UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: November 30, 2014

 

or

 

☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from: ______ to ______

 

PROFIT PLANNERS MANAGEMENT, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other Jurisdiction of

Incorporation or Organization)

 

885 Third Avenue, 19th Floor, New York, New York 10022

(Address of Principal Executive Offices) (Zip Code)

 

(646) 837-0351

(Registrant’s telephone number, including area code)

 

350 Madison Avenue, 8FL, New York, New York 10017

(Former name or former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large Accelerated Filer ☐

Accelerated Filer ☐

Non-Accelerated Filer ☐

Smaller Reporting Company ☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐    No ☒

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of the issuer's common stock, as of the latest practical date: As of January 5th, 2015, the issuer had 54,302,788 outstanding shares of Common Stock. 

 

 

 

Profit Planners Management, Inc.

 

TABLE OF CONTENTS

 

		Page
PART I
Item 1.	Condensed Consolidated Financial Statements	1
	Condensed Consolidated Balance Sheets as of November 30, 2014 (Unaudited) and May 31, 2014 (Audited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months and six months ended November 30, 2014 and 2013 (Unaudited)	2
	Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2014 and 2013 (Unaudited)	3
	Notes to the Condensed Consolidated Financials (Unaudited)	4
Item 2.	Management’s Discussion and Analysis or Plan of Operation	8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4T	Controls and Procedures	15
PART II
Item 1.	Legal Proceedings	15
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Submission of Matters to a Vote of Security Holders	16
Item 5.	Other Information	16
Item 6.	Exhibits	16
SIGNATURES		17

 

 

PART I.

 

ITEM 1. FINANCIAL INFORMATION

 

Profit Planners Management, Inc.

Condensed Consolidated Balance Sheets

 

		(Unaudited)
		November 30, 2014				May 31, 2014
Assets
Current assets:
Cash		$	34,906			$	39,982
Accounts receivable (net of allowance of $28,243 and $19,795, respectively)			67,234				99,940
Note receivable			72,000				72,000
Other current assets			10,282				39,590
Total current assets			184,422				251,512
Property and equipment:
Property and equipment			13,172				13,172
Less: accumulated depreciation			(9,034	)			(6,839	)
Net property and equipment			4,138				6,333
Total Assets		$	188,560			$	257,845
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses		$	76,271			$	46,357
Accounts payable and accrued expenses - related parties			80,269				66,700
Accrued expenses - employee compensation			127,500				130,000
Accrued expenses - officer's compensation			463,148				373,925
Deferred revenue			0				20,000
Total Liabilities			747,188				636,982
Commitments and contingencies (Note 8)			0				0
Stockholders' Deficit
Preferred stock - $.001 par value; 50,000,000 shares authorized; none and none issued and outstanding in 2014 and 2013, respectively			0				0
Common stock - $.001 par value; 500,000,000 shares authorized; 54,302,788 and 54,052,788 shares issued and outstanding, respectively			54,303				54,053
Additional paid-in capital			252,893				248,143
Accumulated deficit			(865,824	)			(681,333	)
Net Stockholders' Deficit			(558,628	)			(379,137	)
Total Liabilities And Stockholders' Deficit		$	188,560			$	257,845

 

See accompanying notes to the condensed consolidated financial statements

 

 

Profit Planners Management, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)

 

		Three				Three				Six				Six
		Months Ended				Months Ended				Months Ended				Months Ended
		November 30, 2014				November 30, 2013				November 30, 2014				November 30, 2013
Revenues - consulting and management services fees		$	167,092			$	176,523			$	303,060			$	365,406
Cost of revenues - personnel and overhead costs			119,078				123,700				225,706				271,758
Gross Profit			48,014				52,823				77,354				93,648
Selling, general and administrative expenses:
Corporate management			61,719				53,912				131,074				87,506
Consulting and professional expenses			36,410				16,905				51,502				46,613
Other operating expenses			49,465				65,224				79,269				133,950
Total selling, general and administrative expenses			147,594				136,041				261,845				268,069
Net loss and comprehensive loss from continuing operations			(99,580	)			(83,218	)			(184,491	)			(174,421	)
Discontinued operations (Note 3)
Net income (loss) and comprehensive loss from operations of Organics Innovations, Inc.			0				2,054				0				(31,631	)
Net loss and comprehensive loss		$	(99,580	)		$	(81,164	)		$	(184,491	)		$	(206,052	)
Net income (loss) per weighted-average shares common stock - basic and diluted:
Continuing operations			0				0				0				0
Discontinued operations			0				0				0				0
Net loss		$	0			$	0			$	0			$	0
Weighted-average number of shares of common stock to be issued and outstanding - basic and diluted:			54,113,899				53,737,972				54,082,843				52,692,207

