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EX-31.1 - Pro Travel Network, Inc | v162343_ex31-1.htm |
EX-32.2 - Pro Travel Network, Inc | v162343_ex32-2.htm |
EX-32.1 - Pro Travel Network, Inc | v162343_ex32-1.htm |
EX-31.2 - Pro Travel Network, Inc | v162343_ex31-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
x ANNUAL REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended June 30, 2009
¨ TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
transition period from ___________ to _____________
Commission
file number: 333-132127
PTN,
INC.
(Formerly
Pro Travel Network, Inc.)
(Exact
name of registrant as specified in its charter)
Nevada
|
68-0571584
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
516 W. Shaw Avenue # 103, Fresno,
CA
|
93704
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Issuer’s
telephone number (559) 224-6000
Securities
registered under Section 12(b) of the Exchange Act:
None
Securities
registered under Section 12(g) of the Exchange Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.
Yes x No ¨
Indicate
by check mark whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes x No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
Set the definitions of “large accelerated filer,” “accelerated filer,” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨ Accelerated
filer ¨
Non-accelerated filer ¨ Smaller
reporting company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes ¨No x
The
aggregate market value of the issuer’s voting and non-voting common equity held
by non-affiliates computed by reference to the price of $.20 at October 8,
2009.
As of,
October 8, 2009 there were 27,889,145 outstanding shares of the issuer’s common
stock, $.001 par value per share.
Documents
incorporated by reference: None.
TABLE
OF CONTENTS
PART
I
|
3
|
Item
1. Business
|
3
|
Item
2. Properties
|
8
|
Item
3. Legal Proceedings
|
8
|
Item
4. Submission of Matters to a Vote of Security
Holders
|
8
|
PART
II
|
8
|
Item
5. Market for Common Equity and Related Stockholder Matters and
Issuer Purchases of Equity Securities
|
8
|
Item
6. Selected Consolidated Financial Data
|
11
|
Item
7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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12
|
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk
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15
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Item
8. Financial Statements and Supplementary Data
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15
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Item
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
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30
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Item
9A(T). Controls and Procedures
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30
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Item
9B. Other Information
|
31
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PART
III
|
31
|
ITEM
10. Directors, Executive Officers And Corporate
Governance
|
31
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Item
11. Executive Compensation
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33
|
Item
12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
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35
|
Item
13. Certain Relationships and Related Transactions and Director
Independence
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35
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Item
14. Principal Accountant Fees and Services
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35
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PART
IV
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36
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Item
15. Exhibits
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36
|
2
PART
I
Item
1. Business.
Organization
We were
originally incorporated in Nevada as PTN Investment Group, Inc. on October 23,
2003. In May 2005, we amended our Articles of Incorporation to change our name
to Pro Travel Network, Inc. from PTN Investment Group, Inc. and reduce the
aggregate number of our authorized shares to 50,000,000 from 75,000,000.
Prior to the amendment, two non-employee shareholders returned an
aggregate of 6,000,000 shares to us which we cancelled. We wanted to
restructure our capital structure in anticipation of going public. As our
original employee stockholders had spent substantial time and effort on the
development of our business and the original non-employee stockholders were
passive investors, the two passive investors decided it would be more equitable
for them to give up a portion of their share ownership to affect the proposed
capital restructure. Following this cancellation, we had 69,000,000 shares
issued and outstanding. Contemporaneous with the reduction of the number of
authorized shares, we issued new certificates for a total of 23,000,000 shares
to replace the certificates for the then outstanding 69,000,000 shares that were
previously issued in the name of PTN Investment Group, Inc.
In May
2009 we changed our name to PTN, Inc. with plans to implement 5 operating
divisions:
|
·
|
Pro
Travel Network
|
|
·
|
Pro
Travel Retail
|
|
·
|
The
Honeymoon Registry (Honeymoons for
Free)
|
|
·
|
PTN
Business
|
|
·
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The
Destinations Club
|
Pro Travel Network
Pro Travel Network is a Seller of Travel operating as a Host
Agency. Pro Travel Network provides the online travel stores,
accounting, training, marketing, licensing, and supplier contracts for those
operating home based Travel businesses or agencies. Pro Travel
Network markets and establishes independent travel agencies.
Pro
Travel Network’s marketing strategy is to create a network of commissioned sales
representatives who exclusively market the online travel agency suite of
products of Pro Travel Network.
Purchasers
of its online travel agencies are known as Independent Travel Agents or ITAs or
Referring Travel Associates (RTAs). Each ITA pays a fee of $439.99
for the initial purchase of our Independent Travel Agent Program (ITAP) product,
and $49.99 monthly license for continued access to our systems. Each
RTA pays $149.99 and $39.99 monthly license. Pro Travel Network also
retains a percentage of the travel commissions generated by each ITA or
RTA.
Pro
Travel Network currently offers the following products:
|
|
Independent Travel Agent -
Program (ITAP) - $339.99 initial fee; $39.99 monthly renewal fee -
sold by our Independent
Representatives.
|
|
|
Once a
sale is made, the purchaser becomes an Independent Travel Agent. We refund
the initial fee to those purchasers who cancel within ten days of their
purchase. We provide ITAs with booking and marketing tools, support systems,
industry booking codes, required initial and on-going training, consumer travel
websites, accounting tools and access to outside industry training and seminars.
Commissions from any and all bookings made by the new agents are split with Pro
Travel Network; in general with agents earning 70% and PTN retaining 30%.
Additional income streams are derived from the ordering of additional marketing
materials and other promotional items.
|
|
Referring Travel
Associate – Program (RTAP) $99.00
initial fee; $39.99 monthly license fee - sold by our Independent
Representatives
|
3
Once a
sale is made, the purchaser becomes a Referring Travel Associate
(RTA). We refund the initial fee to those purchasers who cancel
within ten days of their purchase. We provide RTAs with a consumer travel
website, marketing and accounting tools, and access to trained Pro Travel
Network staff to assist them in earning income by making all of their bookings
in house by a qualified agent. RTA's are able to earn income by
simply referring friends, family, or anyone they know to Pro Travel
Network. Professional Pro Travel Network staff travel agents then
handle the full booking process, directly with the
consumer. Commissions from any and all bookings referred by the RTA
are split with Pro Travel Network at 50%. Additional income streams
are derived from the ordering of additional marketing materials and other
promotional items.
The Destinations Club
Membership - $99.99 initial fee; $9.99 monthly membership dues - sold by
our Independent Representatives.
The
Destinations Club offers members the ability to travel to various preselected
vacation destinations and cruises at specially negotiated rates. The
Club uses its buying power and large membership base to acquire this special
pricing, which is then passed on to the members of the Destinations
Club. While the Destinations Club will be marketed openly to the
public and is a separate division of PTN, the membership itself will be
available as a Product of Pro Travel Network; however will also be sold through
its own marketing outside of the Pro Travel Network framework. The
Destinations Club is still in development, and is currently being test marketed
to our existing database only
|
|
Representative
Trainer -
$99.99 initial fee; $9.99 monthly renewal fee.
|
RT: The optional RT program is
not a product of Pro Travel Network, but a packaged business opportunity, called
the “RT Opportunity”. The RT Opportunity allows the RT to have full
license to market the ITAP and/or RTAP products of Pro Travel Network and may
sell memberships to the Destination Club. Pro Travel Network
aggressively looks to recruit new RTs, who once trained on the benefits of the
RTAP and ITAP products, may sell these products to the general public and earn
commissions. RTs may also, and are encouraged to, recruit other RTs
and may earn commissions on all products sales by their team of
RTs. The act of recruiting additional RTs however, pays no
commission.
We pay
commissions for each ITAP or RTAP sold depending upon factors such as number of
prior ITAP's sold. New representatives pay a one-time nominal fee to
participate in the RT Opportunity, plus a small monthly license fee in order to
access marketing tools, DVDs, individual websites, personal marketing system and
other support systems needed for each representative to market his business
effectively. Independent Representatives are able to market the ITAP and RTAP
throughout North America, with Australian operations expected to commence in mid
2010.
We
currently support approximately 4,500 Independent Travel
Agents and over 1,200 Independent
Representatives throughout North America. Since our inception, we have had
approximately 15,000 Independent Travel Agents that have become inactive for
non-payment of the annual fee after their first year as an agent. Anyone can
become and Independent Representative of PTN; individuals are not required to
first purchase an ITAP or RTAP or Destination Club membership in order to be
eligible..
Our
agents and referral associates are provided with a reliable source of travel
products and services through agreements with selected travel providers,
including major airlines, cruise lines, hotels and car rental agencies,
including wholesale travel providers. Airlines provide airline tickets,
hotels provide hotel rooms, car rental agencies provide rental cars and
wholesale travel providers provide package tours at discounted rates. These
agreements are all terminable at will by the providers. We do not rely on a
single provider for these services and none of these agreements is exclusive. No
provider provides services which account for more than 10% of our revenues.
Neither we nor our agents pay any fees to obtain the services provided by these
providers. In addition, we offer our agents the ability to make reservations on
over 25 airlines, at more than 300 hotels and with several major car rental
companies, cruise lines and tour package operators.
Home-based travel agency
business
The Pro
Travel Network model of using many outside or home based agents is called the
Hosted Agency model. This model is similar to the franchise model,
although the cost of entry is much smaller. Commissions are split
between host and member. Usually the host gets anywhere between
20%-40%.
4
A
significant driver of change in our industry is the Internet. Travelers are
attracted to the Internet by its 24-hour access, convenience, the reliability of
the content, and the ability to tailor information to individual needs and
preferences. The Internet also provides a convenient and efficient medium for
sales of travel product by affording customers direct access to up-to-the-minute
travel information, including changing fares and routes, the ability to engage
in competitive shopping, and the capacity to book tickets. Effectively,
technology is decreasing or eliminating the need for inventory access and ticket
delivery.
Hosted
Model
We have
many competitors in the Hosted model, YTB International, and Global Travel
International.
We
compete with these direct competitors in various ways, including:
|
|
Having
revenue sources other than commissions, such as the ITAP, RTAP, and
Destinations Club Memberships.
|
|
|
Providing
better service to our agents.
|
|
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Using
a network of commissioned only Independent Representatives to sell our
ITAP, RTAP and Destinations Club membership through the RT
Opportunity
|
Independent
Model
Although
it is difficult to determine the size of the independent home-based agent space,
there are literally thousands of agents that fall under this category. These
agents are typically aligned with a consortium and they tend to book through the
supplier-direct channel. The vast majority of the home-based agents appear to be
affiliated with an umbrella organization. Cooperatives, or
consortia, are membership-based, marketing service organizations for independent
travel agencies. Advantages of membership include programs to educate, train,
reduce cost, and the opportunity to generate higher commissions/overrides due to
the greater leverage and volume associated with a large consortium.
We are a
small competitor compared to many of these companies. Many of our
competitors have longer operating histories, larger customer bases, more
established brands and significantly greater financial, marketing and other
resources than we do. Some of our competitors have operated their respective
businesses for significantly longer and may benefit from greater market share,
brand recognition, product diversification, scale and operating experience than
we do. In addition, some of our competitors have each established exclusive
relationships as preferred travel partners for widely used Internet destinations
such as America Online, MSN and Yahoo! These exclusive arrangements, and similar
relationships that may be able to be secured in the future, could provide these
competitors with a significant advantage in obtaining new
customers.
We expect
existing competitors and business partners and new entrants to the travel
business to constantly revise and improve their business models in response to
challenges from competing Internet-based businesses, including ours. For
example, firms that provide services to us and our competitors may introduce
pricing or other business changes that adversely affect our attractiveness to
suppliers in favor of our competitors. Similarly, some of our airline suppliers
have recently entered into arrangements with GDS providers containing "most
favored nations" obligations in which they have committed, in exchange for
reduced GDS (defined below) booking fees, to provide to the GDS and its
subscribers, including some of our online travel agency competitors, all fares
the supplier offers to the general public through any distribution
channel.
