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EX-32.2 - CERTIFICATION - Profit Planners Management, Inc.f10k2016ex32ii_profitplan.htm
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EX-31.2 - CERTIFICATION - Profit Planners Management, Inc.f10k2016ex31ii_profitplan.htm
EX-31.1 - CERTIFICATION - Profit Planners Management, Inc.f10k2016ex31i_profitplan.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

  

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

 

For the fiscal year ended May 31, 2016

 

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

 

For the transition period from ___________ to ______________.

 

COMMISSION FILE NUMBER: 333-142076

 

PROFIT PLANNERS MANAGEMENT, INC.

(Exact Name of Small Business Issuer in its Charter)

 

Nevada   90-0450030
(State of Incorporation)   (IRS Employer ID No.)

 

1001 Avenues of the Americas 2nd Floor

New York, NY 10018

(Address of principal executive offices)

 

646-289-5358

(Registrant’s telephone number)

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of Each Class   Name of Each Exchange on Which Registered
Common Stock, par value $.001 per share   None

 

Securities Registered Pursuant to Section 12(g) of the 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

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐

 

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 website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the 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.

 

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 Exchange Act). ☐   Yes   ☒   No

 

The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the average bid and ask price of such common equity as of the last business day of the registrant’s most recently completed fiscal quarter, was $170,121.

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class   Outstanding at July 31, 2016
Common Stock, $.001 par value per share   5,430,279 shares

 

 

 

 

 

 

Forward Looking Statements

 

All statements, other than statements of historical fact included in this Annual Report on Form 10-K (herein, "Annual Report") regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Annual Report, the words "could", "believe", "anticipate", "intend", "estimate", "expect", "project", and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this Annual Report. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Annual Report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and elsewhere in this Annual Report. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

 

Unless the context otherwise requires, references in this Annual Report to "registrant", "issuer", "we", "us", "our", "the Company" or "ours" refer to Profit Planners Management, Inc.

 

 

 

 

PART I

 

Item 1. BUSINESS

 

Our Background

 

Profit Planners Management, Inc. was incorporated pursuant to the laws of the State of Nevada on January 29, 2009.

 

Our Business

 

Over the past twelve months our operations have been focused on the following major business areas:

 

  CFO, Accounting and Tax Services;
  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.

 

 1 

 

 

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 Services

 

Our Insurance division, PPMT Group, is a licensed insurance broker. We offer a wide array of insurance and insurance related products such as life insurance and annuities. Our 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.

 

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. According to a study conducted by ESPN, statistically 78% of all National Football League players are bankrupt, or are in financial difficulties within two years of their retirement from professional football. Other athletes in the National Basketball Association or Major League Baseball share the same financial issues. It seems clear that these high earning athletes are not receiving competent advice on how to budget their earnings and expenses to provide for their financial needs over the course of their lives.

 

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. This advice may include drafting a budget for the client and showing how expenses can be cut or earnings increased. It may also include advising the client on the use of debt and mortgages to reduce the outflow of cash for long-term asset acquisitions. 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.

  

 2 

 

 

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.

 

Acquisition and Growth Strategy

 

The Company seeks to strengthen its operations and customer service capabilities by selectively acquiring businesses that expand its market position and strengthen its existing service offerings. The Company intends to expand its base business by acquiring client relationships in what it considers to be the foundation of all its business operations -- accounting. Increased regulatory requirements and operating costs, as well as the high average age in partners, are triggering a consolidation in the middle-market public accounting sector.

 

The typical acquisition structure is a purchase price of 1.0 to 1.5 times the targets trailing revenues, with the entire purchase price paid in the form of an “earn out” over three to ten years. These “earn outs” are tied to ongoing performance, so if revenues decline, the payments decline.

 

Accounting practices traditionally have very low client turn-over. Therefore, growth and maintenance of the base accounting business as part of the Company’s growth model is expected to be very predictable. The ability of the Company to execute its growth strategy will depend upon its ability to negotiate mutually agreeable acquisition terms with its targets and to raise the necessary funds to finance the transactions.

 

The Company believes that by acquiring firms with middle-market client bases, additional services can be developed in areas such as:

 

  Capital Markets - wealth management, corporate and personal financial planning, exit planning, mergers
  Business Advisory - will be expanded beyond accounting and domestic tax to include international tax planning and Compliance
  Regulatory Advisory - Volcker Act, Basel III, and FATCA are all recently-enacted rules and regulations
  Fund Institutional Services - due diligence and valuation services.

 

The Company intends to target a small to mid-sized firm with an established client relationship management (“CRM”) system as its first acquisition target. Upon completion, the Company’s clients would be profiled and entered into the CRM system, which would then be used to manage client relationships and interaction. The CPA is expected to always be the primary relationship with the client.

 

The CRM system would also serve to identify potential cross-selling opportunities, and this data is expected to be key to systematically increasing the revenue per client. In addition to using the CRM as a fundamental growth tool, the Company is expecting to develop a relationship manager role. The relationship manager will act as a cross-selling ombudsman, fostering communication and education across the core business units. The relationship manager or “RM”, is expected to interface only with the CPA to train the CPA to cross-sell other revenue opportunities.

 

 3 

 

 

Upon the completion and integration of its first acquisition, the Company intends to acquire additional accounting practices with a target of acquiring significant additional accounting “base” revenue and to utilize the base revenue acquired to develop a multidisciplinary professional services firm that offers higher margin products and services to the stable client base attributed to accounting firms. In doing so, the Company believes it can increase margins and average revenue per client.

 

The Company’s strategy would then be to cross-sell consulting services to the acquired client bases, resulting in additional organic growth.

 

Costs of Acquisition and Growth Strategy

 

We expect to incur significant cost increases related to our acquisition and growth strategy including the costs for due diligence reviews, auditing and legal work, broker fees and investment banking fees to registered entities engaged to locate target firms and raise financing needed to close transactions and compliance costs. We also expect to incur significant costs related to the integration of any acquired targets into the Company, including the compensation and benefits costs of additional personnel, increased rent or other expenses for added office space, and other general business expenses.

  

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 websites, with the following being the more prominent ones:

 

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

 

We use these websites 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 websites, other sites such as LinkedIn, Facebook and Twitter, and through press releases and articles. We will continue to maintain all of our websites.