 

See accompanying notes to the condensed consolidated financial statements

 

 

Profit Planners Management, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

		Six Months Ended				Six Months Ended
		November 30, 2014				November 30, 2013
Net cash used in operating activities		$	(10,076	)		$	(135,622	)
Net cash used in investing activities			0				(10,545	)
Net cash provided by financing activities			5,000				70,500
Net change in cash			(5,076	)			(75,667	)
Cash, beginning of period			39,982				127,984
Cash, end of period		$	34,906			$	52,317

 

See accompanying notes to the condensed consolidated financial statements

 

 

Profit Planners Management, Inc.

Notes to Condensed Consolidated Financial Statements

November 30, 2014

(Unaudited)

 

NOTE 1 - BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial information of Profit Planners Management, Inc. (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

 

The condensed consolidated financial information for the three months and six months ended November 30, 2014 include the accounts of the Company and its wholly-owned subsidiaries and all intercompany balances and transactions have been eliminated in consolidation.

 

The balance sheet at May 31, 2014 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (U.S. GAAP) for complete financial statements.

 

The unaudited interim financial information should be read in conjunction with the Company’s Form 10-K, which contains the audited consolidated financial statements and notes thereto, together with Management’s Discussion and Analysis, for the year ended May 31, 2014. The interim results for the period ended November 30, 2014 are not necessarily indicative of the results for the full fiscal year.

  

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Revenue recognition

 

The Company’s revenues are derived from management, financial and accounting advisory service fees. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.

 

Net loss per common share

 

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. Due to the loss for the periods presented, the shares are not included in the calculation as they would be anti-dilutive.

 

Reclassifications

 

Certain amounts in the prior period presented have been reclassified to conform to the current period classification. These reclassifications have no effect on the previously reported net loss.

 

 

Recently Issued Accounting Pronouncements

 

In August 2014, the Financial Accounting Standards Board(FASB) issued Accounting Standards Update ASU 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this ASU provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. It is too early to assess the impact of the adoption of this new guidance on the Company’s financial position.

 

In May 2014, the FASB issued ASU No. 2014-09: Revenue from Contracts with Customers. The standard outlines a five-step model for revenue recognition with the core principle being that a company should recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Companies can choose to apply the standard using either the full retrospective approach or a modified retrospective approach. Under the modified approach, financial statements will be prepared for the year of adoption using the new standard but prior periods presented will not be adjusted. Instead, companies will recognize a cumulative catch-up adjustment to the opening balance of retained earnings. This new guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company has not yet made a determination been made as to the method of application (full retrospective or modified retrospective). It is too early to assess whether the impact of the adoption of this new guidance will have a material impact on the Company's results of operations, financial position or cash flows.

  

NOTE 3 – DISCONTINUED OPERATIONS

 

On May 9, 2014, the Company completed the sale of assets of its Organic Innovations subsidiary that consisted of to three domain names, trademarks, websites and customer lists, to a third party pursuant to the terms of the Asset Purchase Agreement between the parties dated as of May 7, 2014 for an aggregate purchase price of $115,000. The purchase price was paid in cash of $18,000, the assumption of a Company obligation to the CEO for $25,000 and a promissory note for $72,000 carrying an interest rate of 8% per annum that matures on May 6, 2015. As of November 30, 2014, interest income of $3,298 accrued on the promissory note.

