were $31,955.50. For this period, $68,269.46 in fees and expenses remain
unpaid to Warfield & Company, CPAs. Of this amount, $25,472.67 is from 2004,
$35,008.79 is from 2005, and the remaining $7,788.00 is from 2006. The unpaid
amounts are not included in the statement of sources and uses of cash — modified
cash basis, as they have not been paid as of June 30, 2006.
NOTE 5 — UNPAID EXPENSES
In addition to the accounting fees incurred in Note 3, International Funding
Association, et al has incurred $66,987.85 of unpaid expenses, comprised of fees
and expenses incurred by the Receiver of $13,837.10 and other professional
services engaged by the Receiver of $53,150.75. Of these amounts, $18,653.81
is from 2004, $29,986.55 is from 2005, and the remaining $18,347.49 is from
2006. These amounts are not included in the statement of sources and uses of
cash — modified cash basis, as they have not been paid as of June 30, 2006
NOTE 6 —— CONTINGENCIES
The Receiver is in the process of determining if International Funding Association,
etal has any income tax or other tax liabilities as of June 30, 2006.
NOTE 7 — SUBSEOUENT EVENTS
There are no subsequent events to report.
Case 2:03-cv—01825—PGR Document 320-2 Filed 10/27/2006 Page 4 of 4

Case 2:03-cv-01825-PGR

Exhibit "A" Document 320-2

Filed 10/27/2006

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Case 2:03-cv-01825-PGR

Document 320-2

Filed 10/27/2006

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Case 2:03-cv-01825-PGR

Document 320-2

Filed 10/27/2006

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Case 2:03-cv-01825-PGR

Document 320-2

Filed 10/27/2006

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