UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: February
28, 2015
or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: ______
to ______
PROFIT PLANNERS MANAGEMENT, INC.
(Exact name of registrant as specified
in its charter)
Nevada
(State or other Jurisdiction of
Incorporation or Organization)
1001 Avenue of the Americas, 2nd
Floor, New York, NY 10018
(Address of Principal
Executive Offices) (Zip Code)
(646) 289-5358
(Registrant’s telephone number,
including area code)
885 Third Avenue, 19th Floor, New
York, New York 10022
(Former name or former
address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant
(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 registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large Accelerated Filer ☐ |
Accelerated Filer ☐ |
Non-Accelerated Filer ☐ |
Smaller Reporting Company
☒ |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding
of the issuer's common stock, as of the latest practical date: As of April 10th, 2015, the issuer had 54,302,788 outstanding shares
of Common Stock.
Profit Planners Management, Inc.
TABLE OF CONTENTS
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Page |
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PART I |
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Item 1. |
Condensed
Consolidated Financial Statements |
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Condensed
Consolidated Balance Sheets as of February 28, 2015 (Unaudited) and May 31, 2014 (Audited) |
3 |
|
Condensed
Consolidated Statements of Operations and Comprehensive Loss for the three months and nine months ended February 28,
2015 and 2014 (Unaudited) |
4 |
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Condensed
Consolidated Statements of Cash Flows for the nine months ended February 28, 2015 and 2014 (Unaudited) |
5 |
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Notes
to the Condensed Consolidated Financials (Unaudited) |
6 |
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Item
2. |
Management’s
Discussion and Analysis or Plan of Operation |
9 |
Item
3. |
Quantitative
and Qualitative Disclosures About Market Risk |
14 |
Item 4T |
Controls
and Procedures |
14 |
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PART II |
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Item
1. |
Legal
Proceedings |
15 |
Item 1A. |
Risk
Factors |
15 |
Item
2. |
Unregistered
Sales of Equity Securities and Use of Proceeds |
15 |
Item
3. |
Defaults
Upon Senior Securities |
15 |
Item
4. |
Submission
of Matters to a Vote of Security Holders |
15 |
Item
5. |
Other
Information |
15 |
Item
6. |
Exhibits |
15 |
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SIGNATURES |
16 |
PART I.
ITEM 1. FINANCIAL INFORMATION
Profit Planners Management, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| |
February 28, 2015 | | |
May 31,
2014 | |
Assets | |
| | |
| |
Current assets: | |
| | |
| |
Cash | |
$ | 22,312 | | |
$ | 39,982 | |
Accounts receivable (net of allowance of $28,243 and $19,795, respectively) | |
| 79,041 | | |
| 99,940 | |
Note receivable | |
| 72,000 | | |
| 72,000 | |
Other current assets | |
| 32,276 | | |
| 39,590 | |
Total current assets | |
| 205,629 | | |
| 251,512 | |
| |
| | | |
| | |
Property and equipment: | |
| | | |
| | |
Property and equipment | |
| 13,172 | | |
| 13,172 | |
Less: accumulated depreciation | |
| (10,075 | ) | |
| (6,839 | ) |
Net property and equipment | |
| 3,097 | | |
| 6,333 | |
| |
| | | |
| | |
Total Assets | |
$ | 208,726 | | |
$ | 257,845 | |
| |
| | | |
| | |
Liabilities and Stockholders' Deficit | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 149,317 | | |
$ | 46,357 | |
Accounts payable and accrued expenses - related parties | |
| 83,086 | | |
| 66,700 | |
Accrued expenses - employee compensation | |
| 126,000 | | |
| 130,000 | |
Accrued expenses - officer's compensation | |
| 509,774 | | |
| 373,925 | |
Deferred revenue | |
| - | | |
| 20,000 | |
| |
| | | |
| | |
Total Liabilities | |
| 868,177 | | |
| 636,982 | |
| |
| | | |
| | |