 

As a result of the sale of its Organic Innovations business, management has reclassified the related activities to discontinued operations. For the three and six months ended November 30, 2013, the business incurred net income (loss) of $2,054 and ($31,631) respectively. For the six months ended November 30, 2013, development costs totaling $31,631, have been reclassified under discontinued operations on the condensed consolidated statement of operations and comprehensive loss.

 

 

The discontinued operations are in a net operating loss position and any taxable income generated would be offset by the losses incurred. Since management cannot determine if the operation will be able to generate sufficient taxable income to realize any tax benefits a valuation allowance has been established to offset the asset.

  

NOTE 4 – GOING CONCERN

 

As reflected in the accompanying condensed consolidated financial statements, the Company had a net loss and comprehensive loss from continuing operations of $184,491 for the six months ended November 30, 2014 and the Company has minimal historical evidence of positive earnings as evidenced by the accumulated deficit of $865,824 at November 30, 2014. The historical trend of losses raises substantial doubt about the Company’s ability to continue as a going concern.

 

Management believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern. These actions include continuing to grow the Company’s revenues sufficient to support its cost structure through existing and new clients while actively seeking channels to develop business. Management may seek additional financing using equity or debt instruments in the future through additional private placement offerings.

 

There can be no assurance that the actions taken and raising of equity will be successful or that the Company’s anticipated financing will be available in the future, at terms satisfactory to the Company. Failure to achieve the equity and financing at satisfactory terms and amounts could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

NOTE 5 – RELATED PARTY

 

The Company had accrued officer’s salary expense payable to the CEO, who has a controlling ownership interest in the Company. The net compensation owed to the CEO totaled $463,148 and $373,925 as of November 30, 2014 and May 31, 2014, respectively.

 

The Company had accrued compensation expense payable to a former Director of the Company for providing legal counsel services for $1,000 per month. The compensation obligations owed to the Director totaled $22,000 and $16,000 as of November 30, 2014 and May 31, 2014, respectively. The Company also has net payable to affiliated companies totaling $58,269 and $50,700 as of November 30, 2014 and May 31, 2014, respectively for services performed in prior periods.

 

NOTE 6 – EQUITY

 

In October 2014, the Company closed a private sale transaction with one investor who was subsequently appointed to the Board of Directors, through which the Company issued 250,000 shares of its common stock at a price of $.02 per share. The total proceeds to the Company from the October 2014 private sale was $5,000.

 

 

NOTE 7 – INCOME TAXES

 

The Company has not recorded any income tax expense or benefit for the three and six months ended November 30, 2014. Any taxable income generated will be offset by net operating losses (“NOL”) generated in previous years. At the present time, management cannot determine if the Company will be able to generate sufficient taxable income to realize the benefit of the NOL carryforwards; accordingly, a valuation allowance has been established to offset the asset.

  

NOTE 8 – CONTINGENT EMPLOYEE BONUS

 

On January 1, 2013, the Company entered into a compensation agreement with an employee that provides for a bonus based upon certain performance requirements. Since inception of the compensation agreement, management has evaluated the results of the employee’s performance and determined that the likelihood of payment would be remote as the employee did not meet the minimum performance requirements.

 

The Company agreed to bonus compensation of $130,000 as of May 31, 2014. The outstanding balance as of November 30, 2014 is $127,500.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Forward-Looking Statements

 

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” “anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.

 

The following discussion and analysis should be read in conjunction with our accompanying financial statements and the notes to those financial statements included in this filing. The following discussion includes forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this filing.

 

Operations

 

We are a Nevada Corporation founded in January 2009 with offices in New York and Florida.

 

Our Business

 

Our operations are focused on the following major business areas:

 

	●	CFO, Accounting and Tax Services;
	●	Insurance and Healthcare Insurance Services;
	●	Advisory Consulting Services;
	●	Management Services

 

 

CFO, Accounting and Tax Services

 

Our CFO, Accounting and Financial Services division provides management, staffing, payroll, human resources, billing and tax services to our clients. We provide short-term engagements of outside management services to help companies complete certain transactions or restructurings. Additionally, we provide monthly accounting, payroll, tax and billing services to businesses that do not have those departments.