In
addition, consumers may use our or our representatives' websites for route
pricing and other travel information, and then may choose to purchase travel
products from a source other than ours or our representatives, including travel
suppliers' own websites. Many travel suppliers, including airlines, lodging, car
rental companies and cruise operators, also offer and distribute travel
products, including products from other travel suppliers, directly to the
consumer through their own websites. In many cases, these competitors offer
advantages, such as bonus miles or lower transaction fees that we do not or
cannot provide to consumers. In addition, the airline industry has experienced a
shift in market share from full-service carriers to low-cost carriers that focus
primarily on discount fares to leisure destinations. Some low-cost carriers do
not distribute their tickets through other third-party
intermediaries.
5
Pro Travel Retail
Division
In
December 2008, Pro Travel Network acquired K.G&S Pty Ltd, operating as Laser
Travel in Melbourne Australia. This acquisition set the stage for the
planned entry of the Pro Travel Network Host Agency Program into the Australian
market. Due to the economic decline and worst than expected impact to
Pro Travel Network, we postponed launch of the Pro Travel Network opportunity in
Australia until conditions improved. In the interim period, Laser
Travel has continued to operate as a Brick and Mortar agency. During
this period, it was decided that a retail division would be
established.
Based
upon our experience in the industry, we believe that Brick and Mortar operations
continue to sell more high priced, and high commissioned complex vacations and
cruises, than online retailers. Pro Travel Retail includes retail
store locations where people can book travel face to face with a trained and
qualified agent. PTNs executive management staff has many years of
successful retail experience, prompting the decision to enter the retail
business. In May 2009, the second retail location was launched in
Fresno CA, and in July 2009, PTN purchased Cruise Adventures, a 10 year old
agency located in the upscale River Park area of Fresno. The existing
owner of Cruise Adventures agreed to stay on to oversee the development and
expansion of Pro Travel Retail. We currently have two locations in
Fresno, CA and one location in Australia.
Destinations
Club
The
Destinations Club is a program that allows individuals the opportunity to
purchase heavily discounted vacation packages. Initial enrollment in
the Destinations Club is $99.00 and the monthly fee is $9.99. As part of
the old Pro Travel Network program, reduced rate and discount travel was a huge
draw to our company. However, many who were attracted to Pro Travel
network for this purpose only, proved to be a drain on the resources of the
company as these agents did not book travel. However, reduced rate
travel was only offered to agents who had achieved certain levels of
proficiency, such as earning of the globally respected IATAN
distinction. Once these individuals realized that Pro Travel network
was not a viable way to gain discount travel, they generally
quit. The Destinations Club was borne out of the premise that there
is a niche of people who would join and become a member of a Club that was able
to offer them discounted travel by using its buying power, similar to the Costco
model for merchandise. This also, allowed us to clearly differentiate
Pro Travel Network as having everything to do with the potential of earning
income by booking travel. Should a person’s main interest be
accessing vacations and cruises at discount rate, The Destinations Club
membership is offered. This program is still under development with
limited availability and is being test marketed to our existing database
only. Product launch is scheduled for early 2010.
Honeymoon
Registry
Honeymoon
Registry at this point in the developmental stage is about creating a website in
which people wanting to get married can register their honeymoon plans in the
same way they would register at a department store. Guest would then
be able to go online and purchase part of their honeymoon, see wedding plans,
etc.
PTN
Business
Pro
Travel Business at this point in the developmental stage is about creating
online tools that help businesses track and forecast travel expenditures booked
through our Pro Travel Business travel service department.
Regulation
Our
network marketing program is subject to a number of federal and state
regulations administered by the Federal Trade Commission and various state
agencies in the United States. We are subject to the risk that, in one or more
markets, our network marketing program could be found not to be in compliance
with applicable laws or regulations. Regulations applicable to network marketing
organizations generally are directed at preventing fraudulent or deceptive
schemes, often referred to as "pyramid" or "chain sales" schemes, by ensuring
that product sales ultimately are made to consumers and that advancement within
an organization is based on sales of the organization's products rather than
investments in the organization or other non-retail sales-related criteria. The
regulatory requirements concerning network marketing programs do not include
"bright line" rules and are inherently fact-based and thus, even in
jurisdictions where we believe that our network marketing program is in full
compliance with applicable laws or regulations governing network marketing
systems, we are subject to the risk that these laws or regulations or the
enforcement or interpretation of these laws and regulations by governmental
agencies or courts can change.
6
There
could be private party challenges to the legality of our network marketing
program. The multi-level marketing programs of other companies have been
successfully challenged in the past.
We are
also subject to Seller of Travel Laws in California and Nevada. Among
other things, these laws and related regulations require us to maintain a trust
account for customer funds required to be segregated, to have at least
$1,000,000 in Errors and Omissions insurance and to establish and maintain
registration with the state. We have complied with these requirements for all
prior periods and currently comply with these requirements.
Competition
We
operate in a highly competitive market and we may not be able to compete
effectively. The market for travel products is intensely competitive. We compete
with a variety of companies with respect to each product or service we offer,
including:
|
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InterActiveCorp,
an interactive commerce company, which owns or controls numerous
travel-related enterprises, including Expedia, an online travel
agency.
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Hotels.com,
a representative of online lodging reservations, Hotwire, a wholesaler of
airline tickets, lodging and other travel products and
Ticketmaster.
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Citysearch, both
of which offer destination information and tickets to
attractions.
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Sabre
Holdings, which owns Travelocity, an online travel agency, GetThere, a
provider of online corporate travel technology and services, and the Sabre
Travel Network, a GDS (or "global distribution system" as described
below).
|
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Orbitz,
Inc., an online travel company that enables travelers to search for and
purchase a broad array of travel products, including airline tickets,
lodging, rental cars, cruises and vacation
packages.
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Cendant,
a provider of travel and vacation services, which owns or controls the
following: Galileo International, a worldwide GDS; Cheap Tickets, an
online travel agency; Lodging.com, an online representative of hotel
rooms; Howard Johnson, Ramada Inns and other hotel franchisors; and Avis
and Budget car rental companies.
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Travelport,
a provider of online corporate travel services and other travel-related
brands.
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Expedia,
Lowestfare.com and Priceline.com are our primary competitors in the
referral marketing business.
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Other
consolidators and wholesalers of airline tickets, lodging and other travel
products, including Priceline.com and
Travelweb.
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Other
local, regional, national and international traditional travel agencies
servicing leisure and business
travelers.
|
We are a
relatively small player in this market. These competitors are in general larger,
have greater financial and personnel resources and have achieved greater market
penetration than we have.
Based
solely upon management’s knowledge of and experience in the industry and not
upon any research or other verifying data from independent third parties, our
agents are quoted the same rates from travel service providers as other travel
agents and agencies.
In the
home-based market, we compete with the following, based upon the following
information is taken from “Home Bookin’,” a research report by Credit Suisse
First Boston dated January 7, 2005.
Employees
We have
35 employees, including Paul Henderson, our CEO and President, and the
following:
Full
time:
Clerical
-
|
25
|
7
Operations
-
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2
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Administrative
-
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2
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Management
-
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6
|
Item
2. Properties.
We lease
office space for our principal place of business located at 516 W. Shaw Avenue #
103, Fresno, California 93704. The lease began in March 2005 for a term of
seven years and was amended on April 16, 2007, to add 2,802 square feet bring
our total office space to 6,059 square feet. All other terms remain the same.
The lease is non-cancelable.
On March
1, 2007, we moved our offices from London, Ontario Canada to Mississauga,
Ontario Canada and leased 1,000 square feet of office space under a one year
non-cancelable operating lease beginning in March 2007. On February 20, 2008, we
renewed our lease for two years beginning March 2008 with all terms remaining
the same.
On July
01, 2007, we leased 1,170 square feet of office space in St Jerome, Quebec
Canada under a two year non-cancelable operating lease beginning in July
2007. Currently we operate month to month.
On April
28, 2008, we leased 911 square feet of office space in Surrey, British Columbia
Canada under a three year non-cancelable operating lease beginning in July
2008.
On
October 30, 2008, we leased a space in Mentone, Vic. Australia under a three
year operating lease beginning in November 2008. This lease has can
be extended two more terms of three years.
We
believe that our facilities are adequate to meet our current needs. Should we
need to expend, which is not currently contemplated, we anticipate such
facilities are available to meet our development and expansion needs in existing
and projected target markets for the foreseeable future. Our offices are in good
condition and are sufficient to conduct our operations.
Item
3. Legal Proceedings.
On
October 5th, 2008, a lawsuit was filed against PTN by a recently dismissed
employee. The lawsuit alleges that she was fired due to retaliation for
filing a complaint of workplace sexual harassment. PTN vehemently denies
any and all allegations as completely false and without merit. It is
remote that this lawsuit will settle in favor of the employee and, therefore, no
contingency is recorded.
We are
currently pursuing an operating credit card processing service that failed to
return our deposit of approximately $35,000. The credit card processing
service is currently pursuing action against its bank to recover this sum and
has orally agreed to pay us this amount if recovered. However, as the processor
is not located in the U.S., if they do not pay us as orally agreed, we do not
intend to institute litigation due to the cost of litigation and uncertainty of
collection. Although as the company is still in business and we may be able to
collect, recovery is uncertain, so we have provided an allowance on our
financial statements for the entire balance in case it is not
collected.
Item
4. Submission of Matters to a Vote of Security Holders.
We did
not submit any matters to a vote of our security holders, through the
solicitation of proxies or otherwise, during the fourth year of the fiscal year
covered by this report.
PART
II
Item
5. Market for Common Equity and Related Stockholder Matters and
Issuer Purchases of Equity Securities
Market
Information
PTN, Inc.
(OTCBB: PTVL) completed the necessary SEC filings and began trading as a
publicly held company on November 27, 2006.
The
following table sets forth the range of high and low bid prices of our common
stock as reported by the National Association of Securities Dealers composite
feed or other qualified inter-dealer quotation medium, as compiled by Pink
Sheets LLC for the periods indicated. These quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions or trades.
8
COMMON
STOCK
Period
Ended
|
HIGH
BID
|
LOW
BID
|
||||||
June
30, 2009
|
$ | 0.15 | $ | 0.15 | ||||
March
31, 2009
|
$ | 0.15 | $ | 0.15 | ||||
December
31, 2008
|
$ | 0.12 | $ | 0.12 | ||||
September
30, 2008
|
$ | 0.30 | $ | 0.25 | ||||
June
30, 2008
|
$ | 0.50 | $ | 0.50 | ||||
March
31, 2008
|
$ | 0.32 | $ | 0.31 | ||||
December
31, 2007
|
$ | 0.35 | $ | 0.35 | ||||
September
30, 2007
|
$ | 0.30 | $ | 0.30 |
Holders of
Record
As of
October 1, 2009, there were approximately 114 shareholders of record of our
common stock.
Dividends
We have
not declared any cash dividends on our common stock since our inception and do
not anticipate paying such dividends in the foreseeable future. We plan to
retain any future earnings for use in our business. Any decisions as to future
payments of dividends will depend on our earnings and financial position and
such other facts, as the Board of Directors deems relevant.
Options, Warrants,
Convertible Securities
On June
04, 2008, we entered into a consulting agreement with AGORACOM. In accordance
with the terms and provisions of the consulting agreement: (i) we shall issue to
AGORACOM 250,000 warrants to purchase up to 250,000 of our restricted common
stock at $0.50 per share ; and (ii) AGORACOM shall perform such consulting
services involving general business matters and other business consulting as
mutually agreed upon.