Commitments and contingencies (Note 8) | |
| - | | |
| - | |
| |
| | | |
| | |
Stockholders' Deficit | |
| | | |
| | |
Preferred stock - $.001 par value; 50,000,000
shares authorized; none and none issued and outstanding in 2014 and 2013, respectively | |
| - | | |
| - | |
Common stock - $.001 par value; 500,000,000 shares
authorized; 54,302,788 and 54,052,788 shares issued and outstanding, respectively | |
| 54,302 | | |
| 54,052 | |
Additional paid-in capital | |
| 252,893 | | |
| 248,144 | |
Accumulated deficit | |
| (966,646 | ) | |
| (681,333 | ) |
Net Stockholders' Deficit | |
| (659,451 | ) | |
| (379,137 | ) |
Total Liabilities And Stockholders' Deficit | |
$ | 208,726 | | |
$ | 257,845 | |
See accompanying notes to the condensed
consolidated financial statements
Profit
Planners Management, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| |
Three | | |
Three | | |
Nine | | |
Nine | |
| |
Months Ended | | |
Months Ended | | |
Months Ended | | |
Months Ended | |
| |
February 28, 2015 | | |
February 28, 2014 | | |
February 28, 2015 | | |
February 28, 2014 | |
| |
| | | |
| | | |
| | | |
| | |
Revenues - consulting and management services fees | |
$ | 188,574 | | |
$ | 142,576 | | |
$ | 491,634 | | |
$ | 507,982 | |
Revenues - consulting and management services fees - related party | |
| - | | |
| 3,000 | | |
| - | | |
| 3,000 | |
Cost of revenues - personnel and overhead costs | |
| 113,353 | | |
| 142,275 | | |
| 339,059 | | |
| 413,883 | |
| |
| | | |
| | | |
| | | |
| | |
Gross Profit | |
| 75,221 | | |
| 3,301 | | |
| 152,575 | | |
| 97,099 | |
| |
| | | |
| | | |
| | | |
| | |
Selling, general and administrative expenses: | |
| | | |
| | | |
| | | |
| | |
Corporate management | |
| 58,996 | | |
| 71,337 | | |
| 190,071 | | |
| 158,843 | |
Consulting and professional expenses | |
| 86,900 | | |
| 25,443 | | |
| 138,402 | | |
| 72,056 | |
Other operating expenses | |
| 30,150 | | |
| 52,043 | | |
| 109,418 | | |
| 186,016 | |
Total selling, general and administrative expenses | |
| 176,046 | | |
| 148,823 | | |
| 437,891 | | |
| 416,915 | |
| |
| | | |
| | | |
| | | |
| | |
Net loss and comprehensive loss from continuing operations | |
| (100,825 | ) | |
| (145,522 | ) | |
| (285,316 | ) | |
| (319,816 | ) |
| |
| | | |
| | | |
| | | |
| | |
Discontinued operations (Note 3) | |
| | | |
| | | |
| | | |
| | |
Net loss and comprehensive loss from operations of Organics Innovations, Inc. | |
| - | | |
| 2,044 | | |
| - | | |
| (29,714 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss and comprehensive loss | |
$ | (100,825 | ) | |
$ | (143,478 | ) | |
$ | (285,316 | ) | |
$ | (349,530 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per weighted-average shares common stock - basic and diluted: | |
| | | |
| | | |
| | | |
| | |
Continuing operations | |
| - | | |
| - | | |
| (0.01 | ) | |
| (0.01 | ) |
Discontinued operations | |
| - | | |
| - | | |
| - | | |
| - | |
Net loss | |
$ | - | | |
$ | - | | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted-average number of shares of common stock to be issued and outstanding - basic and diluted: | |
| 54,302,788 | | |
| 53,737,972 | | |
| 54,185,572 | | |
| 53,036,965 | |
See
accompanying notes to the condensed consolidated financial statements
Profit Planners Management, Inc.
Condensed Consolidated Statements
of Cash Flows
(Unaudited)
| |
Nine Months Ended | | |
Nine Months Ended | |
| |
February 28, 2015 | | |
February 28, 2014 | |
| |
| | |
| |
Net cash used in operating activities | |
$ | (22,670 | ) | |
$ | (166,275 | ) |
| |
| | | |
| | |
Net cash used in investing activities | |
| - | | |
| (10,545 | ) |
| |
| | | |
| | |
Net cash provided by financing activities | |
| 5,000 | | |
| 70,500 | |
| |
| | | |
| | |
Net change in cash | |
| (17,670 | ) | |
| (106,320 | ) |
Cash, beginning of period | |
| 39,982 | | |
| 127,984 | |
Cash, end of period | |
$ | 22,312 | | |
$ | 21,664 | |
See accompanying notes to the condensed
consolidated financial statements
Profit Planners Management, Inc.