 

 4 

 

 

Our marketing costs for the year ended May 31, 2016 related to our continuing business operations were approximately $8,400. 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.

 

Competition

 

The CFO, Accounting and Tax service industry is highly competitive. There are many firms that provide services similar to ours in this market. Among the leaders are Tatum, LLC, B2B CFO and The CFO Connection. In addition, many of the mid-tiered public accounting firms typically provide many of the services that we offer. Among such firms are CBIZ, Inc. and CohnReznick. Many of these competitors are well established firms with dedicated and experienced staff.

 

Our Insurance division competes in an industry that is highly competitive both on the small scale and large scale. There are individual insurance agents that are affiliated with larger insurance firms that can offer a number of options to the customer. There are the larger firms that can cater to both small individual or corporate insurance needs.

 

Our Advisory Consulting Services practice competes in an industry that is highly competitive. Firms that compete in our CFO, Accounting and Tax group, would also compete here. In addition, banks, investment houses, and private equity groups maintain skilled staff in these areas to support these client’s needs.

 

Our Management Services division competes in an industry that is highly competitive. Sports agents, financial services firms, accounting firms and insurance companies all offer competing services and products to high earning entertainment and sports individuals.

 

Many of our competitors have longer operating histories, greater brand recognition, broader service lines and greater financial resources and advertising budgets than we do. Therefore, we anticipate substantial competition from other firms in our industries.

 

Employees

 

As of July 31, 2016, we had 5 employees. Our staff is available to be contracted out to clients who need our CFO, accounting, and other related services. For potential clients with larger projects, we have access to independent professionals who are available to provide services to such clients of the company on a sub-contracting basis. Eventually, we intend to employ sufficient personnel that such sub-contracting relationships will not be necessary. We believe our future success depends in large part upon the continued service of our CEO, Wesley Ramjeet.

 

Item 1A.  RISK FACTORS

 

You should carefully consider each of the risks described below, together with all of the other information contained or incorporated by reference in this Annual Report. If any of the following risks develop into actual events, our business, financial condition or results of operations could be materially adversely affected and the trading prices of our common stock could decline.

 

 5 

 

 

Risks Relating to the Company.

 

Risks Related to Our Business

 

We Have A Limited Operating History That You Can Use To Evaluate Us, And The Likelihood Of Our Success Must Be Considered In Light Of The Problems, Expenses, Difficulties, Complications And Delays Frequently Encountered By A Small Company. There Is No Assurance Our Future Operations Will Result In Profitable Revenues. If We Cannot Continued to Generate Sufficient Revenues To Operate Profitably, We Will need to secure financing.

 

Managing Growth and Expansion.

 

Success in managing this expansion and growth will depend, in part, upon the ability of senior management to manage and hire temporary or permanent personnel cost effectively. Any failure to manage the anticipated growth and expansion could have a material adverse effect on our business.

  

We Face Intense Competition And Our Inability To Successfully Compete With Our Competitors Will Have A Material Adverse Effect On Our Results Of Operation.

 

The industries in which we operate are highly competitive. Many of our competitors have longer operating histories, greater brand recognition, broader service lines and greater financial resources and advertising budgets than we do. Many of our competitors offer similar services or alternatives to our services. There can be no assurance that we will procure a customer base to support the products and services we offer or allow us to seek expansion. There can be no assurance that we will be able to compete effectively in this marketplace.

 

If We Do Not Attract Customers On Cost-Effective Terms, We Will Not Make A Profit, Which Ultimately Will Result In A Cessation Of Operations.

 

Our success depends on our ability to attract customers on cost-effective terms. If we are unsuccessful at attracting a sufficient number of clients, our ability to get repeat customers and our financial condition will be harmed.

 

We Rely On The Services Of Wesley Ramjeet, Our CEO, To Provide Consulting Services To Our Clients And To Define Our Marketing Strategy And The Overall Strategic Direction Of Our Company. The Loss Of Mr. Ramjeet’s Services Would Negatively Affect Our Operations And Harm Our Business.

 

Our future success depends in large part on the continued service of our Chief Executive Officer, Wesley Ramjeet. The consulting services provided by Mr. Ramjeet to our clients currently accounts for the majority of our revenues. Mr. Ramjeet also provides the marketing strategies, services and product development planning and overall strategic direction for the Company. We have an exclusive employment agreement with Mr. Ramjeet for an initial term of three years, under which Mr. Ramjeet will continue to be our CEO and President. This agreement also contains a provision prohibiting Mr. Ramjeet from competing with us. We do not currently have a key-man life insurance policy on Mr. Ramjeet. The loss of Mr. Ramjeet’s services for any reason would have an adverse effect on our business.

  

 6 

 

 

Mr. Ramjeet Has Effective Control of the Company's Affairs

 

As of July 31, 2016, Mr. Ramjeet beneficially owned 3,051,200 shares of common stock of the Company, representing approximately 56.19% of the issued and outstanding shares of common stock and approximately 56.19% of the voting power of the issued and outstanding shares of common stock of the Company. In the election of directors, stockholders are not entitled to cumulate their votes for nominees. Accordingly, as a practical matter, Mr. Ramjeet will be able to elect all of the Company's directors and otherwise direct the affairs of the Company.

 

Indemnification of Officers and Directors

 

The Company's Articles of Incorporation provide for the indemnification of our officers and directors to the fullest extent permitted by the laws of the State of Nevada. It is possible that the indemnification obligations imposed under these provisions could result in a charge against the Company's earnings and thereby affect the availability of funds for other uses by the Company.

 

Risks Relating To Our Common Stock

 

There is not now, and there may not ever be, an active market for our shares of common stock.

 

There can be no assurance that an active market for our common stock will develop. If an active public market for our common stock does not develop, shareholders may not be able to re-sell the shares of our common stock that they own and may lose all of their investment.

 

A significant amount of common stock is currently restricted.

 

Of the common stock presently issued and outstanding, a significant amount is restricted from trading. Should such restriction expire or be removed and the stockholders sell in the public market, the market price can potentially fluctuate and if the common stock is sold below the current market price, decline.

 

Sales of a substantial number of shares of our common stock may cause the price of our common stock to decline.

 

Should an active public market develop and our stockholders sell substantial amounts of our common stock in the public market, shares sold at a price below the current market price at which the common stock is trading will cause that market price to decline. Moreover, the offer or sale of a large number of shares at any price may cause the market price to fall. These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

 

Additional stock offerings may dilute current stockholders.