 

Clients are billed either on an hourly basis for the accounting and financial services we provide or under a monthly retainer, if the engagement is to be for an extended period of time. The hourly rates that we charge our clients for these services depends on the complexity of the work being done and the experience level of the persons assigned to the work.

 

Our CFO, Accounting and Tax Services division is currently our main revenue generator with more than 90% of our revenues coming from these services. In the future, we expect this percentage to go down as our other business divisions gain traction in the market place.

 

Insurance and Healthcare Insurance Services

 

Our Insurance and Healthcare Insurance division, Profit Planners Insurance Group, is a licensed insurance brokerage. We offer a wide array of insurance and insurance related products such as life insurance, annuities, health insurance, healthcare discount benefit cards and programs as well as self-funded health insurance accounts. Our Insurance and Healthcare Insurance division offers insurance services to our corporate clients as part of our consulting services. It also sells insurance products and services directly to individuals and companies that have not engaged us for other consulting services.

 

We receive commission from the insurance carrier based on the premium of the product being purchased.

 

As the operation has yet to generate any revenues, we are re-evaluating our approach.

 

Advisory Consulting Services

 

Our Advisory Consulting Services Practice, PPMT Strategic Group, supplies strategic and financial consulting services to companies looking to raise capital in the debt and equity markets. Our knowledge and access to experienced personnel can provide the planning, financial modeling and advice to middle market companies.

 

Clients are billed either on an hourly basis for these services we provide or under a monthly retainer, if the engagement is to be for an extended period of time. The hourly rates that we charge our clients for these services depends on the complexity of the work being done and the experience level of the persons assigned to the work.

 

Management Services

 

Our Management Services division provides budgeting and asset allocation and control advice to professional athletes, entertainers and other high earning individuals. The services that our Management Services division provides include reviewing a client’s current earnings and expenses and advising on what changes need to be made to create long-term financial stability. The main goal of our Management Services division is to create a solid long-term financial plan for these high earning individuals and to create the budgeting discipline needed for these clients to retire comfortably.

 

 

The Management Services that we provide are billed either on an hourly basis or under a monthly retainer depending on the length of the engagement. We may also generate revenue from the sale of insurance products to our Management Services clients if such products are needed as part of the long-term financial plan that has been created.

 

Growth and Profitability Strategy

 

Our objective is to increase our revenue, profitability and cash flow by offering our clients a wide array of essential services in a “one-stop-shopping” framework. By doing so we can simplify the logistics of our client’s purchases of these essential services, eliminate redundant services and streamline the business operations of our corporate clients.

 

Marketing

 

Our marketing focus depends on the business and consumer market. For our CFO, Accounting and Tax Services business, our marketing efforts are targeted at small to midsized companies that are known to, located or identified by our finders’ network. We also utilize our contacts with other professional service firms (law firms, investment bankers, venture capital firms and CPA audit firms) that provide services to the small and middle market sector for referrals of potential clients. We plan to expand and leverage our current clientele in our CFO, Accounting and Tax services group for potential leads and referrals.  We also intend to explore alliances or potential acquisitions of small accounting, or other consulting firms, to access their customer lists so that we can expand our client base. 

  

Although our target market has been on companies that have sales of less than $100 million and are based in North America, we plan to expand to larger companies as our consulting staff grows. We also focus our efforts on Private Equity and Investment Banking firms, who generally require the skill base we possess for some of their investments. Our industry focus is professional services and products related to our businesses. Although we focus on these industries we will look at opportunities in other industries if it makes economic sense.

 

We currently own and operate various web-sites, with the following being the more prominent ones:

 

	●	www.profitplannersmgt.com
	●	www.profitplannersinsurancegroup.com
	●	www.ppmtgroup.com

 

We use these web-sites as part of our marketing strategy.  In addition, we work to expand our communications through various channels of social and business media that include our web-sites, other sites such as LinkedIn, Facebook and Twitter, and through press releases and articles. We will continue to maintain all of our web-sites.