Notes to Condensed Consolidated Financial
Statements
February 28, 2015
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed
consolidated financial information of Profit Planners Management, Inc. (the Company) have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules and regulations of the United States Securities and
Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results
of operations, or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring
adjustments) have been made which are necessary for a fair financial statement presentation.
The condensed consolidated financial
information for the three months and nine months ended February 28, 2015 include the accounts of the Company and its wholly-owned
subsidiaries and all intercompany balances and transactions have been eliminated in consolidation.
The balance sheet at May 31, 2014 has
been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes
required by accounting principles generally accepted in the United States of America (U.S. GAAP) for complete financial statements.
The unaudited interim financial information
should be read in conjunction with the Company’s Form 10-K, which contains the audited consolidated financial statements
and notes thereto, together with Management’s Discussion and Analysis, for the year ended May 31, 2014. The interim results
for the period ended February 28, 2015 are not necessarily indicative of the results for the full fiscal year.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue recognition
The Company’s revenues are derived
from management, financial and accounting advisory service fees. The Company recognizes revenue when it is realized or realizable
and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that
the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.
Net loss per common share
Basic net income (loss) per share is
computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common
stock and potentially outstanding shares of common stock during each period. Due to the loss for the periods presented, the shares
are not included in the calculation as they would be anti-dilutive.
Recently Issued Accounting Pronouncements
In August 2014, the Financial Accounting
Standards Board(FASB) issued Accounting Standards Update ASU 2014-15 on “Presentation of Financial Statements Going Concern
(Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently,
there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about
an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this ASU
provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures.
The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding
upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of
the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide
principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial
doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures
when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial
statements are issued (or available to be issued). The amendments in this ASU are effective for public and nonpublic entities for
annual periods ending after December 15, 2016. Early adoption is permitted. It is too early to assess the impact of the adoption
of this new guidance on the Company’s financial position.
In May 2014, the FASB issued ASU No.
2014-09: Revenue from Contracts with Customers. The standard outlines a five-step model for revenue recognition with the core principle
being that a company should recognize revenue when it transfers control of goods or services to customers at an amount that reflects
the consideration to which it expects to be entitled in exchange for those goods or services. Companies can choose to apply the
standard using either the full retrospective approach or a modified retrospective approach. Under the modified approach, financial
statements will be prepared for the year of adoption using the new standard but prior periods presented will not be adjusted. Instead,
companies will recognize a cumulative catch-up adjustment to the opening balance of retained earnings. This new guidance is effective
for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company
has not yet made a determination been made as to the method of application (full retrospective or modified retrospective). It is
too early to assess whether the impact of the adoption of this new guidance will have a material impact on the Company's results
of operations, financial position or cash flows.
NOTE 3 – DISCONTINUED OPERATIONS
On May 9, 2014, the Company completed
the sale of assets of its Organic Innovations subsidiary that consisted of three domain names, trademarks, websites and customer
lists, to a third party pursuant to the terms of the Asset Purchase Agreement between the parties dated as of May 7, 2014 for an
aggregate purchase price of $115,000. The purchase price was paid in cash of $18,000, the assumption of a Company obligation to
the CEO for $25,000 and a promissory note for $72,000 carrying an interest rate of 8% per annum that matures on May 6, 2015. As
of February 28, 2015, interest income of $4,387 accrued on the promissory note.
As a result of the sale of its Organic
Innovations business, management has reclassified the related activities to discontinued operations. For the nine months ended
February 28, 2014, development costs totaling $29,714, have been reclassified under discontinued operations on the condensed consolidated
statement of operations and comprehensive loss.
NOTE 4 – GOING CONCERN
As reflected in the accompanying condensed
consolidated financial statements, the Company had a net loss and comprehensive loss from continuing operations of $285,316 for
the nine months ended February 28, 2015 and the Company has minimal historical evidence of positive earnings as evidenced by the
accumulated deficit of $966,646 as of February 28, 2015. The historical trend of losses raises substantial doubt about the Company’s
ability to continue as a going concern.
Management believes that the actions
presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern.