 

Given our plans and our expectation that we may need additional capital and personnel, we may need to issue additional shares of capital stock or securities convertible or exercisable for shares of capital stock, including preferred stock, options or warrants. The issuance of additional capital stock may dilute the ownership of our current stockholders.

 

 7 

 

 

Our Common Stock will be subject to the "Penny Stock" rules of the SEC.

 

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

 

  that a broker or dealer approve a person's account for transactions in penny stocks; and
  the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

 

  obtain financial information and investment experience objectives of the person; and
  make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

 

  sets forth the basis on which the broker or dealer made the suitability determination; and
  that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

  

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

 

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

  

We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.

 

We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if its stock price appreciates. 

 

 8 

 

 

FINRA Sales Practice Requirements May Limit A Stockholder's Ability To Buy And Sell Our Stock.

 

FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder's ability to resell shares of our common stock.

 

Item 2. PROPERTIES

 

Our executive, administrative and operating offices are located at 1001 Avenues of the Americas 2nd floor, New York, N.Y. 10018. We currently rent our office space on a month-to-month basis and our monthly rent is approximately $6,000 per month. We believe that our current office space will be sufficient for our needs for the foreseeable future.

 

We consolidated our offices in Florida into one office where our monthly rent is approximately $630 per month. The office is rented under a short-term lease.

 

We have no policies with respect to investments in real estate or interests in real estate, real estate mortgages, or securities of or interests in persons primarily engaged in real estate activities.

 

Item 3. LEGAL PROCEEDINGS

 

There are no legal proceedings pending or threatened against us in the United States or elsewhere.

   

 9 

 

 

PART II

 

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

 

Our common stock is quoted on the “OTCBB”, under the symbol “PPMT”.  The following table sets forth the high and low bid prices for our common stock as reported each quarterly period for the prior two fiscal years, as reported by the National Quotation Bureau. The high and low prices reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions (1). These prices have been adjusted to reflect a one for ten reverse stock split on May 15, 2015.

 

Quarter Ended:  High   Low 
Interim period ended July 31, 2016  $0.07   $0.05 
May 31, 2016  $0.10   $0.07 
February 28, 2016  $0.07   $0.07 
November 30, 2015  $0.20   $0.16 
August 31, 2015  $0.37   $0.23 

 

Quarter Ended:  High   Low 
Interim period ended July 31, 2015  $0.16   $0.16 
May 31, 2015  $0.20   $0.16 
February 28, 2015  $0.50   $0.22 
November 30, 2014  $0.20   $0.15 
August 31, 2014  $0.36   $0.25 

 

On July 31, 2016, the National Quotation Bureau, Inc. reported that the closing ask price on our common stock was $0.07 per share.

 

Holders of Our Common Stock

 

As of July 31, 2016, we had sixteen (16) shareholders of record of our common stock.

 

As of July 31, 2016, we had 5,430,279 shares of common stock outstanding.

 

Stock Option Grants

 

As of July 31, 2016 we had not granted any stock options.

 

Description of Our Capital Stock

 

General

 

Our authorized capital stock consists of 50,000,000 shares of common stock, par value $0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per share. There are no provisions in our charter or by-laws that would delay, defer or prevent a change in our control.

 

Common Stock

 

As of July 31, 2016, we had 5,430,279 shares of common stock issued and outstanding.

 

The holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our board of directors and are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs. Our common stock does not provide the right to a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are entitled to one non-cumulative vote per share on all matters on which shareholders may vote.

  

All shares of common stock now outstanding are fully paid for and non-assessable.  We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of our securities.  All material terms of our common stock have been addressed in this section.

 

Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.

 

Preferred Stock

 

As of July 31, 2016, we had not designated any series or class of preferred stock and no shares of preferred stock were issued or outstanding.

 

 10 

 

 

Dividends

 

We have not paid any cash dividends to shareholders.  The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions.  It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

  

Warrants

 

There are no outstanding warrants to purchase our securities.

 

Options,

 

There are no options to purchase our securities outstanding.

 

Section 15(g) of the Securities Exchange Act of 1934

 

Our shares are currently covered by Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rules 15g-1 through 15g-6 promulgated thereunder, which impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors. Rule 15g-2 declares unlawful any broker-dealer transactions in penny stocks unless the broker-dealer has first provided to the customer a standardized disclosure document.  Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer the current quotation prices or similar market information concerning the penny stock in question. Rule 15g-4 prohibits broker-dealers from completing penny stock transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.  Rule 15g-5 requires that a broker dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.

 

Our common stock may remain subject to the foregoing rules for the foreseeable future. The application of the penny stock rules may affect our stockholder’s ability to sell their shares because some broker/dealers may not be willing to make a market in our common stock because of the burdens imposed upon them by the penny stock rules.

 

Item 6. SELECTED FINANCIAL DATA

 

Not applicable. 

 

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Introduction

 

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.

 

 11 

 

 

Operation

 

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

 

Over the past twelve months our operations have been focused on the following major business areas:

 

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

 

Our CFO, Accounting and Tax Services division is currently our main revenue generator with more than 90% of our revenues coming from these services. These services consist of financial statement preparation assistance, tax preparation, accounting and bookkeeping services and other accounting advisory and consulting services. In the future, we expect the growth of the other businesses and their revenues streams to reduce the effect of this business on earnings.

 

Our Insurance Services has not generated any revenues at the present time. The insurance market is very competitive. We have been discussing strategic options and personnel decisions to determine the best markets and products that will differentiate our business. In the coming year we will evaluate these options and determine our approach.

 

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.

 

Our Management Services business caters to the financial management needs of sports and entertainment professionals.  Although presently the operation is small, we intend to grow this portion of our business. Over the past year we have had difficulties in acquiring new clientele and will reassess the value of adding additional resources to determine if we need to redesign our business strategy in this area.

 

Critical Accounting Policies

 

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 and 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.

 

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 May 31, 2016, an allowance for doubtful accounts of $60,705 was required as a result of the Company believing certain receivables for consulting services will no longer be collected either fully or partially. During the fiscal year ended May 31, 2016, we had to write off delinquent receivables as a result of non-payment and have reflected bad debt expense of $27,915 for the year. The Company does not require collateral to support customer receivables.