 

Our marketing costs for the three months ended November 30, 2014 related to our continuing business operations were approximately $1,671. Ongoing marketing expenses consisted of e-mails, promotions and use of social media to communicate to potential customers.

 

We believe that these strategies will provide the best results given our limited marketing budget.

 

 

Critical Accounting Policies  

 

Accounts receivable

 

Accounts receivable represents open invoices from customers. The Company periodically evaluates the collectability of its accounts receivable and considers the need to record or adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates. The Company has determined that as of November 30, 2014, an allowance for doubtful accounts of $28,243 was required as a result of the Company believing certain receivables for consulting services will no longer be collected either fully or partially. The Company does not require collateral to support customer receivables.

 

Revenue recognition

 

The Company’s revenues are derived from management, financial and accounting advisory services.  The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.

 

For discontinued operations, product sales represented revenue from the sale of products and related shipping fees. Product sales and shipping revenues, net of promotional discounts, rebates, and return allowances, were recorded when the products were shipped and title passed to customers. Return allowances, which reduce revenue, were estimated using historical experience. Revenue from product sales was recorded net of sales taxes. Current discount offers, when accepted by our customers, were treated as a reduction to sales revenues.

 

Net income (loss) per common share

 

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. Due to the loss for the periods presented, the shares are not included in the calculation as they would be anti-dilutive.

 

Reclassifications

 

Certain amounts in the prior period presented have been reclassified to conform to the current period classification. These reclassifications, which relate to discontinued operations, have no effect on the previously reported net loss.

 

Going Concern

 

As reflected in the accompanying financial statements, the Company has had a net loss and comprehensive loss from continuing operations of $184,491 and $174,421 for the six months ended November 30, 2014 and November 30, 2013, respectively; and an accumulated deficit of $865,824 at November 30, 2014.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

 

Management believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern. These actions include continuing to grow the Company’s revenues to sufficiently support its cost structure through existing and new clients while actively seeking channels to develop business. Management may seek additional financing using equity or debt instruments in the future through additional private placement offerings.  

 

There can be no assurance that the actions taken and raising of equity will be successful or that the Company’s anticipated financing will be available in the future, at terms satisfactory to the Company. Failure to achieve the equity and financing at satisfactory terms and amounts could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Recently Issued Accounting Pronouncements

 

In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ASU 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this ASU provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. It is too early to assess the impact of the adoption of this new guidance on the Company’s financial position.

 

In May 2014, the FASB issued ASU No. 2014-09: Revenue from Contracts with Customers. The standard outlines a five-step model for revenue recognition with the core principle being that a company should recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Companies can choose to apply the standard using either the full retrospective approach or a modified retrospective approach. Under the modified approach, financial statements will be prepared for the year of adoption using the new standard but prior periods presented will not be adjusted. Instead, companies will recognize a cumulative catch-up adjustment to the opening balance of retained earnings. This new guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company has not yet made a determination been made as to the method of application (full retrospective or modified retrospective). It is too early to assess whether the impact of the adoption of this new guidance will have a material impact on the Company's results of operations, financial position or cash flows.

 

 

Results of Operations

 

Continuing Operations

 

Three Months Ended November 30, 2014 and 2013

 

For the three months ended November 30, 2014 and 2013, we had revenue of $167,092 and $176,523, respectively. Cost of revenues for the three months ended November 30, 2014 and 2013 totaled $119,078 and $123,700, respectively. Selling, general and administrative expenses for the three months ended November 30, 2014 and 2013 totaled $147,594 and $136,041, respectively, resulting in a net loss from continuing operations of $99,580 and $83,218, respectively.

 

Consulting service income for the three months ended November 30, 2014 consisted of CFO, Accounting and Tax Services of $167,092. For the comparable three months ended November 30, 2013, consulting service income consisted of CFO, Accounting and Tax Services of $151,065 and Management Services of $25,458. The changes in service income are attributable to fluctuations in the client base, the completion of non-recurring projects and the timing of acquiring new clients.

