UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year ended May 31, 2013 |
| o | 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)2013
| Nevada | 90-0450030 | |
| (State of Incorporation) | (IRS Employer ID No.) |
350 Madison Avenue, 8th Floor
New York, NY 10017
(Address of principal executive offices)
646-837-0351
(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.
o Yes | x 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.
o Yes | x No |
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.
x Yes | o 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 proceeding 12 months (or for such shorter period that the registrant was required to submit and post such files).
o Yes | x 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.
o Yes | x 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 | o | Accelerated filer | o |
| Non-accelerated filer | o | Smaller Reporting Company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes | x 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 $3,055,283.20.
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 August 29, 2013 | |
| Common Stock, $.001 par value per share | 51,102,788 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.
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
We are an early stage company with a very limited operating history. Over the past twelve months our operations have expanded. Our current operations are divided into four different revenue lines:
| ● | CFO, Accounting and Tax Services; | |
| ● | Insurance and Healthcare Insurance Services; | |
| ● | Organic Innovations, Inc. | |
| ● | 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. In the future, we expect this percentage to go down as our other business divisions gain traction in the market place.
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.
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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.
Insurance and Healthcare Insurance Services
Our Insurance and Healthcare Insurance division www.twinpeaksplus.com 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 engage us for other consulting services.
We receive commission from the insurance carrier based on the premium of the product being purchased.
Organic Innovations, Inc.
We are currently incubating e-commerce concepts relating to organic, healthcare and holistic lifestyles. We believe that current trends in these sectors have created niche opportunities for us to exploit. Our first concept we expect to launch in September 2013 is www.organicallycrafted.com.
Management Services
Our Management Services division provides budgeting and asset allocation and control advise to professional athletes 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. 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.
Currently we are working with one active NFL player. 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.
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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 efforts are targeted to 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 also intend to explore potential acquisitions of small accounting, or other consulting firms, to acquire their customer lists in order to expand our client base.
Our target will be on companies that have sales of less than $100 million and are based in North America. Our industry focus is professional services and products. Although we focus on these industries we will look at opportunities in other industries if it makes economic sense.
We currently own and operate the following web-sites.
| ● | www.profitplannersmgt.com | |
| ● | www.organicinnovations.com | |
| ● | www.organicallycrafted.com | |
| ● | www.twinpeaksplus.com |
We use these web-sites as part of our marketing strategy.
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 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 J H Cohn, Inc.
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 individuals and athletes.
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 August 29, 2013, we had 8 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 plan 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.
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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.
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 Developing Company. There Is No Assurance Our Future Operations Will Result In Profitable Revenues. If We Cannot Generate Sufficient Revenues To Operate Profitably, We Will Cease Operations.
We were incorporated in Nevada in January 2009. We have no significant financial resources and only a small amount of revenues to date. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support and grow our anticipated activities.
Our ability to achieve and maintain profitability and positive cash flow is dependent upon:
| ● | our ability to identify and pursue mediums through which we will be able to market our products and services; | |
| ● | our ability to attract and retain customers; | |
| ● | our ability to generate revenues through sales of products and services; and | |
| ● | our ability to manage growth by managing administrative overhead. |
Based upon current plans, we expect to incur operating losses in future periods because we will be incurring expenses and generating limited revenues. We cannot guarantee that we will be successful in generating revenues in the future. Our failure to generate increased revenues in a timely manner would have a material adverse effect on our business, operating results and financial condition.
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We Will Require Financing To Achieve Our Current Business Strategy And Our Inability To Obtain Such Financing Could Prohibit Us From Executing Our Business Plan And Cause Us To Slow Down Our Expansion or Cease Our Operations.
We will seek to raise a minimum of $500,000 over the next twelve months, through either the private issuance of debt or the sale of equity, to finance the growth of our business and to execute our marketing plan. Such financing may not be available as needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. If we are unable to obtain this financing on reasonable terms, we would be unable to hire the additional employees needed to grow our business and we would be forced to delay or scale back our plans for expansion. Over an extended period, our failure to raise financing to grow our business could force us to cease operations.
Managing Growth and Expansion.
We are currently seeking to initiate a period of growth through our recent marketing and sales efforts. If such growth does occur, the resulting strain on our managerial, operational, financial and other resources could be significant. Success in managing this expansion and growth will depend, in part, upon the ability of senior management to manage 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.
If We Do Not Make A Profit, We May Have To Suspend Or Cease Operations.
Because we are small and do not have much capital, we will not be able to finance our operations for an extended period if we do not make a profit. Unless we are able to raise additional financing, we will be limiting our marketing activities over the next twelve months. As a result, we may not be able to attract enough customers for our services and products to operate profitably. If we cannot operate profitably, we may have to suspend or cease our operations.