On
September 25, 2008, we granted 800,000 options to Ray Lopez, CFO, under PTN,
Inc. 2008 Stock Incentive Plan to purchase up to 800,000 of our restricted
common stock at $0.50 per share. The options will vest in equal amounts of
160,000 and stage over the next 60 months. All options not exercised by the
expiration date are forfeited.
Securities Authorized for
Issuance under Equity Compensation Plans
Equity
Compensation Plan Information
|
||||||||||||
Plan
category
|
Number
of securities to
be
issued upon exercise
of
outstanding options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities remaining
available
for future issuance under
equity
compensation plans
(excluding
securities reflected in
column
(a))
|
|||||||||
Equity
compensation plans approved by security holders
|
1,050,000 | $ | 0.50 | 1,200,000 | ||||||||
Equity
compensation plans not approved by security holders
|
||||||||||||
Total
|
1,050,000 | $ | 0.50 | 1,200,000 |
9
Description of PTN 2008
Stock Incentive Plan
The PTN
2008 Stock Incentive Plan is intended to secure for the Company and its
Affiliates the benefits arising from ownership of the Company's Common Stock by
the Employees, Officers, Directors, Consultants of the Company and its
Affiliates, all of whom are and will be responsible for the Company's future
growth. The Plan is designed to help attract and retain for the
Company and its Affiliates personnel of superior ability for positions of
exceptional responsibility, to reward Employees, Officers, Directors and
Consultants for their services and to motivate such individuals through added
incentives to further contribute to the success of the Company and its
Affiliates.
Awards
under the Plan may be made to an Eligible Person in the form of (i) Nonqualified
Stock Options; (ii) Restricted Stock; (iii) Stock Awards; (iv) Performance
Shares; or (v) any combination of the foregoing.
The
maximum aggregate number of shares of Common Stock which may be issued pursuant
to Awards under the Plan shall be One Million Two Hundred Thousand (1,200,000)
shares.
Stock
Options
The
Board, in its sole discretion, may from time to time on or after the Effective
Date grant Nonqualified Stock Options to Eligible Persons, subject to the
provisions of this Article IV and Articles III and V and subject to the
following conditions:
(a) Nonqualified Stock Options may be
granted to any Eligible Person, each of whom may be granted one or more of such
Nonqualified Stock Options, at such time or times determined by the
Board.
(b) The Option Price per share of
Common Stock for a Nonqualified Stock Option shall be set in the Award Agreement
and may be less than one hundred percent (100%) of the Fair Market Value of the
Common Stock at the Grant Date; provided, however, that the exercise price of
each Nonqualified Stock Option granted under the Plan shall in no event be less
than the par value per share of the Company’s Common Stock.
(c) A Nonqualified Stock Option may be
exercised in full or in part from time to time within the Option Period
specified by the Board and set forth in the Award Agreement; provided, however,
that, in any event, the Nonqualified Stock Option shall lapse and cease to be
exercisable upon a Termination of Service or within such period following a
Termination of Service as shall have been determined by the Board and set forth
in the related Award Agreement.
Restricted
Stock
The
Board, in its sole discretion, may from time to time on or after the Effective
Date award shares of Restricted Stock to Eligible Persons as a reward for past
service and an incentive for the performance of future services that will
contribute materially to the successful operation of the Company an its
Affiliates, subject to the terms and conditions set forth in this Article
VI.
The Board
shall determine the terms and conditions of any Award of Restricted Stock, which
Shall be
set forth in the related Award Agreement, including without
limitation:
(a) the
purchase price, if any, to be paid for such Restricted Stock, which may be zero,
subject to such minimum consideration as may be required by applicable
law;
(b) the
duration of the Restriction Period or Restriction Periods with respect to such
Restricted Stock and whether any events may accelerate or delay the end of such
Restriction Period(s);
(c) the
circumstances upon which the restrictions or limitations shall lapse, and
whether such restrictions or limitations shall lapse as to all shares of
Restricted Stock at the end of the Restriction Period or as to a portion of the
shares of Restricted Stock in one or more installments during the Restriction
Period by means of one or more vesting schedules;
(d)
whether such Restricted Stock is subject to repurchase by the Company or to a
right of first refusal at a predetermined price or if the Restricted Stock may
be forfeited entirely under certain conditions;
(e)
whether any performance goals may apply to a Restriction Period to shorten or
lengthen such period; and
10
(f)
whether dividends and other distributions with respect to such Restricted Stock
are to be paid currently to the Participant or withheld by the Company for the
account of the Participant.
Administration of the
Incentive Plan
The Plan
shall be administered by the Board of Directors of the Company. The
Board shall have the exclusive right to interpret and construe the Plan, to
select the Eligible Persons who shall receive an Award, and to act in all
matters pertaining to the grant of an Award and the determination and
interpretation of the provisions of the related Award Agreement, including,
without limitation, the determination of the number of shares subject to Stock
Options and the Option Period(s) and Option Price(s) thereof, the number of
shares of Restricted Stock or shares subject to Stock Awards or Performance
Shares subject to an Award, the vesting periods (if any) and the form, terms,
conditions and duration of each Award, and any amendment thereof consistent with
the provisions of the Plan. The Board may adopt, establish, amend and
rescind such rules, regulations and procedures as it may deem appropriate for
the proper administration of the Plan, make all other determinations which are,
in the Board’s judgment, necessary or desirable for the proper administration of
the Plan, amend the Plan or a Stock Award as provided in the Plan, and terminate
or suspend the Plan as provided in the Plan. All acts, determinations
and decisions of the Board made or taken pursuant to the Plan or with respect to
any questions arising in connection with the administration and interpretation
of the Plan or any Award Agreement, including the severability of any and all of
the provisions thereof, shall be conclusive, final and binding upon all
persons.
Amendments
The Board
of Directors at any time and from time to time may amend or terminate the Plan
as may be necessary or desirable to implement or discontinue the Plan or any
provision hereof. No amendment to or discontinuance of the Plan or
any provision hereof by the Board of Directors or the shareholders of the
Company shall, without the written consent of the Participant, adversely affect
(in the sole discretion of the Board) any Award theretofore granted to such
Participant under this Plan; provided, however, that any Award is annulled and
voided and no shares shall be issued under any Award if the Participant’s
relationship with the Company is terminated for any reason as determined by the
Board or if the Participant terminates employment or other relationship for any
reason prior to the Vesting Date of any shares under an Award or the Exercise
Date for any unexercised Option.
Recent Sales of Unregistered
Securities
During
the fiscal year ended June 30, 2009, Pro Travel Network, Inc. issued 783,805
shares to thirty third parties for services rendered valued at their fair market
value using quoted market prices on the date of grant, resulting in total
share-based compensation expense of $154,854, 1,105,000 shares to executive
officers of Pro Travel Network, for services rendered valued at their fair
market value using quoted market prices on the date of grant, resulting in total
share-based compensation expense of $331,500, and 115,000 shares of common stock
to twelve (12) employees based on a two year plus vesting with the company
valued at their fair market value using quoted market prices on the date of
grant, resulting in total share-based compensation expense of
$34,500.
We relied
upon Section 4(2) of the Securities Act of 1933, as amended for the above
issuances.
We
believed that Section 4(2) of the Securities Act of 1933 was available
because:
|
|
None
of these issuances involved underwriters, underwriting discounts or
commissions.
|
|
|
Restrictive
legends were and will be placed on all certificates issued as described
above.
|
|
|
The
distribution did not involve general solicitation or
advertising.
|
|
|
The
distributions were made only to investors who were sophisticated enough to
evaluate the risks of the
investment.
|
Item
6. Selected Consolidated Financial Data
Not
required.
11
Item
7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
In
addition to historical information, this report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These statements include,
among other things, statements concerning our expectations regarding our future
financial performance, business strategy, milestones, projected plans and
objectives. Statements preceded by, followed by or that otherwise include the
words "believes", "expects", "anticipates", "intends", "projects", "estimates",
"plans", "may increase", "may fluctuate" and similar expressions or future or
conditional verbs such as "should", "would", "may" and "could" are generally
forward-looking in nature and not historical facts. These forward-looking
statements were based on various factors and were derived utilizing numerous
important assumptions and other important factors that could cause actual
results to differ materially from those in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this report, and in particular, the risks
discussed in this section under the heading "Risk Factors." Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements including milestones. Most of these factors are difficult to
predict accurately and are generally beyond our control. We undertake no
obligation to revise or publicly release the results of any revision to these
forward-looking statements. Given these risks and uncertainties, readers are
cautioned not to place undue reliance on such forward-looking
statements.
Overview
We
currently support approximately 4500 independent travel agents and over 1200
Independent Representatives throughout North America.
The most
major goal towards achieving our business objectives over the next year is our
goal of having 100% of our agents booking travel. This is an
ambitious goal that may be impossible to attain as many prospective agents or
would be agents do not fully work the program. However, we continue
to upgrade our training and mentoring programs in pursuit of this
goal. Also, continuing operations will always focus on ways to
increase our marketing sales force, which by definition will produce more sales
of our ITAP and RTAP products which should produce more travel sales to ultimate
consumers of travel. Pro Travel Network retains approximately 20-25%
of the commission derived from bookings by our ITA (purchasers of our ITAP and
RTAP).
The
economic downturn has had a significant effect on our operations over the past
year and we expect that it will continue to be a significant factor going
forward. Most notably was the reduction in our investments as
unrealized and realized losses, due to the severe contraction in stock prices
across the board. Lower sales and the resulting reduction in revenues
was also a serious issue that we attribute to the recession gaining in
intensity.
We
continue to believe that we must cut additional costs. While we have
reduced expenses significantly through several strong cost-cutting measures,
including but not limited to layoffs and bonus and salary reductions, we are
looking at possibly closing one or more of our non performing Canadian offices
in order to shift our resources where productivity is still vigorous and where
we believe we can quickly achieve profitability, namely the new Pro Travel
Retail Division. While Pro Travel Network is now leaner, we believe we must be
leaner still, as the results the negative economy on our financial situation
will take some time to correct, and will still be a major factor working against
profitability and revenue growth in the coming months. However, we
believe that should we have to make additional cuts, they would be sufficient,
combined with previously made and on-going significant marketing adjustments, to
carry us through 2010.
We
continue to book travel a satisfactory pace throughout our US office and Toronto
offices, and expect that as the economy rebounds, and our enhanced focus on cost
cutting and strong marketing push, that we should see profitability by 1st fiscal
quarter of 2010, although continuing economic uncertainty could cause us to miss
this goal.
Pro Travel
Retail
We
initiated an expansion into Australia on December 19, 2008 with our acquisition
of KG & S Pty. Ltd. KG & S Pty, Ltd. has operated its travel
business for nearly 20 years and is among the leading online travel agencies in
the Melbourne area. This acquisition brings incremental value to the Company and
will immediately increase our customer base along with giving the Company
immediate access to already established relationships with all major hotels,
airlines and car rentals within the greater Australian area. The Australian
market is strategic in the Company’s long term business plans and will allow the
Company to expand services to customers in the Australian
market. However, to date we have not launched the Pro Travel network
opportunity due to our decision that economic forces were not in our
favor. Our CEO just recently visited Australia to begin the ground
work for a proposed 2010 launch.
12
The
Australian market is large part of our strategic plans for the growth of the
Company. We have had a successful track record in business and our experience
from our Canadian expansion has served us well and makes us confident in the
international markets. Not only do we believe Australia is an important part of
our expansion, but it also serves as the perfect launch pad to capture the
lucrative Asia-Pacific travel market in the future.
As
described below in “Liquidity and Capital Resources,” we believe we will be able
to launch our expansion in Australia without any need to obtain additional
financing. However, we may delay our expansion into Australia until
2010
Critical Accounting
Estimates
The
financial statements include estimates made by management that impact the
amounts reflected for property and equipment as well as security deposits, as
detailed below:
Property &
Equipment
Management
has estimated the useful lives as the basis for depreciating its property and
equipment. Estimated useful lives utilized for depreciating property and
equipment is three years for all computer equipment and software and seven years
for furniture and fixtures. Management believes these estimates are very
conservative.