 

Cost of revenues for the three months ended November 30, 2014 comprised of personnel and overhead costs of $119,078. The personnel and overhead costs were comprised of salaries and compensation expenses of $84,383, and other expenses of $34,695. Cost of revenues for the three months ended November 30, 2013 comprised of personnel and overhead expenses of $123,700. The personnel and overhead expenses were comprised of salaries and compensation expenses of $109,719 and other overhead expenses of $13,981.

 

Selling, general and administrative expenses for the three months ended November 30, 2014 was $147,594 comprised of net compensation expense for corporate management of $61,719, consulting and professional expenses of $36,410, rent expense of $11,990, filing fee of $2,133, bad debts of $8,448, office and IT related expenses of $3,694, travel-related expenses of $8,111 and other expenses of $15,089.

 

Selling, general and administrative expenses for the three months ended November 30, 2013 was $136,041, comprised of net compensation expense for corporate management of $53,912, consulting and professional expenses of $16,905, rent expense of $16,712, bad debt expense of $33,196, travel-related expenses of $5,431, and other expenses of $9,885.  

 

For the three months ended November 30, 2014 as compared to same period ended November 30, 2013, there was an increase in selling, general and administrative expenses of $11,553. Corporate management, consulting, and professional expenses, as compared to the prior year, increased as management and consultants increased the time spent on business development and administration rather than servicing clients.

 

Six Months Ended November 30, 2014 and 2013

 

For the six months ended November 30, 2014 and 2013, we had revenue of $303,360 and $365,406, respectively. Cost of revenues for the six months ended November 30, 2014 and 2013 totaled $225,706 and $271,758, respectively. Selling, general and administrative expenses for the six months ended November 30, 2014 and 2013 totaled $261,845 and $268,069, respectively, resulting in a net loss from continuing operations of $184,491 and $174,421, respectively.

 

Consulting service income for the six months ended November 30, 2014 consisted of CFO, Accounting and Tax Services of $303,060. Consulting service income for the six months ended November 30, 2013 consisted of CFO, Accounting and Tax Services of $314,082 and Management Services of $51,324. The changes in service income are attributable to changes in the client base and the completion of non-recurring projects.  As clients grow or change, certain functional responsibilities are brought in-house and our services are no longer necessary.

 

 

Cost of revenues for the six months ended November 30, 2014 comprised of personnel and overhead costs of $225,706. The personnel and overhead costs were comprised of salaries and compensation expenses of $184,690, and other expenses of $41,016. Cost of revenues for the six months ended November 30, 2013 comprised of personnel and overhead expenses of $271,758. The personnel and overhead expenses were comprised of salaries and compensation expenses of $239,101 and other overhead expenses of $32,657.

 

Selling, general and administrative expenses for the six months ended November 30, 2014 was $261,845 comprised of net compensation expense for corporate management of $131,074, consulting and professional expenses of $51,502, rent expense of $21,573, filing fee of $5,870, bad debts of $8,448, office and IT related expenses of $5,366, travel-related expenses of $9,495, settlement fee of $18,000 and other expenses of $10,517.

 

Selling, general and administrative expenses for the six months ended November 30, 2013 was $268,069, net compensation expense for corporate management of $87,506, consulting and professional expenses of $46,613, rent expense of $30,065, bad debt expense of $60,173, travel-related expenses of $12,947, and other expenses of $30,765.

 

For the six months ended November 30, 2014 as compared to same period ended November 30, 2013, there was a decline in selling, general and administrative expenses of $6,224. Corporate management and professional expenses, as compared to the prior year, increased as management increased the time spent on business development and administration rather than servicing clients. The increase in corporate management and professional fees was offset by a decrease in other operating expenses specially.

 

Discontinued operations

 

In February 2014, our management reached a decision to sell the assets of its Organic Innovations Inc. business. Organic Innovations, Inc. consisted primarily of two e-commerce platforms and websites branded under the “Golden Age Medical” and “Organically Crafted” names. On May 9, 2014, we completed the sale of assets of our Organic Innovations subsidiary to a third party pursuant to the terms of the Asset Purchase Agreement between the parties dated as of May 7, 2014.