These actions include continuing to grow the Company’s revenues sufficient to support its cost structure through existing
and new clients while actively seeking channels to develop business. Management may seek additional financing using equity or debt
instruments in the future through additional private placement offerings.
There can be no assurance that the actions
taken and raising of equity will be successful or that the Company’s anticipated financing will be available in the future,
at terms satisfactory to the Company. Failure to achieve the equity and financing at satisfactory terms and amounts could have
a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
NOTE 5 – RELATED PARTY
The Company has accrued officer’s
salary expense payable to the CEO, who has a controlling ownership interest in the Company. The net compensation owed to the CEO
totaled $509,774 and $373,925 as of February 28, 2015 and May 31, 2014, respectively.
The Company has accrued compensation
expense payable to a former Director of the Company for providing legal counsel services for $1,000 per month. The compensation
obligations owed to the former Director totaled $25,000 and $16,000 as of February 28, 2015 and May 31, 2014, respectively. The
Company also has net payable to affiliated companies totaling $58,086 and $50,700 as of February 28, 2015, and May 31, 2014, respectively
for services performed in prior periods.
NOTE 6 – EQUITY
In October 2014, the Company closed
a private sale transaction with one investor who was subsequently appointed to the Board of Directors, through which the Company
issued 250,000 shares of its common stock at a price of $.02 per share. The total proceeds to the Company from the October 2014
private sale was $5,000.
NOTE 7 – INCOME TAXES
The Company has not recorded any income
tax expense or benefit for the three and nine months ended February 28, 2015 or 2014. Any taxable income generated will be offset
by net operating losses (“NOL”) generated in previous years. At the present time, management cannot determine if the
Company will be able to generate sufficient taxable income to realize the benefit of the NOL carryforwards; accordingly, a
valuation allowance has been established to offset the asset.
NOTE 8 – CONTINGENT EMPLOYEE BONUS
On January 1, 2014, the Company entered
into a compensation agreement with an employee that provides for a bonus based upon certain performance requirements. Since inception
of the compensation agreement, management has evaluated the results of the employee’s performance and determined that the
likelihood of payment would be remote as the employee did not meet the minimum performance requirements.
The Company agreed to bonus compensation
of $130,000 as of May 31, 2014. The outstanding balance as of February 28, 2015 is $126,000.
NOTE 9 – SUBSEQUENT EVENT
Effective March 1, 2015, the Company entered into a lease
agreement for its Corporate office in New York. The lease agreement expires on February 28, 2017. The monthly rent is $6,000 for
the first twelve months and $6,195 for the last twelve months.
ITEM 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
The information in this report contains
forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In
particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking
statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,”
“could,” “possibly,” “probably,” “anticipates,” “projects,” “expects,”
“may,” “will,” or “should” or other variations or similar words. No assurances can be given
that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s
current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.
The following discussion and analysis
should be read in conjunction with our accompanying unaudited condensed consolidated financial statements and the notes to those
financial statements included in this filing. The following discussion includes forward-looking statements that reflect our plans,
estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this
filing.
Operations
We are a Nevada Corporation founded
in January 2009 with offices in New York and Florida.
Our Business
Our operations are focused on the following
major business areas:
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CFO, Accounting and Tax Services; |
|
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Insurance and Healthcare Insurance Services; |
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Advisory Consulting Services; |
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Management Services |
CFO, Accounting and Tax Services
Our CFO, Accounting and Financial Services
division provides management, staffing, payroll, human resources, billing and tax services to our clients. We provide short-term
engagements of outside management services to help companies complete certain transactions or restructurings. Additionally, we
provide monthly accounting, payroll, tax and billing services to businesses that do not have those departments.
Clients are billed either on an hourly
basis for the accounting and financial services we provide or under a monthly retainer, if the engagement is to be for an extended
period of time. The hourly rates that we charge our clients for these services depends on the complexity of the work being done
and the experience level of the persons assigned to the work.
Our CFO, Accounting and Tax Services
division is currently our main revenue generator with all of our revenues coming from these services. In the future, we expect
this percentage to go down as our other business divisions gain traction in the market place.
Insurance and Healthcare Insurance
Services
Our Insurance and Healthcare Insurance
division, Profit Planners Group offers a wide array of insurance and insurance related products such as life insurance, annuities,
health insurance, healthcare discount benefit cards and programs as well as self-funded health insurance accounts. Our Insurance
and Healthcare Insurance division offers insurance services to our corporate clients as part of our consulting services. It also
sells insurance products and services directly to individuals and companies that have not engaged us for other consulting services.