Security
Deposits
Security
deposits represent operating lease deposits and amounts on deposit with credit
card payment processing services that serve as collateral in case we were to
cease operations or experience significant chargebacks from customers.
Management has provided an allowance for unrecoverable deposits based on its
estimate of collectability in the amount of $35,353 as of June 30, 2009 (See the
section entitled “Legal Proceedings,” below)
Goodwill
Goodwill
is the excess of the fair values of tangible and identifiable intangible assets
acquired over liabilities assumed. The amount recognized as Goodwill
includes acquired intangible assets for which fair values could not be
determined. Goodwill is not amortized, but is tested for impairment
at least annually
Results of
Operations
Fiscal Year Ended June 30,
2009 Compared to the Fiscal Year Ended June 30, 2008
For the
year ended June 30, 2009, total revenues broke down as follows: Independent
Travel Agent Program or ITAP sales – 59%, Travel Commissions – 36% and National
Events – 5%. For the year ended June 30, 2008, total revenues broke down
as follows: Independent Travel Agent Program or ITAP sales – 71%, Travel
Commissions – 24% and National Events – 5%. We had total revenues of
$5,438,297 for the year ended June 30, 2009, which is a decrease of $4,173,776,
or 43%, below our total revenues for the year ended June 30, 2008, which was
$9,612,073. The decrease in total sales was due to a decrease of $3,676,808 in
Independent Travel Agent Program or ITAP sales, a decrease of $221,126 in
National Events revenue and a decrease of $275,842 in Travel Commissions
revenue. The decrease in ITAP sales was due to the decrease in signing up
of new agents due to declining economic conditions.
Our cost
of sales decreased $3,287,626, or 53%, to $2,922,609 for the year ended June 30,
2009, as compared to cost of sales of $6,210,235 for the fiscal year ended June
30, 2008. The decrease in total cost of sales was due to a decrease of
$2,954,792 in Independent Travel Agent Program or ITAP sales, a decrease of
$237,767 in National Events cost and a decrease of $95,067 in Travel
Commissions. Our cost of sales decreased as a direct result of lower sales of
our products offset by reduction in sales bonuses during the year ended June 30,
2009.
We had
gross profit of $2,515,688 for the year ended June 30, 2009, which was a
decrease of $886,150, or 26%, when compared to our gross profit for the year
ended June 30, 2008, which was $3,401,838. Our decrease in gross profit was
primarily attributable to the decrease in signing up of new agents due to
declining economic conditions.
Operating
expenses increased $260,245, or 8%, to $3,435,593 for the year ended June 30,
2009, as compared to total operating expenses of $3,175,348 for the year ended
June 30, 2008. The increase in total operating expenses was mainly due to an
increase in compensation expense and professional and consulting fees offset by
a decrease in general and administrative expenses. Compensation expense
increased $366,995 to $2,246,639 for the year ended June 30, 2009, as compared
to compensation expense of $1,879,644 for the year ended June 30,
2008. The increase in compensation expense was as
follows:
13
|
·
|
$347,000
due to the issuance of 1,220,000 shares to employees and
officers.
|
|
·
|
$126,000
due to the increase of our corporate and Canadian staffs and the addition
of Ray Lopez, Vice President and
COO.
|
|
o
|
Mr.
Lopez provides management and other services to us under an employment
agreement which was amended July 1, 2008 to increase his annual salary
from $96,000 per year to $120,000 per year and change his commission of 2%
of the net Travel Agent Product revenue, less all costs of sales expenses
to .5% of actual gross revenue.
|
|
o
|
Mr.
Henderson provides management and other services to us under an employment
agreement which was amended July 1, 2008 to increase his annual salary
from $200,000 to $240,000 per year and commission of 1.75% of actual gross
revenue.
|
Professional
and consulting fees increased $227,280 to $406,830 for the year ended June 30,
2009, as compared to professional and consulting fees of $179,550 for the year
ended June 30, 2008. The increase in professional and consulting fees
was primarily due to the issuance of warrants resulting in an expense to the
company of $70,725 along with 783,805 shares of common stock issued for services
resulting in an expense to the company of $154,070. Depreciation expense
increased $7,236 to $23,048 for the year ended June 30, 2009, as compared to
depreciation expense of $15,812 for the year ended June 30,
2008. Impairment expense increased to $65,000 for the year ended June
30, 2009, as compared to none for the year ended June 30, 2008. General and
administrative expenses decreased $406,266 to $694,076 for the year ended June
30, 2009, as compared to general and administrative expenses of $1,100,342 for
the year ended June 30, 2008. The decrease in general and administrative
expenses was primarily attributable to the decrease in office expense and travel
resulting from the expansion of our US and Canadian operations in 2008 and
merchant fees associated with the decrease in overall sales.
Other
income and expenses included a decrease in net interest income of $8,753, to
$15,689 for the year ended June 30, 2009, as compared to net interest income of
$24,442 for the year ended June 30, 2008, along with a loss on sale of
investments of $133,057 for the year ended June 30, 2009, compared to gain on
sale of investments of $8,243 for the year ended June 30, 2008, and a gain on
foreign currency of $16,784 for the year ended June 30, 2009, compared to a gain
on foreign currency of $2,111 for the year ended June 30, 2008.
We had a
net loss applicable to common stock of $1,020,489 for the year ended June 30,
2009, as compared to net income applicable to common stock of $261,286 for the
year ended June 30, 2008. The increase in net loss applicable to common stock
was primarily attributable to the issuance of 2,003,805 shares of common stock
for services along with the issuance of options/warrants resulting in a non-cash
expense to the company of $616,175 and a decrease in signing up of new agents
due to declining economic conditions along with the increase in our corporate
and Canadian staffs.
We had
other comprehensive loss for the year ended June 30, 2009, consisting of
unrealized loss on investments of $127,171 resulting from market to market
adjustment of stock owned by the Company at June 30, 2009 compared to an
unrealized loss on investment of $75,647 for the year ended June 30,
2008.
Our
comprehensive loss was $1,147,660 for the year ended June 30, 2009, as compared
to comprehensive income of $185,639 for the year ended June 30, 2008. The
increase in comprehensive loss of $1,333,299 for the year ended June 30, 2009
was primarily attributable to the increase in unrealized loss on investments of
$127,171 and issuance of 2,003,805 shares of common stock for services along
with the issuance of options/warrants resulting in a non-cash expense to the
company of $616,175 and a decrease in signing up of new agents due to declining
economic conditions along with the increase in our corporate and Canadian
staffs.
Liquidity and Capital
Resources
As of
June 30, 2009, we had total current assets of $542,495 consisting of cash and
cash equivalents of $164,703, accounts receivable of $12,026, inventory of
$9,950, and investments of $355,816.
We had
total current liabilities of $449,162 consisting of accounts payable of $70,571,
accrued expenses of $337,961 and deferred revenue of $40,630. We have no
long-term debt. Accrued expenses consisted of accrued employees
salaries and benefits of $105,539, other expenses of $39,835 and commissions and
rewards owed our representatives in the amount of $192,587, of which
approximately $33,645 was the estimated full potential value of PTN Reward
Points owed Agents and Managers and the reminder was primarily commissions held
for payment at the end of every two weeks.
14
We had
working capital of $93,333 as of June 30, 2009 and $657,530 as of June 30,
2008. This is a decrease of $564,197 and due to a decrease in the
value of our investments.
During
the year ended June 30, 2009, net cash decreased by $203,501 consisting of
$117,797 used in operating activities, and $72,617 used in investing
activities.
Net cash
used in operating activities during the year ended June 30, 2009, consisted of a
net loss from operations of $1,020,489, adjustment for impairment
in investment of $65,000, adjustments for depreciation and
amortization of $23,048 along with share-based compensation of $616,175, an
increase in accounts receivable of $11,165, an increase in accounts payable and
accrued expenses of $131,377, a decrease in prepaid expenses and other current
assets of $16,214 and a decrease in inventory of $7,814 which were offset by a
decrease in deferred revenue of $117,241, and an adjustment for gain
on sale of investments of $171,470.
Net cash
used in investing activities during the year ended June 30, 2009, consisted of
property and equipment purchases of $14,450, investments purchases of $309,577
and business acquisition of $41,743 which were offset by sale of investments of
$292,722 and a decrease in deposits of $431.
PTN’s
plan of operations for the coming fiscal year is to take the steps necessary to
maximize its operating ability in the current recessionary economy. The downturn
has had a significant effect on our earnings, we had a net loss from
comprehensive operations for the year ended June 30, 2009 of $1,147,660, and
cash used in operations, we had a net utilization of cash applied to operations
for the year ended June 30, 2009 of $117,797, and has had a significant impact
on our working capital. However, management believes that it has sufficient
liquid assets, unrealized commission income from future travel bookings and
other sources of working capital to continue operations for the foreseeable
future and avoid any adjustments to the carrying value of our assets or
liabilities that may be required if we were unable to continue to
operate.
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk
Market
risk is the potential loss arising from adverse changes in market rates and
prices, such as changes in foreign currency exchange rates. A
discussion of this is presented below.
Exchange
Rate
Although
we maintain our books and records in U. S. Dollars, we have offices that operate
in both Canada and Australia. The exchange rate between the U.S.
Dollar and the Canadian Dollar and also the exchange rate between the U.S.
Dollar and the Australia Dollar is subject to the foreign exchange quotation
regulated by the Securities and Exchange Commission. Results of
operations and cash flows are translated at average exchange rates during the
period, as well as assets and liabilities.
Transaction
gains and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the U.S. Dollar are included in the results
of operations. Gains and losses from foreign currency transactions
are also included in the results of operations.
Item
8. Financial Statements and Supplementary Data.
15
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors
PTN,
Inc.
Fresno,
California
We have
audited the accompanying consolidated balance sheets of PTN, Inc. and subsidiary
as of June 30, 2009 and 2008 and the related consolidated statements of
operations, changes in shareholders’ equity, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
management of PTN, Inc. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). These standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. PTN is not required to have, nor
were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of PTN’s internal control over financial reporting. Accordingly,
we express no such opinion. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the accompanying financial statements present fairly, in all material
respects, the consolidated financial position of PTN, Inc. and subsidiary as of
June 30, 2009 and 2008, and the consolidated results of its operations and cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/S/
Malone & Bailey, PC
www.malone-bailey.com
Houston,
Texas
October
8, 2009
16
PTN,
INC.
(Formerly
Pro Travel Network, Inc.)
CONSOLIDATED
BALANCE SHEETS
June 30,
|
June 30,
|
|||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 164,703 | $ | 368,204 | ||||
Accounts
receivable
|
12,026 | 861 | ||||||
Inventory
|
9,950 | 17,764 | ||||||
Investments
in marketable securities
|
355,816 | 689,513 | ||||||
Prepaid
expenses
|
- | 16,214 | ||||||
Total
current assets
|
542,495 | 1,092,556 | ||||||
PROPERTY
and EQUIPMENT, net
|
101,305 | 106,362 | ||||||
OTHER
ASSETS
|
||||||||
Security
deposits, net of allowance of $35,353
|
121,929 | 122,360 | ||||||
Intangible
assets-goodwill
|
38,201 | - | ||||||
160,130 | 122,360 | |||||||
TOTAL
ASSETS
|
$ | 803,930 | $ | 1,321,278 | ||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 70,571 | $ | 7,366 | ||||
Accrued
expenses
|
337,961 | 269,789 | ||||||
Deferred
national event revenue
|
40,630 | 157,871 | ||||||
Total
current liabilities
|
449,162 | 435,026 | ||||||
SHAREHOLDERS’
EQUITY
|
||||||||
Common
stock, $.001 par value; 50,000,000 shares authorized, 27,889,145 and
25,885,340 shares issued and outstanding
|
27,889 | 25,885 | ||||||
Additional
paid-in-capital
|
3,619,947 | 3,005,775 | ||||||
Accumulated
deficit
|
(3,068,314 | ) | (2,047,825 | ) | ||||
Accumulated
other comprehensive loss
|
(224,754 | ) | (97,583 | ) | ||||
Total
shareholders’ equity
|
354,768 | 886,252 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 803,930 | $ | 1,321,278 |
The
accompanying notes are an integral part of the financial
statements.