 

For the six months November 30, 2014 and 2013 we had expenses related to be discontinued operations of $0 and $31,631, respectively. The expenses of discontinued operations totaling $31,631 were for development expense for the Organic Innovation e-commerce platform to sell “organic” products. It consisted of salaries and compensation of $12,250, consulting and professional fees of $18,000 and other web-development expenses of $1,381.  The Organic Innovation business started development in the quarter ended August 31, 2013.

 

The Organic Innovations, Inc. business operations, assets and liabilities have been reclassified as discontinued operations on the financial statements.

  

Liquidity and Capital Resources

 

As of November 30, 2014, we had cash of $34,906 as compared to cash of $39,982 as of May 31, 2014. The decrease in net cash of $5,076 was the result of net cash used in operating activities totaling $10,076, used in investing activities totaling $ 0 and provided by financing activities totaling $5,000 for the six months ended November 30, 2014.

 

For the six months ended November 30, 2014, net cash used in operating activities was attributable to a net loss of $184,491, non-cash adjustments for depreciation of $2,195 and a net change in operating assets and liabilities of $172,220.

 

 

For the six months ended November 30, 2013, net cash used in operating activities was attributable to a net loss of $206,052, non-cash adjustments for depreciation expense of $3,077, stock compensation expense of $50,086 and a net change from the change in operating assets and liabilities of $17,267.

 

In order for us to execute our business plan we will need to raise at least $500,000 in debt or equity. The funds are needed for building out the management team, sales and marketing and working capital. There can be no assurance that we will be able to raise the funds needed to execute our business plan.

 

If we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations.  We do not anticipate the purchase or sale of any significant equipment. The foregoing represents our best estimate of our cash needs based on current planning and business conditions.  In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or cease operations.

 

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future.

   

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

N/A

 

ITEM 4T. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our President, Chief Financial Officer and Secretary, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, our President, Chief Financial Officer and Secretary concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

Changes in Internal Control Over Financial Reporting. During the most recent quarter ended August 31, 2014, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

 

ITEM 1. LEGAL PROCEEDINGS.

 

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations.

 

 

ITEM 1A. RISK FACTORS.

 

Our Annual Report on Form 10K for the fiscal year ended May 31, 2014 contains a description of the risk factors relating to our operations and to an investment in our common stock.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

In October 2014, the Company closed a private sale transaction with one investor who was subsequently appointed to the Board of Directors, through which the Company issued 250,000 shares of its common stock at a price of $.02 per share. The total proceeds to the Company from the October 2014 private sale was $5,000. The investor is an “accredited investor” as that term is defined in Rule 501 of Regulation D of the Securities Act of 1933. The shares bear a transfer restriction legend. The Company did not use an underwriter or placement agent for the October 2014 private sale and did not pay any commissions or fees in connection with the transaction. The October 2014 private sale involved no general solicitation, and was conducted in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

None

 

ITEM 5. OTHER INFORMATION.

 

On November 11, 2014, the Board of Directors of the Company appointed William R. Hunter and Stephen B. Kass, Esq., CPA, LLM to serve as directors of the Company to fill vacancies on its Board of Directors. On November 11, 2014, Bradley L. Steere II resigned from our board of directors to pursue other business interests. There were no disagreements between Mr. Steere and the Company, or its executives or directors, on any matter relating to the Company’s operations, policies or practices.

 

As a result of the above appointments and resignations, Wesley Ramjeet, William R. Hunter and Stephen B. Kass currently constitute the full board of directors of the Company.

 

ITEM 6. EXHIBITS

 

Exhibit Number		Description of Exhibit
31.1		Certifications required by Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer and Principal Accounting Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: January 12th, 2015	Profit Planners Management, Inc.
	By:	/s/ Wesley Ramjeet
	Wesley Ramjeet Chief Executive Officer, Chief Financial , Chief Accounting Officer, Officer and Director

 

 

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