 

 12 

 

 

Revenue recognition

 

The Company’s revenues from continuing operations 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.

 

RESULTS OF OPERATIONS

 

For the Year Ended May 31, 2016

 

Operations

 

For the year ended May 31, 2016, we had revenues of $1,294,015. Cost of revenue and selling, general and administrative expenses totaled $1,165,318. The net result was a net income of $128,697 for the year ended May 31, 2016.

 

Consulting service income for the year ended May 31, 2016 consisted of CFO, Accounting, Management Consulting and Tax Services. The change in service income is attributable to new clients and increased billing to our existing clients.

  

Cost of revenues for the year ended May 31, 2016 totaled $676,183 and was comprised of salaries and compensation expenses of $320,327 and other overhead expenses of $355,856. These costs are directly attributable to work performed on the client accounts by any employee in the organization and include costs for outside temporary consultants, office needs and other overhead expenses. Our gross margin improved significantly compared to 2015 because our pricing has improved and our staff has been more billable. Some reductions in internal staffing costs are offset by additional costs resulting from the use of outside consultants to meet the needs of the business.

 

Selling, general and administrative expenses for the year ended May 31, 2016 was $489,135 comprised of net compensation expense for corporate management of $238,534, consulting and professional expenses of $50,088, rent expense of $79,685, bad debt expense of $27,915, travel-related expenses of $26,169, computer related expenses of $7,557, office supplies and filing fees of $29,438, corporate communications of $8,630, and other expenses of $21,119. Compensation expenses include the apportioned salaries, benefits and any performance incentive compensation expenses. The Consulting and professional expenses are primarily costs for accountants, lawyers and administrative consultants.

 

 13 

 

 

For the Year Ended May 31, 2015

 

Operations

 

For the year ended May 31, 2015, we had revenues of $812,758. Cost of revenue and selling, general and administrative expenses totaled $1,103,812. The net result was a net loss of $291,054 for the year ended May 31, 2015.

 

Consulting service income for the year ended May 31, 2015 consisted of CFO, Accounting and Tax Services.

  

Cost of revenues for the year ended May 31, 2015 totaled $549,844 and was comprised of salaries and compensation expenses of $348,098 and other overhead expenses of $201,746. These costs are directly attributable to work performed on the client accounts by any employee in the organization and include costs for outside temporary consultants, office needs and other overhead expenses. Costs for the period are comparable to the prior year but the mix is slightly different. Some reductions in internal staffing costs are offset by additional costs resulting from the use of outside consultants to meet the needs of the business.

 

Selling, general and administrative expenses for the year ended May 31, 2015 was $553,968, comprised of net compensation expense for corporate management of $241,604, consulting and professional expenses of $142,356, settlement expense of $18,000, rent expense of $55,417, bad debt expense of $10,684, travel-related expenses of $23,420, computer related expenses of $14,168, office supplies and filing fees of $21,728, corporate communications of $2,597, and other expenses of $23,994. Compensation expenses include the apportioned salaries, benefits and any performance incentive compensation expenses. The Consulting and professional expenses are primarily costs for accountants, lawyers and administrative consultants.

  

Capital Resources and Liquidity

 

Liquidity and Capital Resources

 

As of May 31, 2016, we had cash of $270,178 as compared to cash of $57,906 as of May 31, 2015.  The increase in net cash of $212,272 was primarily the result of net cash provided by operating activities for the year ended May 31, 2016.

 

For the year ended May 31, 2016, net cash provided by operating activities was attributable to a net income of $128,697, non-cash adjustments for depreciation expense of $3,051 and a net increase from the change in operating assets and liabilities of $86,526. Cash flow used in investing activities consisted of $6,002 in purchases of equipment.

 

For the year ended May 31, 2015, net cash provided by operating activities was attributable to a net loss of $291,054, non-cash adjustments for depreciation expense of $4,159 and a net increase from the change in operating assets and liabilities of $299,819. Net cash provided by financing activities for the year ended May 31, 2015 resulted from $5,000 received from the sale of restricted shares of common stock purchased through private placement.

   

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

 14 

 

 

Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The consolidated financial statements of the Company, together with the Reports of Independent Registered Public Accounting Firm thereon of Coulter & Justus, P.C., appear herein. See Index to Financial Statements, appearing on page F-1.

 

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL

 

There were no changes in or disagreements with accountants by the Company during the fiscal year ended May 31, 2016.

 

Item 9A. CONTROLS AND PROCEDURES

 

Management’s Annual Report on Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.

 

Internal control over financial reporting is defined under the Exchange Act as a process designed by, or under the supervision of, our CEO and CFO and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

  Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
  Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
  Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.  Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.

 

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of the Company’s internal control over financial reporting as of May 31, 2016. Based on this evaluation and those criteria, our management, with the participation of our CEO and CFO, concluded that, as of May 31, 2016, such controls and procedures were effective and there is no material weakness in our internal control over financial reporting. A material weakness is a deficiency or a combination of control deficiencies, in internal control over financial reporting that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

 

 15 

 

 

This Annual Report does not include an attestation report of our registered public accounting firm regarding our internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report.

 

Changes in Internal Control over Financial Reporting. There were no changes in internal control over financial reporting during the year.

 

Item 9B.  OTHER INFORMATION

 

None.

 

PART III

 

Item 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Executive Officers and Directors

 

The following table sets forth information regarding our executive officers, certain other officers and directors as of May 31, 2016:

 

Name   Age   Position
Wesley Ramjeet   50   Chief Executive Officer and Director

 

Background of Officers and Directors

 

The following biographies describe the business experience of our executive officers and directors:

 

Wesley Ramjeet - Chief Executive Officer and Director

 

Mr. Ramjeet, 50, has been our Chief Executive Officer and a member of our board of directors since the formation of the company in January 2009. Mr. Ramjeet has been the Managing Partner of Profit Planners, Inc., a private New York consulting company since 2003. Profit Planners, Inc. provides professional consulting services to publicly traded and privately held companies. Mr. Ramjeet is also the Chairman of Micro-Cap Review, Inc., a financial publisher that covers the micro-cap market place. Prior to founding Profit Planners, Inc., Mr. Ramjeet was the interim Chief Financial Officer of Youth Stream Media, Inc., a NASDAQ-traded public company. Mr. Ramjeet began his professional career in the Entrepreneurial Services Group at Ernst and Young, LLP. During his nine years at Ernst and Young, Mr. Ramjeet served both private and publicly-traded companies in various industries. Mr. Ramjeet received his Bachelor’s degree in Accounting from St. John's University and is a CPA.