We receive commission from the insurance
carrier based on the premium of the product being purchased.
As the operation has yet to generate
any revenues, we are re-evaluating our approach.
Advisory Consulting Services
Our Advisory Consulting Services Practice,
PPMT Strategic Group, supplies strategic and financial consulting services to companies looking to raise capital in the debt and
equity markets. Our knowledge and access to experienced personnel can provide the planning, financial modeling and advice to middle
market companies.
Clients are billed either on an hourly
basis for these services we provide or under a monthly retainer, if the engagement is to be for an extended period of time. The
hourly rates that we charge our clients for these services depends on the complexity of the work being done and the experience
level of the persons assigned to the work.
Management Services
Our Management Services division provides
budgeting and asset allocation and control advice to professional athletes, entertainers and other high earning individuals. The
services that our Management Services division provides include reviewing a client’s current earnings and expenses and advising
on what changes need to be made to create long-term financial stability. The main goal of our Management Services division is to
create a solid long-term financial plan for these high earning individuals and to create the budgeting discipline needed for these
clients to retire comfortably.
The Management Services that we provide
are billed either on an hourly basis or under a monthly retainer depending on the length of the engagement. We may also generate
revenue from the sale of insurance products to our Management Services clients if such products are needed as part of the long-term
financial plan that has been created.
Growth and Profitability Strategy
Our objective is to increase our revenue,
profitability and cash flow by offering our clients a wide array of essential services in a “one-stop-shopping” framework.
By doing so we can simplify the logistics of our client’s purchases of these essential services, eliminate redundant services
and streamline the business operations of our corporate clients.
Marketing
Our marketing focus depends on the business
and consumer market. For our CFO, Accounting and Tax Services business, our marketing efforts are targeted at small to midsized
companies that are known to, located or identified by our finders’ network. We also utilize our contacts with other professional
service firms (law firms, investment bankers, venture capital firms and CPA audit firms) that provide services to the small and
middle market sector for referrals of potential clients. We plan to expand and leverage our current clientele in our CFO, Accounting
and Tax services group for potential leads and referrals. We also intend to explore alliances or potential acquisitions
of small accounting, or other consulting firms, to access their customer lists so that we can expand our client base.
Although our target market has been
on companies that have sales of less than $100 million and are based in North America, we plan to expand to larger companies as
our consulting staff grows. We also focus our efforts on Private Equity and Investment Banking firms, who generally require the
skill base we possess for some of their investments. Our industry focus is professional services and products related to our businesses.
Although we focus on these industries we will look at opportunities in other industries if it makes economic sense.
We currently own and operate various web-sites, with the
following being the more prominent ones:
|
● |
www.profitplannersmgt.com |
|
● |
www.profitplannersinsurancegroup.com |
|
● |
www.ppmtgroup.com |
We use these web-sites as part of our
marketing strategy. In addition, we work to expand our communications through various channels of social and business
media that include our web-sites, other sites such as LinkedIn, Facebook and Twitter, and through press releases and articles.
We will continue to maintain all of our web-sites.
We believe that these strategies will provide the best results
given our limited marketing budget.
Critical Accounting Policies
Accounts receivable
Accounts receivable represents open
invoices from customers. The Company periodically evaluates the collectability of its accounts receivable and considers the need
to record or adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information.
Actual amounts could vary from the recorded estimates. The Company has determined that as of February 28, 2015, an allowance for
doubtful accounts of $28,243 was required as a result of the Company believing certain receivables for consulting services will
no longer be collected either fully or partially. The Company does not require collateral to support customer receivables.
Revenue recognition
The Company’s revenues are derived
from management, financial and accounting advisory services. The Company will recognize revenue when it is realized
or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an
arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability
is reasonably assured.
For discontinued operations, product
sales represented revenue from the sale of products and related shipping fees. Product sales and shipping revenues, net of promotional
discounts, rebates, and return allowances, were recorded when the products were shipped and title passed to customers. Return allowances,
which reduce revenue, were estimated using historical experience. Revenue from product sales was recorded net of sales taxes. Current
discount offers, when accepted by our customers, were treated as a reduction to sales revenues.