17
PTN,
INC.
(Formerly
Pro Travel Network, Inc.)
CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Years Ended
|
||||||||
June 30,
|
||||||||
2009
|
2008
|
|||||||
REVENUE
|
||||||||
Travel
agent products
|
$ | 2,921,340 | $ | 6,861,163 | ||||
Travel
sales
|
263,016 | - | ||||||
National
events
|
290,850 | 511,977 | ||||||
Commissions
|
1,963,091 | 2,238,933 | ||||||
Total
revenues
|
5,438,297 | 9,612,073 | ||||||
COST
OF REVENUES
|
||||||||
Travel
agent products
|
1,083,237 | 4,278,700 | ||||||
Travel
sales
|
240,671 | - | ||||||
National
events
|
276,755 | 514,522 | ||||||
Commissions
|
1,321,946 | 1,417,013 | ||||||
Total
cost of revenues
|
2,922,609 | 6,210,235 | ||||||
Gross
profit
|
2,515,688 | 3,401,838 | ||||||
OPERATING
EXPENSES
|
||||||||
Compensation
expense
|
2,246,639 | 1,879,644 | ||||||
Professional
and consulting fees
|
406,830 | 179,550 | ||||||
General
and administrative expenses
|
694,076 | 1,100,342 | ||||||
Depreciation
expense
|
23,048 | 15,812 | ||||||
Impairment
expense
|
65,000 | - | ||||||
Total
operating expenses
|
3,435,593 | 3,175,348 | ||||||
Income
(loss) from operations
|
(919,905 | ) | 226,490 | |||||
OTHER
INCOME (EXPENSE)
|
||||||||
Interest
income, net
|
15,689 | 24,442 | ||||||
Gain
(loss) on sale of investments
|
(133,057 | ) | 8,243 | |||||
Gain
on foreign currency
|
16,784 | 2,111 | ||||||
Net
income (loss) applicable to common stock
|
(1,020,489 | ) | 261,286 | |||||
Unrealized
loss on investments
|
(127,171 | ) | (75,647 | ) | ||||
Comprehensive
income (loss)
|
$ | (1,147,660 | ) | $ | 185,639 | |||
Basic
and Diluted Per Common Share Data
|
||||||||
Basic
and diluted net income (loss) per share
|
$ | (0.04 | ) | $ | 0.01 | |||
Weighted
average shares outstanding-basic
|
27,306,359 | 25,731,310 | ||||||
Weighted
average shares outstanding-fully diluted
|
27,306,359 | 25,931,310 |
The
accompanying notes are an integral part of the financial
statements.
18
PTN,
INC.
(Formerly
Pro Travel Network, Inc.)
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For
the Years Ended June 30, 2009 and 2008
Common
Shares
|
Common
Stock
|
Additional
Paid in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
|||||||||||||||||||
Balances,
June 30, 2007
|
25,680,340 | $ | 25,680 | $ | 2,919,977 | $ | (2,309,111 | ) | $ | (21,936 | ) | $ | 614,610 | |||||||||||
Stock
issued for:
|
||||||||||||||||||||||||
Services
|
205,000 | 205 | 73,595 | - | 73,800 | |||||||||||||||||||
Option
expense
|
12,203 | 12,203 | ||||||||||||||||||||||
Unrealized
loss on investments
|
(75,647 | ) | (75,647 | ) | ||||||||||||||||||||
Net
Income applicable to common stock
|
261,286 | 261,286 | ||||||||||||||||||||||
Balances,
June 30, 2008
|
25,885,340 | $ | 25,885 | $ | 3,005,775 | $ | (2,047,825 | ) | $ | (97,583 | ) | $ | 886,252 | |||||||||||
Stock
issued for:
|
||||||||||||||||||||||||
Services
|
2,003,805 | 2,004 | 518,850 | 520,854 | ||||||||||||||||||||
Warrant/Option
expense
|
95,322 | 95,322 | ||||||||||||||||||||||
Unrealized
loss on investments
|
(127,171 | ) | (127,171 | ) | ||||||||||||||||||||
Net
Loss applicable to common stock
|
(1,020,489 | ) | (1,020,489 | ) | ||||||||||||||||||||
Balances,
June 30, 2009
|
27,889,145 | $ | 27,889 | $ | 3,619,947 | $ | ( 3,068,314 | ) | $ | (224,754 | ) | $ | 354,768 |
The
accompanying notes are an integral part of the financial
statements.
19
PTN,
INC.
(Formerly
Pro Travel Network, Inc.)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Years Ended
|
||||||||
June 30,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income (loss) applicable to common stock
|
$ | (1,020,489 | ) | $ | 261,286 | |||
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating
activities:
|
||||||||
Impairment
in investment
|
65,000 | - | ||||||
Share-based
compensation
|
616,175 | 86,003 | ||||||
Gain
on sale of investments
|
171,470 | (8,243 | ) | |||||
Depreciation
and amortization
|
23,048 | 15,812 | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
(11,165 | ) | 1,944 | |||||
Inventory
|
7,814 | 332 | ||||||
Prepaid
expenses and other current assets
|
16,214 | 9,844 | ||||||
Accounts
payable and accrued expenses
|
131,377 | (55,721 | ) | |||||
Deferred
revenue
|
(117,241 | ) | 152,630 | |||||
Net
cash provided by (used in) operating activities
|
(117,797 | ) | 463,887 | |||||
Cash
flows from investing activities
|
||||||||
Purchase
of property and equipment
|
(14,450 | ) | (46,284 | ) | ||||
Purchase
of investments
|
(309,577 | ) | (457,361 | ) | ||||
Proceed
from sale of investments
|
292,722 | 42,307 | ||||||
Net
cash paid on acquisition of KG&S Pty, Ltd.
|
(41,743 | ) | - | |||||
Deposits
|
431 | (1,182 | ) | |||||
Net
cash flows used in investing activities:
|
(72,617 | ) | (462,520 | ) | ||||
Effect
of exchange rate changes on cash
|
(13,087 | ) | - | |||||
Net
increase (decrease) in cash and cash equivalents
|
(203,501 | ) | 1,367 | |||||
Cash
and cash equivalents
|
||||||||
Beginning
of period
|
368,204 | 366,837 | ||||||
End
of period
|
$ | 164,703 | $ | 368,204 | ||||
Supplemental
Disclosures
|
||||||||
Cash
Paid During the Year for:
|
$ | - | $ | - | ||||
Interest
|
- | - | ||||||
Income
taxes
|
||||||||
Non-Cash
Investing Activities:
|
$ | (127,171 | ) | $ | (75,647 | ) | ||
Unrealized
loss on investment
|
The
accompanying notes are an integral part of the financial
statement
20
PTN,
INC.
(Formerly
Pro Travel Network, Inc.)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
June
30, 2009
NOTE
A – THE COMPANY
Nature
of Business and Plan of Operations
PTN, Inc.
(formerly Pro Travel Network, Inc.) is a Nevada corporation that was
incorporated on October 23, 2003. The Company was initially named PTN
Investment Group, Inc. and up through May 2005 was doing business as Pro Travel
Network. In May 2005, the Company amended its Articles of
Incorporation and changed its name to Pro Travel Network. In May
2009, the Company changed its name to PTN, Inc.
On
December 19, 2008, PTN completed its acquisition of 100% of the common stock of
KG & S Pty, Ltd., an Australian company which will form the basis of PTN’s
retail operations.
PTN
serves the travel industry by providing tools, support systems, and
comprehensive training for its extensive network of independent, home-based
travel agents throughout North America.
PTN’s
plan of operations for the coming fiscal year is to take the steps necessary to
maximize its operating ability in the current recessionary economy. The downturn
has had a significant effect on our earnings, we had a net loss from
comprehensive operations for the year ended June 30, 2009 of $1,147,660, and
cash used in operations, we had a net utilization of cash applied to operations
for the year ended June 30, 2009 of $117,797, and has had a significant impact
on our working capital. However, management believes that it has sufficient
liquid assets, unrealized commission income from future travel bookings and
other sources of working capital to continue operations for the foreseeable
future and avoid any adjustments to the carrying value of our assets or
liabilities that may be required if we were unable to continue to
operate.
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES
Principles
of Consolidation
PTN's
consolidated financial statements include the accounts of PTN and its wholly
owned subsidiary. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
Cash and Cash
Equivalents
PTN
considers all highly liquid investments with original maturities of three months
or less at the date of purchase to be cash equivalents.
Foreign Currency
Translation
PTN’s
functional and reporting currency is the United States dollar. Monetary assets
and liabilities denominated in foreign currencies are translated in accordance
with SFAS No. 52 “Foreign
Currency Translation”, using the exchange rate prevailing at the balance
sheet date. Gains and losses arising from this translation is included in the
statement of operations.
21
Credit
Risk
PTN is
subject to credit risk relative to its trade receivables. However,
credit risk with respect to trade receivables is minimized due to the nature of
its customer base and the geographic dispersion of such
customers. The Company estimates losses for uncollectible trade
receivables based on the aging of the accounts receivable and the evaluation of
the likelihood of success in collecting the receivable. For the years
ended June 30, 2009 and 2008, respectively, the Company had determined that no
allowance for doubtful accounts is necessary.
There are
no cash balances that exceed FDIC insurance protection levels at June 30,
2009.
Inventories
Inventories
consist primarily of training aids provided to travel agents who register in our
Independent Travel Agent Program and other promotional products and are valued
at the lower of cost (determined using an average cost method) or
market. PTN records provisions to write down its inventory for
estimated obsolescence or unmarketable inventory equal to the difference between
cost of the inventory and its estimated market value based on assumptions about
future market demand and market conditions. For the years ended June
30, 2009 and 2008, respectively, the Company had determined that no obsolete or
slow-moving inventory valuation is necessary.
Investments in Marketable
Securities
PTN
classifies its investments as held-to-maturity or available-for sale based upon
the nature of the investment. Held-to-maturity investments primarily
consist of certificates of deposit. Earnings on held-to-maturity
investments are reflected as a component of net income or
loss. Available-for-sale securities are primarily marketable equity
securities which are reported at estimated fair market value with unrealized
gains and losses included in other comprehensive income or loss net of
applicable deferred income taxes. Realized gains and losses on sales
are recognized in comprehensive in come on the specific identification
basis. The estimated fair values of investments are based on quoted
market prices or dealer quotes.
In
September 2006, the FASB issued SFAS 157, Fair Value Measurements, as amended in
February 2008 by FASB Staff Position (“FSP”) FAS 157-2, Effective Date of FASB
Statement No. 157. SFAS 157 defines fair value, establishes a framework
for measuring fair value and expands disclosures about fair value measurements.
SFAS 157 also established a fair value hierarchy that prioritizes
the use of inputs used in valuation techniques into the following three
levels:
Level
1—quoted prices in active markets for identical assets and
liabilities.
Level
2—observable inputs other than quoted prices in active markets for identical
assets and liabilities.
Level
3—unobservable inputs.
The
adoption of FAS 157 did not have an effect on the Company’s financial condition
or results of operations, but SFAS 157 introduced new disclosures about how we
value certain assets and liabilities. Much of the disclosure is focused on the
inputs used to measure fair value, particularly in instances where the
measurement uses significant unobservable (Level 3) inputs.