  

Other than as described above, none of our directors, executive officers, promoters or control persons has, within the last five years: (i) had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (ii) been convicted in a criminal proceeding or is currently subject to a pending criminal proceeding (excluding traffic violations or similar misdemeanors); (iii) been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (iv) been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission (the "SEC") or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. There are no family relationships among any of our directors and executive officers.

 

 16 

 

 

Election of Directors and Officers

 

Holders of our common stock are entitled to one (1) vote for each share held on all matters submitted to a vote of the stockholders, including the election of directors. Cumulative voting with respect to the election of Directors is not permitted by our Articles of Incorporation. Our Board of Directors is elected at the annual meeting of the stockholders or at a special meeting called for that purpose. Each director holds office until the next annual meeting of the stockholders or until the director’s successor is elected and qualified. If a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors, the vacancy may be filled by a vote of the Board of Directors, by the stockholders at the next annual stockholders’ meeting or by the stockholders at a special meeting of stockholders called for that purpose.

 

Director Compensation

 

Our directors currently do not receive any compensation for their roles as members of our Board of Directors and no director receives a salary as a director.

  

Item 11. EXECUTIVE COMPENSATION

 

Summary Compensation Table; Compensation of Executive Officers

 

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers by us during the period ended May 31, 2016 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO):

  

Summary Compensation Table

 

Name and Principal Position  Year   Salary
($)
   Bonus
($)
   Stock Awards
($)
   Option Awards
($)
   Non- Equity Incentive  Plan Comp
($)
   Non- Qualified Deferred Comp Earnings
($)
   All Other
Comp
($)
   Totals
($)
 
Wesley Ramjeet,   2012    87,666    0    0    0    0    0    0    87,666 
CEO (1) (2) (4) (5)   2013    185,167    0    0    0    0    0    30,000    215,167 
    2014    229,167    0    0    0    0    0    36,000    265,167 
    2015    250,000    0    0    0    0    0    36,000    286,000 
    2016    250,000    0    0    0    0    0    36,000    286,000 

 

(1) On November 21, 2011, we entered into a three year Employment Agreement with Mr. Wesley Ramjeet pursuant to which Mr. Ramjeet will receive a base salary of $150,000 in the first year, $200,000 in the second year and $250,000 in the third year. Mr. Ramjeet will also qualify to receive bonus payments each year based on the revenue and operations of the Company and expense reimbursement for automobile and office cost of $3,000 per month. Mr. Ramjeet serves as our Chief Executive Officer and is a member of our board of directors.

 

(2) On January 24, 2011, under an agreement dated January 24, 2011 we issued Mr. Wesley Ramjeet 2,000,000 shares of the company’s common stock at $.03 per share for a total value of $60,000.

 

(3) For the year ended May 31, 2014, Mr. Ramjeet was paid $96,000 and the remaining balance of $169,167 was accrued.

 

(4) For the year ended May 31, 2015, Mr. Ramjeet was paid $75,832 and the remaining balance of $200,376 was accrued.

 

(5) For the year ended May 31, 2016, Mr. Ramjeet was paid $160,696 and the remaining balance of $125,304 was accrued.

 

 17 

 

 

Option Grants Table 

 

There were no individual grants of stock options to purchase our common stock made to the executive officers named in the Summary Compensation Table through July 31, 2016.

 

Aggregated Option Exercises and Fiscal Year-End Option Value Table

 

There were no stock options outstanding or exercised during the year ended May 31, 2016 by the executive officers named in the Summary Compensation Table.

 

Long-Term Incentive Plan (“LTIP”) Awards Table  

 

There were no awards made to a named executive officer in the last completed fiscal year under any LTIP.

 

Compensation of Directors

 

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.

 

Employment Contracts

 

On November 21, 2011, we entered into an employment agreement with Wesley Ramjeet, our CEO and President (the “Ramjeet Employment Agreement”), which has an initial term of three (3) years. Under the terms of the Ramjeet Employment Agreement, Mr. Ramjeet will continue to serve as our President and Chief Executive Officer. Mr. Ramjeet is also a member of our board of directors.  Mr. Ramjeet will receive a base salary of $150,000 per year in the first year of the agreement, $200,000 per year in the second year of the agreement and $250,000 per year in the third year of the agreement. Mr. Ramjeet will be entitled to certain bonus payments based on the revenue of the company and capital raised by the company and expense reimbursement for automobile and office cost of $3,000 per month.

 

 18 

 

 

The Consulting Agreement previously in effect between the Company and Mr. Ramjeet was replaced by the Ramjeet Employment Agreement and is no longer in effect.

 

Indemnification

 

Under our Articles of Incorporation and Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada. Regarding indemnification for liabilities arising under the Securities Act, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

 

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth, as of July 31, 2016, information regarding the beneficial ownership of our common stock: (i) by each of our directors and executive officers; (ii) by all directors and executive officers as a group; or (iii) by all persons known to us to own 5% or more of our outstanding shares of common stock. The mailing address for each of the persons indicated is our corporate headquarters.

 

Beneficial ownership is determined under the rules of the SEC. In general, these rules attribute beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities and include, among other things, securities that an individual has the right to acquire within sixty (60) days. Unless otherwise indicated, the stockholders identified in the following table have sole voting and investment power with respect to all shares shown as beneficially owned by them.

 

Name  Number of
Shares
   Percent of
Class
 
Wesley Ramjeet   3,051,200(2)   56.19%
All directors and executive officers   3,051,200    56.19%

 

(1) As used in this table, a beneficial owner of a security includes any person who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise has or shares (a) the power to vote, or direct the voting of, such security or (b) investment power which includes the power to dispose, or to direct the disposition of, such security. In addition, a person is deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security within sixty (60) days.
(2) Mr. Ramjeet personally owns 3,051,200 shares of our common stock.

 

 19 

 

 

The percentages in the above table are computed based upon a total of 5,430,279 shares of our common stock being outstanding on July 31, 2016.