Net income (loss) per common share
Basic net income (loss) per share is
computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common
stock and potentially outstanding shares of common stock during each period. Due to the loss for the periods presented, the shares
are not included in the calculation as they would be anti-dilutive.
Going Concern
As reflected in the accompanying financial
statements, the Company has had a net loss and comprehensive loss from continuing operations of $285,316 and $319,816 for the nine
months ended February 28, 2015 and February 28, 2014, respectively; and an accumulated deficit of $966,646 at February 28, 2015. These
factors raise substantial doubt about the Company’s ability to continue as a going concern.
Management believes that the actions
presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern.
These actions include continuing to grow the Company’s revenues to sufficiently support its cost structure through existing
and new clients while actively seeking channels to develop business. Management may seek additional financing using equity or debt
instruments in the future through additional private placement offerings.
There can be no assurance that the actions
taken and raising of equity will be successful or that the Company’s anticipated financing will be available in the future,
at terms satisfactory to the Company. Failure to achieve the equity and financing at satisfactory terms and amounts could have
a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Recently Issued Accounting Pronouncements
In August 2014, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update ASU 2014-15 on “Presentation of Financial Statements Going Concern
(Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently,
there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about
an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this ASU
provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures.
The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding
upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of
the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide
principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial
doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures
when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial
statements are issued (or available to be issued). The amendments in this ASU are effective for public and nonpublic entities for
annual periods ending after December 15, 2016. Early adoption is permitted. It is too early to assess the impact of the adoption
of this new guidance on the Company’s financial position.
In May 2014, the FASB issued ASU No.
2014-09: Revenue from Contracts with Customers. The standard outlines a five-step model for revenue recognition with the core principle
being that a company should recognize revenue when it transfers control of goods or services to customers at an amount that reflects
the consideration to which it expects to be entitled in exchange for those goods or services. Companies can choose to apply the
standard using either the full retrospective approach or a modified retrospective approach. Under the modified approach, financial
statements will be prepared for the year of adoption using the new standard but prior periods presented will not be adjusted. Instead,
companies will recognize a cumulative catch-up adjustment to the opening balance of retained earnings. This new guidance is effective
for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company
has not yet made a determination been made as to the method of application (full retrospective or modified retrospective). It is
too early to assess whether the impact of the adoption of this new guidance will have a material impact on the Company's results
of operations, financial position or cash flows.
Results of Operations
Continuing Operations
Three Months Ended February 28, 2015 and 2014
For the three months ended February
28, 2015 and 2014, we had revenue of $188,574 and $145,576, respectively. Cost of revenues for the three months ended February
28, 2015 and 2014 totaled $113,353 and $142,275, respectively. Selling, general and administrative expenses for the three months
ended February 28, 2015 and 2014 totaled $176,046 and $148,823, respectively, resulting in a net loss from continuing operations
of $100,825 and $145,522, respectively. The decline in our operating loss is primarily due to reduced labor and overhead.
Consulting service income for the three
months ended February 28, 2015 consisted of CFO, Accounting and Tax Services of $188,574. For the comparable three months ended
February 28, 2014, consulting service income consisted of CFO, Accounting and Tax Services of $145,576. The change in service income
is attributable to new clients and increased billing to our existing clients.
Cost of revenues for the three months
ended February 28, 2015 comprised of personnel and overhead costs of $113,353. The personnel and overhead costs were comprised
of salaries and compensation expenses of $82,399 and other expenses of $30,954. Cost of revenues for the three months ended February
28, 2014 comprised of personnel and overhead expenses of $142,275. The personnel and overhead expenses were comprised of salaries
and compensation expenses of $126,576 and other overhead expenses of $15,699. Our cost of revenue was declined by $28,922 as we
reduced our head count.
Selling, general and administrative
expenses for the three months ended February 28, 2015 was $176,046 comprised of compensation expense for corporate management of
$58,996, consulting and professional expenses of $86,900, rent expense of $13,922, filing fee of $3,159, office and IT related
expenses of $3,232, travel-related expenses of $4,263 and other expenses of $5,574.
Selling, general and administrative
expenses for the three months ended February 28, 2014 was $148,823 comprised of net compensation expense for corporate management
of $71,337, consulting and professional expenses of $25,443, rent expense of $16,338, travel-related expenses of $7,531, computer
related expenses of $5,281, office supplies and filings fees of $4,435, corporate communications of $3,413 and other expenses of
$15,045.