Investments in Closely-Held
Business
PTN has
made an equity investment in a privately held company. The accounting treatment
of that investment is dependent upon a number of factors, including, primarily,
the Company's ability to exercise significant influence over the operating and
financial policies of the investee. Since the Company has no ability to exercise
significant influence over the operating and financial policies of the investee,
the cost method has been used to account for this investment. PTN has classified
this investment as non-current as it is not readily marketable.
Additionally
PTN periodically evaluates this investment to determine if the carrying value
should be impaired.
Property and
Equipment
Property
and equipment are recorded at cost. The cost and related accumulated
depreciation of assets sold, retired or otherwise disposed of are removed from
the respective accounts, and any resulting gains or losses are included in the
Statements of Operations. Depreciation is computed for financial
reporting purposes using the straight-line method over the estimated useful
lives of the related assets as follows:
22
Furniture
and Fixtures
|
7
years
|
Computers
and software
|
3
years
|
Leasehold
improvements
|
Shorter
of asset life or term of
lease
|
Depreciation
and amortization expense related to property and equipment was approximately
$23,048 and $15,812 for the years ended June 30, 2009 and 2008
respectively.
Revenue
Recognition
PTN
recognizes revenue when persuasive evidence of an arrangement exists, services
have been rendered, the sale price is fixed and determinable and collectability
is reasonably assured. The Company’s primary sources of revenue are
discussed below.
Travel
Agent Products
PTN’s
revenue from sales of travel agent products relate to sales of its independent
travel agent packages and sales of its representative trainer program license
(“RT License”). Purchasers of the ITA Kit receive everything they
need to start their own travel agency and become an independent travel
agent. Purchasers of the RT License gain access to the network
marketing side of the Company’s business. All proceeds received from
participants and expenses generated are recognized in the period of purchase for
proper matching of revenue and expense. It represents a one-time sale and
is the property of the consumer from that point on whether they choose to book
through the PTN system or not.
National
Event Services
National
event services revenues relate to special promotional training events PTN
organizes for purchasers of its travel agent products that are held three to
four times a year at resort destination locations. These are training
events designed to give PTN’s independent travel agents the opportunity to
enhance their skills by learning new and innovative ways to maximize the
earnings potential of their recently acquired travel agent
products. Since these trainings events occur at a specific point in
time, all proceeds received from participants and expenditures paid to the
resort vendors are deferred and recognized in the period in which the event
occurs. PTN evaluates the proceeds received from participants
relative to non-refundable event expenditures that it has made on a monthly
basis to assess expected profitability. At such times PTN makes a
determination that it is probable that it will not realize participant bookings
sufficient to cover its non-refundable event expenditures PTN recognizes a
charge equal to the anticipated deficiency.
Commission
Revenue
PTN has
negotiated arrangements with many travel industry vendors (e.g., hotels,
vacation resorts and cruise lines) (“Preferred Suppliers”) that provide the
Company the opportunity to earn a commission when one of its independent travel
agents makes a booking with one of the Preferred Suppliers. At the
time PTN sells one of its ITA packages, it also enters into an agreement with
the independent travel agent wherein the independent travel agent agrees that it
will earn a percentage (typically 70%) of any commissions generated from
bookings with Preferred Suppliers. As the host travel agency, PTN
receives the commission payment directly from the Preferred
Supplier. Upon receipt of the commission from the Preferred Supplier,
PTN recognizes revenue equal to the gross commission received and recognizes an
expense equal to the percentage of the commission due the independent travel
agent.
Allowance
for Cancellations and Returns
PTN
provides an allowance for cancellations and returns of travel agent products
based on historical experience. Cancellations and returns are applied
to the allowance when realized. No allowance was considered necessary
as of June 30, 2009 and 2008.
Income
Taxes
PTN
recognizes deferred income tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Deferred income tax liabilities and assets are
determined based on the difference between the financial statement and the tax
basis of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse. PTN recognizes
deferred tax assets if it is more likely than not that the assets will be
realized in future years.
23
Stock-Based
Compensation
From time
to time, PTN issues shares of common stock to its directors, certain employees
and non-employee service providers. PTN recognizes the estimated fair
value of those shares at the date of grant and amortizes such amount to
compensation expense ratably over the vesting period of each
grant. In those instances where the award is immediately vested, PTN
recognizes a charge for stock based compensation on the grant date.
PTN
follows the criteria in EITF Issue No. 96-18, “Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services" to determine the measurement date for transactions
with non-employees for which the measure of goods acquired or services received
is based on the fair value of the equity instruments issued.
New Accounting
Standards
In April
2008, the FASB issued FSP SFAS 142-3, "Determination of the Useful Life of
Intangible Assets" ("SFAS 142-3"). This statement revises the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FASB Statement
No. 142, Goodwill and Other Intangible Assets. The goal of SFAS 142-3 is to
improve the consistency between the useful life of a recognized intangible asset
under Statement 142 and the period of expected cash flows used to measure the
fair value of the asset under SFAS 141R, Business Combinations, and other U.S.
GAAP. FSP SFAS 142-3 is effective for fiscal years beginning after December 15,
2008. The Company does not expect SFAS 142-3 to have a material impact on its
financial statements.
In July
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). This statement identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with U.S. GAAP. The levels of authority of the
accounting principles available for the preparation of financial statements were
previously issued by the American Institute of Certified Public Accountants. The
FASB decided that accounting principles applicable to GAAP should be adopted as
a FASB Statement. SFAS 162 does not set an effective date. It will become
effective 60 days following approval by the Securities and Exchange Commission
of amendments made by the Public Accounting Oversight Board to AU Section 411,
"The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles." Effects of applying the provisions of SFAS 162 must be reported as
changes in accounting principle in accordance with SFAS No. 154, "Accounting
Changes and Error Corrections" ("SFAS 154"). A company must follow the
disclosure requirements of SFAS 154 and additionally disclose the accounting
principles that were used before and after the application of the provisions of
SFAS 162 and the reasons why applying this Statement resulted in a change in
accounting principle. The Company does not expect SFAS 162 to have a material
impact on its financial statements.
In May
2009, the FASB issued SFAS No. 165, “Subsequent Events,” which establishes
general standards for accounting for and disclosures of events that occur after
the balance sheet date but before the financial statements are issued or are
available to be issued. The pronouncement requires the disclosure of the date
through which an entity has evaluated subsequent events and the basis for that
date, whether that date represents the date the financial statements were issued
or were available to be issued. SFAS 165 is effective with interim and annual
financial periods ending after June 15, 2009. Management does not expect the
adoption of SFAS 165 to impact the Company’s results of operations, financial
position or cash flows.
In June
2009, the FASB issued SFAS No. 168, "The FASB Accounting Standards Codification
and Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB
Statement No. 162" ("SFAS 168"). SFAS 168 establishes the FASB Standards
Accounting Codification ("Codification") as the source of authoritative U.S.
generally accepted accounting principles ("GAAP") recognized by the FASB to be
applied to nongovernmental entities and rules and interpretive releases of the
SEC as authoritative GAAP for SEC registrants. The Codification will supersede
all the existing non-SEC accounting and reporting standards upon its effective
date and subsequently, the FASB will not issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. SFAS
168 also replaces FASB Statement No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" given that once in effect, the Codification will carry
the same level of authority. We do not anticipate that the adoption of this
statement will have a material impact on our consolidated financial
statement.
24
Net Income per Common
Share
Basic net
income (loss) per common share amounts is computed using the weighted average
number of common shares outstanding during the year. Diluted per
common share amounts are computed using the weighted average number of common
shares outstanding during the year and dilutive potential common
shares. Dilutive potential common shares consist of stock options,
stock warrants, and Redeemable Convertible Preferred Stock and are calculated
using the treasury stock method. As of June 30, 2009, the potentially
dilutive instruments were excluded because they would be
anti-dilutive.
Goodwill
Goodwill
represents the excess of purchase price and related costs over the value
assigned to the net tangible assets of businesses acquired. The business
acquired was KG&S Pty, Ltd. in December 2008. We evaluate
goodwill for impairment utilizing undiscounted projected cash flows in
accordance with SFAS No. 142, “Goodwill and Other Intangible
Assets.” As of June 30, 2009, we believe that no such impairment has
occurred. Goodwill has been adjusted for purchase price adjustments recognized
during the current fiscal year, if any.
NOTE
C — INVESTMENTS IN MARKETABLE SECURITIES
The
aggregate amortized cost, cumulative unrealized gains and losses, and estimated
fair value, available for sales securities by major type at June 30, 2009
and 2008, is as follows:
2009
|
||||||||||||
Description
|
Cost
|
Cumulative
Unrealized
Losses
|
Estimated
Fair Value
|
|||||||||
Held-to-maturity
|
||||||||||||
Certificates
of Deposit
|
$ | 45,463 | $ | - | $ | 45,463 | ||||||
Available-for-sale
|
||||||||||||
Corporate
equity investments
|
534,520 | 224,167 | 310,353 | |||||||||
Total
|
$ | 579,983 | $ | 224,167 | $ | 355,816 |
2008
|
||||||||||||
Description
|
Cost
|
Cumulative
Unrealized
Losses
|
Estimated
Fair Value
|
|||||||||
Held-to-maturity
|
||||||||||||
Certificates
of Deposit
|
$ | 270,388 | $ | - | $ | 270,388 | ||||||
Available-for-sale
|
||||||||||||
Corporate
equity investments
|
516,121 | 96,996 | 419,125 | |||||||||
Total
|
$ | 786,509 | $ | 96,996 | $ | 689,513 |
The
certificates of deposit as of June 30, 2009 in the amount of $45,463 mature on
May 10, 2010.
As
required by SFAS 157, financial assets and liabilities are classified based on
the lowest level of input that is significant to the fair value measurement. Our
assessment of the significance of a particular input to the fair value
measurement requires judgment and may affect the valuation of the fair value of
assets and liabilities and their placement within the fair value hierarchy
levels. Following are the major categories of assets and liabilities measured at
fair value on a recurring basis as of June 30, 2009, using quoted prices in
active markets for identical assets (Level 1); significant other observable
inputs (Level 2); and significant unobservable inputs (Level
3):
25
Fair Value Measurements at June 30, 2009 Using
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
(Liabilities):
|
$
|
355,816
|
$
|
-
|
$
|
-
|
$
|
355,816
|
||||||||
Derivative
liabilities
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Total
|
$
|
355,816
|
$
|
-
|
$
|
-
|
$
|
355,816
|
NOTE
D — INVESTMENTS IN CLOSELY HELD BUSINESS
PTN made
an investment of $65,000 for 100,000 shares of a closely held private company
named State CE, Inc. on July 15, 2008. State CE, Inc. is an internet based
provider of continuing education services. PTN evaluated this investment as of
June 30, 2009 and has determined that the carrying value should be impaired to
zero.
NOTE
E — PROPERTY & EQUIPMENT
Property
& equipment as of June 30, 2009 and 2008, consists of the
following:
Description
|
June 30, 2009
|
June 30, 2008
|
||||||
Furniture
and fixtures
|
$ | 65,783 | $ | 49,061 | ||||
Equipment
|
108,985 | 96,916 | ||||||
Websites/Software
|
29,824 | 29,824 | ||||||
Total
|
204,592 | 175,801 | ||||||
Less:
Accumulated Depreciation
|
(103,287 | ) | (69,439 | ) | ||||
Property and equipment, net
|
$ | 101,305 | $ | 106,362 |
Depreciation
and amortization expense related to property and equipment was approximately
$23,048 and $15,812 for the years ended June 30, 2009 and 2008,
respectively.