 

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

On January 24, 2014, we entered into an agreement to provide CFO and accounting services to Tajuni Media, Inc., a private Delaware corporation. Under the terms of this agreement, we provide general CFO and accounting services for standard hourly fees. The term of this agreement is for one year and can be renewed.

  

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Fees paid to the Company’s current principal accountant, Coulter & Justus, P.C., were as follows:

 

   Year ended   Year Ended 
   2016   2015 
           
Audit fees (1)  $39,420   $30,110 

 

(1) Audit fees consist of amounts billed for professional services rendered for the audits of our financial statements, reviews of our interim financial statements included in quarterly reports, services performed in connection with filings with the Securities & Exchange Commission and related comfort letters and other services that are normally provided by Coulter & Justus, P.C., in connection with statutory and regulatory filings or engagements.

 

The Company has not designated a formal audit committee. However, as defined in Sarbanes-Oxley Act of 2002, the entire Board of Directors (Board), in the absence of a formally appointed committee, is, by definition, the Company’s audit committee.

 

In discharging its oversight responsibility as to the audit process, commencing with the engagement of Coulter & Justus, P.C., the Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors’ independence as required by applicable accounting standards.  The Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors’ independence.

 

The Board discussed and reviewed with the independent auditors all matters required to be discussed by auditing standards generally accepted in the United States of America, including those described in the appropriate Statement(s) on Auditing Standards.

 

The Board reviewed the audited financial statements of the Company as of and for the years ended May 31, 2016 and May 31, 2015 with management and the independent auditors.  Management has the sole ultimate responsibility for the preparation of the Company’s financial statements and the independent auditors have the responsibility for their examination of those statements.

 

Based on the above-mentioned review and discussions with the independent auditors and management, the Board of Directors approved the Company’s audited financial statements and recommended that they be included in its Annual Report on Form 10-K for the year ended May 31, 2016 for filing with the U. S. Securities and Exchange Commission.

 

The Company’s principal accountant did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees. 

 

 20 

 

 

PART IV

 

Item 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

 

(a) Consolidated Financial Statements

 

Profit Planners Management, Inc.

 

FORM 10-K

YEAR ENDED MAY 31, 2016

 

TABLE OF CONTENTS

 

    Page

   
Consolidated Financial Statements   F-1
Report of Independent Registered Public Accounting Firm   F-2
Consolidated Balance Sheets as of May 31, 2016 and May 31, 2015   F-3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended May 31, 2016 and 2015   F-4
Consolidated Statements of Stockholders’ Deficit for the Years ended May 31, 2016 and 2015   F-5
Consolidated Statements of Cash Flows for the Years ended May 31, 2016 and 2015   F-6
Notes to Consolidated Financial Statements   F-8

 

 F-1 

 

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders
Profit Planners Management, Inc.

We have audited the accompanying consolidated balance sheets of Profit Planners Management, Inc. and subsidiaries (the Company) as of May 31, 2016 and 2015, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ deficit and cash flows for each of the years in the two-year period ended May 31, 2016. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits 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 the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Profit Planners Management, Inc. and subsidiaries as of May 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended May 31, 2016 in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Coulter & Justus, P.C.

 

Coulter & Justus, P.C.


Knoxville, Tennessee
August 24, 2016

 

 F-2 

 

 

 

Profit Planners Management, Inc.

Consolidated Balance Sheets

 

   May 31,
2016
   May 31,
2015
 
Assets        
Current assets:        
Cash  $270,178   $57,906 
Accounts receivable (net of allowance of $60,705 and $34,079, respectively)   103,122    99,497 
Other current assets   6,195    6,991 
Total current assets   379,495    164,394 
           
Property and equipment:          
Property and equipment   19,174    13,172 
Less: accumulated depreciation   (14,049)   (10,998)
Net property and equipment   5,125    2,174 
           
Total Assets  $384,620   $166,568 
           
Liabilities and Stockholders' Deficit          
Current liabilities:          
Accounts payable and accrued expenses  $224,391   $161,290 
Accounts payable and accrued expenses - related parties   -    74,712 
Accrued expenses - employee compensation   25,000    25,000 
Accrued expenses - officer's compensation   592,210    466,907 
Deferred revenue   -    2,850 
Total current liabilities   841,601    730,759 
           
Accrued expenses - employee compensation, less current portion   79,513    101,000 
           
Total Liabilities   921,114    831,759 
           
           
Commitments and contingencies          
           
Stockholders' Deficit          
Preferred stock - $.001 par value; 50,000,000 shares authorized; none issued and outstanding   -    - 
Common stock - $.001 par value; 50,000,000 shares authorized; 5,430,279 issued and outstanding   5,430    5,430 
Additional paid-in capital   301,766    301,766 
Accumulated deficit   (843,690)   (972,387)
Net Stockholders' Deficit   (536,494)   (665,191)
Total Liabilities And Stockholders' Deficit  $384,620   $166,568 

 

See accompanying notes to the consolidated financial statements

 

 F-3 

 

  

Profit Planners Management, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

   Year Ended 
   May 31,
2016
   May 31,
2015
 
         
Revenues - consulting and management services fees  $1,294,015   $812,758 
           
Cost of revenues - personnel and overhead costs   676,183    549,844 
           
Gross Profit   617,832    262,914 
           
Selling, general and administrative expenses:          
Corporate management   238,534    241,604 
Consulting and professional expenses   50,088    142,356 
Other operating expenses   200,513    170,008 
Total selling, general and administrative expenses   489,135    553,968 
           
Net income (loss) and comprehensive income (loss)  $128,697   $(291,054)
           
Net income (loss) per weighted-average shares common stock - basic and diluted  $0.02   $(0.05)
           
Weighted-average number of shares of common stock issued and outstanding - basic and diluted   5,430,279    5,430,279 

 

See accompanying notes to the consolidated financial statements

 

 F-4 

 

 

Profit Planners Management, Inc.

Consolidated Statements of Stockholders' Deficit

 

   Common Shares       Additional         
   Issued and   Common   Paid-in   Accumulated     
   Outstanding   Stock   Capital   Deficit   Total 
Balance June 1, 2014   5,405,279   $5,405   $296,791   $(681,333)  $(379,137)
Stock issued to private placement investor   25,000    25    4,975         5,000 
Net loss for the year ended May 31, 2015                  (291,054)   (291,054)
Balance May 31, 2015   5,430,279   $5,430   $301,766   $(972,387)  $(665,191)
Net loss for the year ended May 31, 2016                  128,697    128,697 
Balance May 31, 2016   5,430,279   $5,430   $301,766   $(843,690)  $(536,494)

 

See accompanying notes to the consolidated financial statements

 

 F-5 

 

 

Profit Planners Management, Inc.