For the three months ended February
28, 2015 as compared to three months ended February 28, 2014, there was an increase in selling, general and administrative expenses
of $27,223, because we increased the time spent on business development.
Nine Months Ended February 28, 2015 and 2014
Continuing Operations
For the nine months ended February
28, 2015 and 2014, we had revenue of $491,634 and $510,982, respectively. Cost of revenues for the nine months ended February
28, 2015 and 2014 totaled $339,059 and $413,883, respectively. Selling, general and administrative expenses for the nine months
ended February 28, 2015 and 2014 totaled $437,891 and $416,915, respectively, resulting in a net loss from continuing operations
of $285,316 and $319,816, respectively.
Consulting service income for the nine
months ended February 28, 2015 consisted of CFO, Accounting and Tax Services of $491,634. Consulting service income for the nine
months ended February 28, 2014, consisted of CFO, Accounting and Tax Services of $510,982.
Cost of revenues for the nine months
ended February 28, 2015 comprised of personnel and overhead costs of $339,059. The personnel and overhead comprised of salaries
and compensation expenses of $267,089, and other expenses of $71,970. Cost of revenues for the nine months ended February 28, 2014,
comprised of personnel and overhead expenses of $413,883. The personnel and overhead expenses were comprised of salaries and compensation
expenses of $365,677 and other overhead expenses of $48,206. The decline of $74,824 was due to reduced head count.
Selling, general and administrative
expenses for the nine months ended February 28, 2015 was $437,891, comprised of compensation expense for corporate management of
$190,071, consulting and professional expenses of $138,402, rent expense of $35,496, filing fee of $8,960, bad debts of $5,198,
office and IT related expenses of $9,745, travel-related expenses of $13,824, settlement fee of $18,000 and other expenses of $18,195.
Selling, general and administrative
expenses for the nine months ended February 28, 2014 was $416,915, comprised of compensation expense for corporate management of
$158,843, consulting and professional expenses of $72,056, rent expense of $46,403, bad debt expense of $60,173, travel-related
expenses of $20,478, computer related expenses of $15,813, office supplies and filing fees of $13,944, corporate communications
of $8,299, and other expenses of $20,906.
For the nine months ended February
28, 2015 as compared to same period ended February 28, 2014, our selling, general and administrative expenses increased by $20,976.
This was due to an increase in corporate management consulting and professional fees that was partially offset by a decline in
other expenses.
Discontinued operations
In February 2014, our management reached
a decision to sell the assets of its Organic Innovations Inc. business. Organic Innovations, Inc. consisted primarily of two e-commerce
platforms and websites branded under the “Golden Age Medical” and “Organically Crafted” names. On May 9,
2014, we completed the sale of assets of our Organic Innovations subsidiary to a third party pursuant to the terms of the Asset
Purchase Agreement between the parties dated as of May 7, 2014.
The Organic Innovations, Inc. business
operations have been reclassified as discontinued operations on the financial statements. The Company incurred a gain of $2,044
and net loss of $29,714 for the three and nine months ended February 28, 2014, respectively.
Liquidity and Capital Resources
As of February 28, 2015, we had cash
of $22,312 as compared to cash of $39,982 as of May 31, 2014. The decrease in net cash of $17,670 was the result of net cash used
in operating activities totaling $22,670 with $5,000 provided by financing activities for the nine months ended February 28, 2015.
For the nine months ended February 28,
2015, net cash used in operating activities was attributable to a net loss of $285,316, non-cash adjustments for depreciation of
$3,239 and a net change in operating assets and liabilities of $259,407.
For the nine months ended February 28,
2014, net cash used in operating activities was attributable to a net loss of $349,530, non-cash adjustments for depreciation expense
of $4,915 and stock compensation expense of $54,249, and a net increase from the change in operating assets and liabilities of
$124,091.
In order for us to execute our business
plan we will need to raise at least $500,000 in debt or equity. The funds are needed for building out the management team, sales
and marketing and working capital. There can be no assurance that we will be able to raise the funds needed to execute our business
plan.
If we are unable to satisfy our cash
requirements we may be unable to proceed with our plan of operations. We do not anticipate the purchase or sale of any significant
equipment. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. In
the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able
to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or
cease operations.