NOTE
F — COMMON STOCK
PTN
2008 Stock Incentive Plan
PTN
adopted the PTN 2008 Stock Incentive Plan on September 26, 2008. The Plan is
intended to secure for the Company and its Affiliates the benefits arising from
ownership of the Company's Common Stock by the Employees, Officers, Directors,
Consultants of the Company and its Affiliates, all of whom are and will be
responsible for the Company's future growth. The Plan is designed to
help attract and retain for the Company and its Affiliates personnel of superior
ability for positions of exceptional responsibility, to reward Employees,
Officers, Directors and Consultants for their services and to motivate such
individuals through added incentives to further contribute to the success of the
Company and its Affiliates.
Awards
under the Plan may be made to an Eligible Person in the form of (i) Nonqualified
Stock Options; (ii) Restricted Stock; (iii) Stock Awards; (iv) Performance
Shares; or (v) any combination of the foregoing.
The
maximum aggregate number of shares of Common Stock which may be issued pursuant
to Awards under the Plan shall be One Million Two Hundred Thousand (1,200,000)
shares.
Issuances
for Services
On
September 3, 2008, PTN issued 51,429 shares of common stock to a consultant for
services rendered valued at $18,000 based upon a closing price of $0.35 on that
date.
On
September 25, 2008, PTN issued 1,220,000 shares of common stock to employees for
services rendered valued at $366,000 based upon a closing price of $0.30 on that
date.
26
On
September 25, 2008, PTN issued 95,000 shares of common stock to consultants for
services rendered valued at $28,500 based upon a closing price of $0.30 on that
date.
On
November 26, 2008, PTN issued 637,376 shares of common stock to consultants for
services renders valued at $108,354 based upon a closing price of $0.17 on that
date.
NOTE
G — STOCK OPTIONS/WARRANTS
On June
04, 2008, we entered into a consulting agreement with AGORACOM. In accordance
with the terms and provisions of the consulting agreement: (i) we shall issue to
AGORACOM 250,000 warrants to purchase up to 250,000 of our restricted common
stock at $0.50 per share ; and (ii) AGORACOM shall perform such consulting
services involving general business matters and other business consulting as
mutually agreed upon. Cost for the 250,000 warrants issued to AGORACOM for
consulting services amounted to $82,928, with $12,203 recognized in the
financial statements for the year ended June 30, 2008 and $70,725 recognized in
the financial statements for the year ended June 30, 2009. The warrants qualify
as “plain vanilla” warrants under the provisions of Staff Accounting Bulletin
No. 107 and, due to limited warrant exercise data available to the Company, the
term was estimated pursuant to the provisions of SAB 107. The weighted average
fair value of the options issued was $0.15. Variables used in the Black Scholes
option pricing model includes (i) 2.14% risk-free interest rate (ii) expected
life of eighteen four months (iii) expected volatility of 167% and
(iv) zero expected dividends.
On
September 25, 2008, we granted 800,000 options to Ray Lopez, CFO, under PTN,
Inc. 2008 Stock Incentive Plan to purchase up to 800,000 of our restricted
common stock at $0.50 per share. The options will vest in equal amounts of
160,000 and stage over the next 60 months. All options not exercised by the
expiration date are forfeited. Compensation cost for the 800,000 options issued
to Ray Lopez amounted to $117,750, with $24,598 recognized in the financial
statements for the year ended June 30, 2009 with the balance of $93,152 to be
recognized over the period July 1, 2009 through December 24, 2014. The options
qualify as “plain vanilla” options under the provisions of Staff Accounting
Bulletin No. 107 and, due to limited option exercise data available to the
Company, the term was estimated pursuant to the provisions of SAB 107. The
weighted average fair value of the options issued was $0.15. Variables used in
the Black Scholes option pricing model includes (i) 1.97% risk-free interest
rate (ii) expected life of twelve months (iii) expected volatility of
162% and (iv) zero expected dividends.
Summary
information regarding options/warrants is as follows:
Weighted Average
|
||||||||||
Options/Warrants
|
Share Price
|
|||||||||
Outstanding
at June 30, 2007
|
1,000,000 | $ | 0.46 | |||||||
Issued
|
(a)
|
250,000 | 0.50 | |||||||
Exercised
|
- | - | ||||||||
Forfeited
|
(1,000,000 | ) | .46 | |||||||
Outstanding
at June 30, 2008
|
250,000 | $ | 0.50 | |||||||
Issued
|
(b)
|
800,000 | 0.50 | |||||||
Exercised
|
- | - | ||||||||
Forfeited
|
- | - | ||||||||
Outstanding
at June 30, 2009
|
1,050,000 | $ | 0.50 |
(a)
|
The
weighted average fair value of the options issued was $0.33. Variables
used in the Black Scholes warrant pricing model includes (i) 2.1%
risk-free interest rate (ii) expected life of six months (iii) expected
volatility of 167% and (iv) zero expected
dividends.
|
(b)
|
The
weighted average fair value of the options issued was $0.15. Variables
used in the Black Scholes warrant pricing model includes (i) 2.0%
risk-free interest rate (ii) expected life of six months (iii) expected
volatility of 164% and (iv) zero expected
dividends.
|
At June
30, 2009, the exercise price of the options and warrants outstanding was
$.50. At June 30, 2009, the weighted average remaining contractual
life of the options was 3.45 years and the weighted average remaining
contractual life of the warrants was .96 years. At June 30, 2008,
there were no options outstanding. At June 30, 2008, the exercise
price of the warrants outstanding was $.50. At June 30, 2008, the
weighted average remaining contractual life of the warrants was .96
years. The options and warrants outstanding had no intrinsic value at
June 30, 2009 or June 30, 2008.
27
Options/Warrants
outstanding and exercisable as of June 30, 2009:
Outstanding
|
Exercisable
|
|||||||||
Number
of
|
Remaining
|
Number
|
||||||||
Exercise
Price
|
Options/Warrants
|
Life
|
of
Shares
|
|||||||
$ |
0.50
|
310,000 |
1
year
|
310,000 | ||||||
$ |
0.50
|
160,000 |
2
year
|
160,000 | ||||||
$ |
0.50
|
160,000 |
3
year
|
160,000 | ||||||
$ |
0.50
|
160,000 |
4
year
|
160,000 | ||||||
$ |
0.50
|
160,000 |
5
year
|
160,000 | ||||||
$ |
0.50
|
50,000 |
1
year
|
50,000 | ||||||
$ |
0.50
|
50,000 |
1
year
|
50,000 | ||||||
1,050,000 | 1,050,000 |
NOTE
H – NET INCOME PER COMMON SHARE
Basic net
income per common share is calculated by dividing the net income applicable to
common shares by the weighted-average number of common shares outstanding during
the period. Fully diluted net income per common share is calculated by dividing
the net income applicable to common shares by the weighted-average number of
common and common equivalent shares outstanding during the period. The weighted
average common shares and common stock equivalents for both basic and fully
diluted earnings per share calculations at June 30, 2009 and 2008 are as
follows:
June
30,
|
||||||||
Description
|
2009
|
2008
|
||||||
|
||||||||
Weighted-average
shares used to compute basic net income per common
share
|
27,306,359 | 25,731,310 | ||||||
Securities
convertible into shares of common stock used in calculation of common
stock equivalents for fully diluted EPS:
|
||||||||
Stock
options/warrants
|
- | 200,000 | ||||||
Weighted-average
shares used to compute diluted net income per common share
|
27,306,359 | 25,931,310 |
Common
stock equivalents for the year ended June 30, 2009 were not used in calculating
fully diluted earnings per share as the effect would be
anti-dilutive.
NOTE
I – COMMITMENTS AND CONTINGENCIES
On
October 5th, 2008, a lawsuit was filed against PTN by a recently dismissed
employee. The lawsuit alleges that she was fired due to retaliation for
filing a complaint of workplace harassment. PTN vehemently denies any and
all allegations as completely false and without merit. It is remote
that this lawsuit will settle in favor of the employee and, therefore, no
contingency is recorded.
PTN
leases office space under four non-cancelable operating leases. Rent expense was
$158,806 and $143,939 for the years ended June 30, 2009 and 2008,
respectively.
28
The lease
on our primary operating facility was amended in April, 2007, and monthly rent
was increased, effective July, 2007, to $9,072 per month. The amount of the
increase was due to an additional 2,802 square feet bring our total office space
to 6,059 square feet. All other terms remain the same. On March 1,
2007, we moved one of our offices from London, Ontario Canada to Mississauga,
Ontario Canada and leased 1,000 square feet of office space under a one year
non-cancelable operating lease beginning in March 2007 for $1,243 per month. On
February 20, 2008, we renewed our lease for two years beginning March 2008 with
all terms remaining the same. On July 1, 2007, we leased 1,170 square feet of
office space in St Jerome, Quebec Canada under a two year non-cancelable
operating lease beginning in July 2007, for $1,029 per month. On April 28, 2008,
we leased 911 square feet of office space in Surrey, British Columbia Canada
under a three year non-cancelable operating lease beginning in July 2008 for
$1,536 per month. On October 30, 2008, we leased a space in Mentone, Vic.
Australia under a three year operating lease beginning in November 2008 for
$1,300 per month.
The lease
on our primary operating facility is an operating lease with escalating lease
payments. In accordance with the provisions of SFAS No. 13, Accounting for Leases, rent
expense is recognized on a straight line basis over the life of lease. Deferred
rent was $34,410 and $11,302 at June 30, 2009 and 2008, respectively, and is
included in accrued expenses in the accompanying balance sheets
Future
minimum rental payments, by year and in aggregate under these leases are as
follows.
Year
Ending June 30,
|
Amount
|
|||
|
||||
2010
|
$
|
152,846
|
||
2011
|
142,896
|
|||
2012
|
114,063
|
|||
$
|
409,805
|
During
the normal course of business, PTN may become involved in various claims and
legal actions. Management of the Company establishes estimated liabilities for
contingencies consistent with guidance prescribed in SFAS 5. Currently,
Management believes the Company has no material exposure related to litigation
or other loss contingencies and therefore no provision has been made for
potential loss contingencies for the years ending June 30, 2009, and 2008,
respectively.
NOTE
J –ACQUISITION OF COMPANY
On
December 19, 2008, PTN completed its acquisition of KG & S Pty, Ltd., an
Australian company for a cash purchase price of $41,743. The assets we acquired
consisted of furnishings and fittings. In connection with the acquisition, we
assumed no liabilities. The acquisition cost was allocated to assets as
follows:
Property
and equipment, net
|
$ | 3,542 | ||
Goodwill
|
38,201 | |||
$ | 41,743 |
Goodwill
is the excess of the fair values of tangible and identifiable intangible assets
acquired over liabilities assumed. The amount recognized as Goodwill
includes acquired intangible assets for which fair values could not be
determined. Goodwill is not amortized, but is tested for impairment
at least annually.
NOTE
K –SECURITY DEPOSITS
Deposits
are comprised of operating lease deposits of approximately $21,929 and $135,353
on deposit with two third-party credit card payment processing services that
serve as collateral in case the Company ceased operations or experienced
excessive charge backs with its customers. Of the $135,353,
approximately $35,353 relates to a credit card processing services that ceased
operations prior to returning PTN’s deposit. Although PTN is pursuing
collection of this amount, it has provided an allowance for the entire
balance.
29
NOTE
L – ACCRUED EXPENSES
Accrued
Expenses consist of the following at June 30, 2009 and 2008:
June 30,
|
||||||||
2009
|
2008
|
|||||||
Rep/travel
commissions payable
|
$ | 151,570 | $ | 26,539 | ||||
PTN
reward points payable
|
33,645 | 95,378 | ||||||
Accrued
payroll and benefits
|
105,539 | 99,805 | ||||||
Other
expenses
|
47,207 | 48,067 | ||||||
Total
|
$ | 337,961 | $ | 269,789 |
NOTE
M – DEFERRED NATIONAL EVENT REVENUE
Represents
payments received in advance for National Events in the amount of $40,630 that
are scheduled to take place in a future period. Revenue will be
recognized by PTN when this scheduled event takes place and expenses related to
this event are incurred.