Consolidated Statements of Cash Flows

 

   Year Ended 
   05/31/16   05/31/15 
         
Cash Flows Provided by Operating Activities        
Net Income (loss)  $128,697   $(291,054)
Adjustments to reconcile net income (loss) to cash provided by operating activities:          
Depreciation   3,051    4,159 
Provision for bad debt   27,915    10,684 
Changes in operating assets and liabilities:          
Accounts receivable   (31,540)   (10,241)
Other current assets   796    32,599 
Accounts payable and accrued expenses   63,101    114,933 
Accounts payable and accrued expenses - related party   (74,712)   8,012 
Accrued expenses - employee compensation   (21,487)   (4,000)
Accrued expenses payable - officer's compensation   125,303    164,982 
Deferred revenue   (2,850)   (17,150)
Net Cash Provided by Operating Activities   218,274    12,924 
           
Cash Flows Used In Investing Activities          
Purchases of property and equipment   (6,002)   - 
           
Cash Flows Provided by Financing Activities          
Proceeds from the issuance of common stock        5,000 
           
Net increase in cash   212,272    17,924 
Cash, beginning of year   57,906    39,982 
Cash, end of year  $270,178   $57,906 

 

Noncash Transaction

 

During April 2015, The Company's CEO assumed a previously recorded $72,000 note receivable and offset the amount against the Company accrued compensation to him.

See accompanying notes to the consolidated financial statements

 

 F-6 

 

 

Profit Planners Management, Inc.

Consolidated Statements of Cash Flows

 

   Year Ended 
   May 31,
2016
   May 31,
2015
 
         
Net cash provided by (used in) operating activities  $218,274   $12,924 
           
Net cash used in investing activities   (6,002)     
           
Net cash provided by financing activities   -    5,000 
           
Net change in cash   212,272    17,924 
Cash, beginning of period   57,906    39,982 
Cash, end of period  $270,178   $57,906 

 

See accompanying notes to condensed consolidated financial statements

  

 F-7 

 

 

Profit Planners Management, Inc.

Notes to Consolidated Financial Statements

 

NOTE 1 - ORGANIZATION

 

Profit Planners Management, Inc. (the “Company”) was incorporated on January 29, 2009 under the laws of the State of Nevada.  The Company derives revenue from management, tax, financial and accounting advisory services mainly through consulting agreements in New York and Florida.

  

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Profit Management, Inc., PPMT Group, Inc., formally Enertel Plus, Inc. and PPMT Strategic Group, Inc. All inter-company balances and transactions have been eliminated in consolidation.

 

Property and equipment

 

Property and equipment consists of computer equipment, which is stated at cost and depreciated using the straight-line method based on an estimated useful life of three years.  Depreciation expense from continuing operations totaled $3,051 and $4,159 for the years ended May 31, 2016, and May 31, 2015, respectively.

 

Expenditures for maintenance and repairs are charged to expense as incurred.  When an asset is sold or otherwise disposed of, the cost and associated accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized in the statement of operations.

 

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  An impairment loss is recognized if the carrying amount of the asset exceeds its fair value.

 

Accounts receivable

 

Accounts receivable represent trade obligations from customers that are subject to normal trade collection terms, without discounts. 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. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and credit to accounts receivable. Actual amounts could vary from the recorded estimates. The Company recorded an allowance for doubtful accounts of $60,705 and $34,079, as of May 31, 2016 and May 31, 2015, respectively.  The Company does not require collateral to support customer receivables.

 

Changes in estimates for the allowance for doubtful accounts are made in the period in which such circumstances become known.

 

 F-8 

 

 

Revenue recognition

 

The Company’s revenues are derived from management, financial and accounting advisory services.  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. The Company’s three largest customers accounted for 22%, 17% and 15% of revenue for the year ended May 31, 2016 and 28%, 12% and 11% of revenue for the year ended May 31, 2015. 

 

Deferred Revenue

 

Deferred revenue represents revenues collected but not earned. This is primarily composed of revenue for service contracts where payments are made in advance of services being rendered.

 

Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Income taxes

 

The amount provided for income taxes is based upon the amounts of current and deferred taxes payable or refundable at the date of the financial statements as a result of all events recognized in the financial statements as measured by the provisions of enacted tax laws.

 

The Company evaluates any uncertain tax positions and a loss would be recognized based on management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The amount that would be recognized is subject to estimate and management’s assessment of relevant risks, facts and circumstances for each uncertain tax position. To the extent the Company’s assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The Company reports any tax-related interest and penalties as a component of income tax expense.  The Company is subject to federal and state income taxes in which the Company operates. Tax years subject to examination by federal and state jurisdictions include 2012 and after.

 

Financial Instruments

 

The Company’s cash, accounts receivable, accounts payable and accrued expenses are considered financial instruments. The carrying amount of these assets and liabilities approximate their fair value due to their short term nature.

 

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. There were no potentially dilutive shares outstanding as of May 31, 2016 and 2015.

 

 F-9 

 

 

Recently Issued Accounting Pronouncements

 

In May 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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, 2017, including interim periods within that reporting period. Early adoption is permitted only as of 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. 

 

In November 2015, the FASB issued ASU 2015-17 : Balance Sheet Classification of Deferred Taxes : ASU 2015-2017, requires all deferred tax assets and liabilities, and related valuation allowance, to be classified as noncurrent on the Company’s consolidated balance sheet. ASU 2015-17 is effective for public business in fiscal years beginning after December 15, 2016, including interim periods within that reporting period. The Company elected to early adopt the new standard for the current reporting period, which is permitted; however, as the Company’s net deferred tax assets are fully reserved with a valuation allowance, there was no impact on the Company’s consolidated balance sheet as of May 31, 2016 or 2015.