We anticipate that depending on market
conditions and our plan of operations, we may incur operating losses in the foreseeable future.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
N/A
ITEM 4T. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls
and Procedures. Under the supervision and with the participation of our management, including our President, Chief Financial
Officer and Secretary, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”))
as of the end of the period covered by this report. Based upon that evaluation, our President, Chief Financial Officer and Secretary
concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that
the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded,
processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated
and communicated to our management to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance,
however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control Over
Financial Reporting. During the most recent quarter ended February 28, 2015, there has been no change in our internal control
over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS.
From
time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course
of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse
effect on our business, prospects, financial condition or results of operations.
ITEM 1A. RISK FACTORS.
Our Annual Report on Form 10K for the
fiscal year ended May 31, 2014 contains a description of the risk factors relating to our operations and to an investment in our
common stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS.
In October 2014, the Company closed
a private sale transaction with one investor who was subsequently appointed to the Board of Directors, through which the Company
issued 250,000 shares of its common stock at a price of $.02 per share. The total proceeds to the Company from the October 2014
private sale was $5,000. The investor is an “accredited investor” as that term is defined in Rule 501 of Regulation
D of the Securities Act of 1933. The shares bear a transfer restriction legend. The Company did not use an underwriter or placement
agent for the October 2014 private sale and did not pay any commissions or fees in connection with the transaction. The October
2014 private sale involved no general solicitation, and was conducted in reliance on the exemption from registration contained
in Section 4(2) of the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
On November 11, 2014, the Board of Directors
of the Company appointed William R. Hunter and Stephen B. Kass, Esq., CPA, LLM to serve as directors of the Company to fill vacancies
on its Board of Directors. On November 11, 2014, Bradley L. Steere II resigned from our board of directors to pursue other business
interests. There were no disagreements between Mr. Steere and the Company, or its executives or directors, on any matter relating
to the Company’s operations, policies or practices.
As a result of the above appointments
and resignations, Wesley Ramjeet, William R. Hunter and Stephen B. Kass currently constitute the full board of directors of the
Company.
ITEM 6. EXHIBITS
Exhibit Number | | |
Description of Exhibit |
| | |
|
| 31.1 | | |
Certifications required by Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | |
|
| 32.1 | | |
Certification of Chief Executive Officer and Principal Accounting Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
SIGNATURES
Pursuant to the requirements 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.
Date: April 10th, 2015 |
Profit Planners Management, Inc. |
|
|
|
|
By: |
/s/ Wesley Ramjeet |
|
|
Wesley Ramjeet |
|
|
Chief Executive Officer, Chief Financial ,
Chief Accounting Officer, Officer and Director |
16
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Wesley Ramjeet, certify that:
1. |
I have reviewed this Form 10-Q of Profit Planners Management, Inc. for the period ended February 28, 2015; |
2. |
Based on my knowledge, this 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 report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods present in this report; |
4. |
The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the small business issuer and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals; |
|
(c) |
Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the small business issuer’s internal control over financing reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and |
5. |
The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involved management or other employees who have a significant role in the small business issuer’s internal control over financial reporting. |
Date: April 10th, 2015 |
Profit Planners Management, Inc. |
|
|
|
|
By: |
/s/ Wesley Ramjeet |
|
|
Wesley Ramjeet
Chief Executive Officer, Chief Financial Officer, Chief Accounting
Officer and Director |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with this Quarterly Report of Profit Planners Management,
Inc. (the “Company”) on Form 10-Q for the period ending February 28, 2015 as filed with the Securities and Exchange
Commission on the date hereof (the “Report”), I, Wesley Ramjeet, Chief Executive Officer and Chief Financial Officer
of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley
Act of 2002, that:
1. |
|
Such Quarterly Report on Form 10-Q for the period ending February 28, 2015, 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 Quarterly Report on Form 10-Q for the period ending February 28, 2015, fairly presents, in all material respects, the financial condition and results of operations of Profit Planners Management, Inc. |
Date: April 10th, 2015 |
Profit Planners Management, Inc. |
|
|
|
|
By: |
/s/ Wesley Ramjeet |
|
|
Wesley Ramjeet
Chief Executive Officer, Chief Financial Officer, Chief Accounting
Officer and Director |
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