NOTE
N – INCOME TAXES
Income
taxes are not due since PTN has continued to operate at net loss since
inception. PTN has deductible net operating losses of approximately $2,939,091
at June 30, 2009. These losses begin to expire in 2025. Components of deferred
tax assets and liabilities at June 30, 2009 and 2008 are as
follows:
June 30,
|
||||||||
2009
|
2008
|
|||||||
Deferred
tax asset-net operating loss carry-forwards
|
$ | 1,044,847 | $ | 650,319 | ||||
Deferred
tax liability-unrealized holding loss on investments
|
(78,664 | ) | (34,154 | ) | ||||
Valuation
allowance
|
(966,183 | ) | (616,165 | ) | ||||
Net
deferred tax asset
|
$ | - | $ | - |
PTN has
recorded a full valuation allowance against its deferred tax asset since it
believes it is likely that such deferred tax asset will not be
realized.
NOTE
O – SUBSEQUENT EVENTS
PTN has
evaluated subsequent events through October 1, 2009 which is the date the
financial statements were issued.
On July
1, 2009, PTN completed its acquisition of Cruise Adventures, a sole
proprietorship of Craig Mungary. The acquisition includes all of the
identifiable assets of Cruise Adventures, but no liabilities, in exchange for a
payment arrangement wherein:
|
·
|
PTN
will pay Mungary the excess of cash collections of receivable existing at
July 1, 2009 over expenses for that
period.
|
|
·
|
PTN
assumes all cost of operations after the date of acquisition in excess of
collections and all expenses after the initial three month
period.
|
|
·
|
PTN
agrees to pay Craig Mungary with PTN common stock an amount equal to all
money paid for operating expense and applied to pre-close collections
during the payment period which ends October 1,
2009.
|
On July
1, 2009, the Company has an employment agreement with Craig Mungary, who will
serve as VP of Retail Sales. The agreement terminates on June 30,
2011 and states Mungary’s base salary of $72,000 up to June 30, 2010 and
increase annually by 10%. Mungary’s performance-based incentive
compensation is 10% of actual received commission revenue only after the first
$600,000 in revenue.
Mungary
is also granted the option to purchase 200,000 common shares per year over the
next five years at strike price of $0.20 with each tranche of shares vesting and
expiring at the end of each annual period on June 30.
Item
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
30
Item
9A(T). Controls and Procedures.
Evaluation of Disclosure
Controls and Procedures
We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the reports that we file or submit to
the SEC under the Exchange Act, is recorded, processed, summarized, and reported
within the time periods specified by the SEC’s rules and forms, and that
information is accumulated and communicated to our management, including our
chief executive and chief financial officers, as appropriate to allow timely
decisions regarding required disclosure.
The
Company’s management, with the participation of the chief executive
officer and chief financial officer, carried out an evaluation of the
effectiveness of the Company's “disclosure, controls and procedures”, using the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework, (as defined in the
Exchange Act) Rules 13a-15(3) and 15-d-15(3) as of the end of the period covered
by this report (the “Evaluation Date”). Based upon that evaluation, the
chief executive officer and chief financial officer concluded that, as of the
Evaluation Date, the Company’s disclosure, controls and procedures are not
effective at providing them with material information relating to the Company as
required to be disclosed in the reports the Company files or submits under the
Exchange Act on a timely basis. The following material weaknesses were
noted in the evaluation of our disclosure controls and procedures:
1) There
are inadequate controls over the creation and posting of journal entries to
ensure they are authorized, accurate, and complete.
2)
Financial reporting controls are inadequate to ensure that the financial
statements are free of material misstatement and disclosures are in accordance
with generally accepted accounting principles.
These
material weaknesses have been disclosed to our Board of Directors and PTN will
implement compensating controls as resources become available.
Changes in Internal Control
Over Financial Reporting
No change
in the Company s internal control over financial reporting occurred during the
year ended June 30, 2009, that materially affected, or is reasonably likely to
materially affect, the Company s internal control over financial
reporting.
Item
9B. Other Information
None
PART
III
ITEM
10. Directors, Executive Officers And Corporate
Governance
Identification of Directors
and Executive Officers
All of
our directors hold office until the next annual general meeting of the
shareholders or until their successors are elected and qualified. Our officers
are appointed by our board of directors and hold office until their earlier
death, retirement, resignation or removal.
Our
directors and executive officers, their ages, positions held are as
follows:
Name
|
Age
|
Position
with the Company
|
||
Paul
Henderson
|
44
|
President,
Chief Executive Officer and a Director
|
||
Raymond
Lopez
|
44
|
Vice
President and Chief Operating Officer
|
||
Frederick
McIntosh
|
42
|
CFO/Controller
|
||
Douglas
Singer
|
42
|
Director
|
||
James
Estes
|
40
|
Director
|
31
Business
Experience
The
following is a brief account of the education and business experience of each
director, executive officer and key employee during at least the past five
years, indicating each person's principal occupation during the period, and the
name and principal business of the organization by which he or she was employed,
and including other directorships held in reporting companies.
Paul Henderson,
President/Chief Executive Officer and a director
Mr.
Henderson has been President, Chief Executive Officer and director of PTN, Inc.
since its inception in October 2003. From January 2002 to October 2003, Mr.
Henderson was a self employed sales and recruiting representative selling and
recruiting people to sell long distance services. Prior to that, he was Regional
Vice President of ACN, Inc. a long distance service marketing
company.
Raymond Lopez, Vice
President/Chief Operating Officer
Mr. Lopez
brings over 16 years of sales management and finance experience to his role as
Chief Operating Officer and Vice President. Most recently, he served as Area
Manager for Countrywide Specialty Lending Group. Prior to that, he was the
General Sales Manager of Fresno Dodge, the largest selling Dodge dealer in
Central California. He has a proven track record of quickly achieving success
and being recognized for that success.
Frederick McIntosh,
CFO/Controller
Mr.
McIntosh brings over 20 years of accounting experience to his role as
CFO/Controller. Most recently, he served as Controller for the Fresno Rescue
Mission in Fresno, CA.
Douglas Singer,
Director
Mr.
Singer has been a successful Central Valley small business owner and
entrepreneur for nearly 20 years. After earning a BA in history from San Diego
State University, he began his first company in 1989, Singer Commercial
Spraying. Currently Mr. Singer now owns and operates three ag service companies;
Singer Commercial Spraying, Singer Brush Shedding and Singer Farms, which
consist of a 40 acre orange orchard and 110 acres of almonds, pistachios and
grapes.
Jim Estes,
Director
Mr. Estes
founded Estes Development, a company that develops and constructs commercial
real estate projects. Mr. Estes and his company have completed a range of
projects such as shopping centers, various land development projects and auto
dealerships. He has been very successful in the auto sales industry and is a
Dealer Principal and owner, of a number of successful dealerships. Mr. Estes
earned his Bachelor of Science degree in Business Marking from California State
University.
Family
Relationships
There are
no family relationships among our directors or officers.
Audit
Committee
As of the
date of this Annual Report, we have not appointed members to an audit committee
and, therefore, the respective role of an audit committee has been conducted by
our Board of Directors as a whole. When established, the audit committee's
primary function will be to provide advice with respect to our financial matters
and to assist our Board of Directors in fulfilling its oversight
responsibilities regarding finance, accounting, tax and legal compliance. The
audit committee's primary duties and responsibilities will be to: (i) serve as
an independent and objective party to monitor our financial reporting process
and internal control system; (ii) review and appraise the audit efforts of our
independent accountants; (iii) evaluate our Annual financial performance as well
as our compliance with laws and regulations; (iv) oversee management's
establishment and enforcement of financial policies and business practices; and
(v) provide an open avenue of communication among the independent accountants,
management and our Board of Directors.
32
Code of
Ethics
Our board
of directors adopted a Code of Ethics in September 2006, meeting the
requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We will provide
to any person without charge, upon request, a copy of such Code of Ethics.
Persons wishing to make such a request should contact Paul Henderson, Chief
Executive Officer, at 516 West Shaw Avenue # 103, Fresno, California 93704 or at
(559) 224-6000.
Item
11. Executive Compensation.
The
following table sets forth the compensation paid to our executive officers
during fiscal year ended June 30, 2009 and 2008 (collectively, the “Named
Executive Officers”):
Summary Compensation
Table
Non-Equity
|
Non-Qualified
|
|||||||||||||||||||||||||||||||||
Name
and
|
Incentive
|
Deferred
|
||||||||||||||||||||||||||||||||
Principal
|
Stock
|
Option
|
Plan
|
Compensation
|
All
Other
|
|||||||||||||||||||||||||||||
Position
|
Year
|
Salary
|
Bonus
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|||||||||||||||||||||||||
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||||||||||||
Paul
|
||||||||||||||||||||||||||||||||||
Henderson
|
2008
|
190,000 | 215,305 | 36,000 | - | - | - | - | 441,305 | |||||||||||||||||||||||||
President/CEO
|
2009
|
240,000 | 96,750 | - | - | - | - | - | 336,750 | |||||||||||||||||||||||||
Raymond
|
||||||||||||||||||||||||||||||||||
Lopez,
|
2008
|
96,000 | 51,137 | - | - | - | - | - | 147,137 | |||||||||||||||||||||||||
VP/COO
|
2009
|
120,000 | 26,032 | - | - | - | - | - | 146,032 | |||||||||||||||||||||||||
Frederick
|
||||||||||||||||||||||||||||||||||
McIntosh,
|
2008
|
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
CFO/Controller
|
2009
|
80,000 | - | - | - | - | - | - | 80,000 |
(1)
|
This
amount represents fees paid by us to the Named Executive Officer during
the past year pursuant to services provided in connection with their
respective position as Chief Executive Officer and Chief Operating
Officer.
|
Compensation
Agreements
We have
an employment agreement with Paul Henderson which provides as
follows:
o
|
The
agreement began on July 1, 2008.
|
|
o
|
The
agreement was amended July 1, 2008 to increase his annual salary from
$200,000 to $240,000 per year and change his performance-based incentive
compensation to 1.75% of actual gross
revenue.
|
o
|
Without
cause, we may terminate the agreement at any time prior to the end of the
agreement without cause; we are required to pay Mr. Henderson a severance
payment in an amount equal to the Executive’s Base Salary for the
preceding two years in biweekly increments for the two years following
such termination.
|
For a
period of two years after the end of employment, Mr. Henderson shall not
control, consult to or be employed by any business similar to that conducted by
us, either by soliciting any of our accounts or by operating within our general
trading area.
We have
an employment agreement with Ray Lopez which provides as follows:
o
|
The
agreement began on July 1, 2008.
|
|
o
|
The
agreement was amended July 1, 2008 to increase his annual salary from
$96,000 to $120,000 per year and change his performance-based incentive
compensation to 0.50% of actual gross
revenue.
|
o
|
Without
cause, we may terminate the agreement at any time prior to the end of the
agreement without cause; we are required to pay Mr. Lopez a severance
payment in an amount equal to the Executive’s Base Salary for the
preceding two years in biweekly increments for the two years following
such termination.
|
For a
period of two years after the end of employment, Mr. Lopez shall not control,
consult to or be employed by any business similar to that conducted by us,
either by soliciting any of our accounts or by operating within our general
trading area.
33
Summary Equity Awards
Table
The
following table sets forth certain information for our executive officers
concerning unexercised options, stock that has not vested, and equity incentive
plan awards as of June 30, 2009.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
||||||||||||||||||||||||||||||||||||
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
Of
Unearned
Shares,
Units
or Other
Rights
That Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value
of
Unearned
Shares,
Units
or Other
Rights
That Have
Not
Vested
($)
|
|||||||||||||||||||||||||||
Paul
Henderson
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Ray
Lopez
|