 

In February 2016, the FASB issued ASU 2016-02: Leases (Topic 842). ASU 2016-02 supersedes FASB ASC Topic 840, Leases, and makes confirming amendments to GAAP. ASU 2016-02 requires, among other changes to the lease accounting guidance, lessees to recognize most leases on balance sheet via a right of use asset and lease liability, and additional qualitative and quantitative disclosures. ASU 2016-02 is effective for public businesses in fiscal years beginning after December 15, 2018, including interim period within that reporting period. The Company is currently evaluating the effect this new standard will have on its consolidated financial statements.

 

The Company does not expect the adoption of any other recently issued accounting standards to have a material impact on its consolidated results of operations, financials position or cash flow. 

 

NOTE 3 - RELATED PARTY TRANSACTIONS

 

The Company had accrued officer’s compensation expense payable to the CEO, who has a controlling ownership interest in the Company. The compensation obligations owed to the CEO totaled $592,210 and $466,907 as of May 31, 2016 and 2015, respectively. In April, 2015 the Company’s CEO assumed the $72,000 note plus accrued interest related to the sale of Organic Innovations. The compensation obligation to the CEO was reduced by $77,745.

  

 F-10 

 

 

NOTE 4 - INCOME TAXES

 

For tax purposes as of May 31, 2016, the Company has United States federal and state (New York and Florida) net operating loss (NOL) carryovers which are available to offset future taxable income These NOL carryovers expire follows:

 

    Federal   State 
Fiscal Year
Generated
  

Fiscal

Year of Expiration

   Amount  

Fiscal

Year of Expiration

   Amount 
                  
 2011          $-    2031     $62,389 
 2012           -    2032      50,280 
 2014      2034      225,808    2034      89,370 
 2015      2035      125,944    2035      127,018 
          $351,752        $329,057 

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

 

Components of the Company’s deferred tax asset are as follows as of May 31:

 

   2016   2015 
Deferred tax asset - net operating loss carryovers  $72,506   $117,589 
Deferred tax asset – allowance for doubtful accounts   12,748    7,157 
Deferred tax asset - accrued expenses   124,364    141,865 
Valuation allowance   (209,618)   (266,611)
Net deferred tax asset  $-   $- 

 

The Company periodically evaluates whether it is more likely than not that it will generate sufficient taxable income to realize the deferred income tax asset. The ultimate realization of this asset is dependent upon the generation of future taxable income sufficient to offset the related deductions. At the present time, management cannot presently determine when the Company will be able to generate sufficient taxable income to realize the deferred tax asset; accordingly, a valuation allowance has been established to offset the assets. The net change in valuation allowance was a decrease of $56,993 in 2016 and an increase of $59,524 in 2015.

 

The reconciliation of income tax benefit attributable to continuing operations computed at the U.S. federal statutory tax rates to the income tax benefit recorded is as follows:

 

   Year Ended May 31, 
   2016   2015 
Income tax at U.S. statutory rate of 15%  $19,305   $(43,658)
State income taxes, net of federal benefit   7,722    (15,866)
Change in estimate   29,966    - 
(Decrease) Increase in valuation allowance   (56,993)   59,524 
Income tax benefit  $-   $- 

 

NOTE 5 - LEASES

 

In March 2015 the lease agreement for office space in Manhattan, NY was made on a month-to-month basis with a monthly rent of $6,000. The Company has an office in Miami, Florida under a short-term lease with monthly rent of $630. Rent expense for the Company totaled $79,685 and $55,417, for the years ended May 31, 2016 and 2015, respectively.

 

 F-11 

 

 

NOTE 6 – EQUITY

 

On April 24, 2015, the Company’s Board of Directors approved a One (1) for Ten (10) reverse stock split of the Registrant’s authorized and issued and outstanding par value $.001 per share common stock (the “Reverse Stock Split”). Under the terms of the Reverse Stock Split, (i) each Ten (10) shares of common stock held by the Registrant’s shareholders shall be reclassified and converted to One (1) common share, (ii) the number of shares of common stock authorized by the Registrant’s Articles of Incorporation shall be reduced from 500,000,000 shares to 50,000,000 shares. All periods presented in the accompanying consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split.

  

During October 2014, the Company entered in an agreement with an accredited investor whereby the Company issued 25,000 shares of common stock at a price of $0.20 per share for total proceeds of $5,000.

 

NOTE 7- 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 employee and management settled with the employee for a $130,000 bonus for past services. $25,487 has been paid out related to the bonus as of May 31, 2016.

 

 F-12 

 

 

(b)  Exhibits

 

Ex. No.   Document Description
3.1#   Articles of Incorporation of Profit Planners Management, Inc.  Incorporated by reference to Exhibit 3.1 to Amendment #1 to the registrant’s Registration Statement on Form S-1 filed on September 8, 2009.
3.2#   Bylaws of Profit Planners Management, Inc.  Incorporated by reference to Exhibit 3.2 to Amendment #1 to the registrant’s Registration Statement on Form S-1 filed on September 8, 2009.
10.1#@   Employment Agreement between Profit Planners Management, Inc. and Mr. Wesley Ramjeet dated November 21, 2011.  Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the registrant on November 22, 2012.
10.2#   Asset Purchase Agreement.  Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the registrant on May 12, 2014
10.3#   Promissory Note.  Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the registrant on May 12, 2014
14.1 #   Code of Ethics. Incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K filed by the registrant on August 29, 2011.
31.1*    Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 
31.2*   Certificate of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*   Certificate of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*   Certificate of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1#   Press Release.  Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the registrant on May 12, 2014
101.INS*    XBRL Instance Document.
101.SCH*    XBRL Taxonomy Extension Schema Document.
101.CAL*    XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*    XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*    XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*    XBRL Taxonomy Extension Presentation Linkbase Document.

 

# Incorporated by reference.
@ Management contract or compensatory plan.
* Filed herewith.

 

 21 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf on August 24, 2016 by the undersigned, thereunto authorized. 

 

  PROFIT PLANNERS MANAGEMENT, INC.
     
  By: /s/ Wesley Ramjeet
    Wesley Ramjeet, Chief Executive Officer and Director
     
  By: /s/ Wesley Ramjeet
    Wesley Ramjeet, principal financial officer and principal accounting officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities on the date(s) indicated.

 

SIGNATURE   DATE   TITLE
         

/s/ Wesley Ramjeet

 

August 24, 2016

 

Chief Executive Officer and Director

Wesley Ramjeet        

 

 

 

22