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 entered into 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.
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There Is Substantial Uncertainty That We Will Be Able to Continue Operations.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such, we may have to cease operations within the next twelve months.
Mr. Ramjeet Has Effective Control of the Company's Affairs
As of August 29, 2013, Mr. Ramjeet beneficially owned 30,431,000 shares of common stock of the Company, representing approximately 59.55% of the issued and outstanding shares of common stock and approximately 59.55% 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.
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.
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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.
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.
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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 350 Madison Avenue, New York, N.Y. 10017. We currently rent our office space on a month-to-month basis and our monthly rent is approximately $2,600 per month. We believe that our current office space will be sufficient for our needs for the foreseeable future.
We recently opened 2 offices in Plantation and Miami, Florida. Our monthly rent is approximately $990 and $630 per month and the offices are 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.
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).
Quarter Ended: | High | Low | ||||||
| Interim period ended August 29, 2013 | $ | 0.30 | $ | 0.04 | ||||
| May 31, 2013 | $ | 0.20 | $ | 0.20 | ||||
| February 29, 2013 | $ | 0.20 | $ | 0.10 | ||||
| November 30, 2012 | $ | 0.35 | $ | 0.10 | ||||
| August 31, 2012 | $ | 0.30 | $ | 0.10 | ||||
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Quarter Ended: | High | Low | ||||||
| May 31, 2012 | $ | 0.32 | $ | 0.30 | ||||
| February 28, 2012 | $ | 0.35 | $ | 0.20 | ||||
| November 30, 2011 | $ | 0.35 | $ | 0.35 | ||||
| August 31, 2011 | $ | 0.35 | $ | 0.20 | ||||
On August 29, 2013, the National Quotation Bureau, Inc. reported that the closing ask price on our common stock was $0.09 per share.
Holders of Our Common Stock
As of August 29, 2013, we had fourteen (14) shareholders of record of our common stock.
In May 2011 the Company entered into a Stock Purchase Agreement with Orchid Island Capital Partners LP (“Orchid”) whereby Orchid agreed to purchase from the Company 1,111,112 restricted shares of common stock for $100,000. As of August 29, 2013, the company has received $71,666 of the $100,000.
As of August 29, 2013, the shareholders list from our transfer agent shows that there were 51,102,788 shares of common stock outstanding. Of those shares, 35,231,000 shares, or 68.94% percent of our outstanding common stock, were owned by our officers and directors.
Stock Option Grants
As of August 29, 2013, we had not granted any stock options.
Description of Our Capital Stock
General
Our authorized capital stock consists of 500,000,000 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 August 29, 2013, we had 51,102,788 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.
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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 August 29, 2013, we had not designated any series or class of preferred stock and no shares of preferred stock were issued or outstanding.
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.
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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.
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 expanded into several business areas. Our current operations are divided into the following revenues:
| ● | CFO, Accounting and Tax Services; | |
| ● | Insurance and Healthcare Insurance Services; | |
| ● | Organic Innovations, Inc. | |
| ● | 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. In the future, we expect this percentage to go down as our other business divisions gain traction in the market place.
Critical Accounting Policies
Going concern
The accompanying financial statements have been prepared under a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has incurred operating losses from inception through the period ended May 31, 2013. In addition, at May 31, 2013 the Company has an accumulated deficit of $266,005. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
During 2013 the Company intends to continue to raise financing for the purpose of funding operating expenses.
However, there can be no assurance that the raising of future equity will be successful and 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.
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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, 2013, no allowance for doubtful accounts was required because we believe that all receivables will subsequently be collected. 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.
Results of Operations
Year Ended May 31, 2013
For the year ended May 31, 2013, the Company has significantly increased its revenue to $843,172. Expenses for the year ended May 31, 2013 totaled $945,584 resulting in a net loss of $102,412. Our revenues increased primarily because we added more customers and increased billings to existing customers.
Cost of revenue for the year ended May 31, 2013 is $552,348.
Operating expenses for the year ended May 31, 2013 of $393,236 are comprised of officer’s compensation of $105,129, consulting and professional fees of $67,657, and other expenses of $220,450.
Year Ended May 31, 2012
For the year ended May 31, 2012, the Company has significantly increased its revenue to $510,570 of which $5,660 was derived from related-party service income. Expenses for the year ended May 31, 2012 totaled $563,485 resulting in a net loss of $52,915. Our revenues increased primarily because we added more customers and increased billings to existing customers.
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Cost of revenue for the year ended May 31, 2012 is $367,577, of which $74,036 was comprised of related party consulting fees.
Operating expenses for the year ended May 31, 2012 of $195,908 are comprised of officer’s compensation of $58,544, consulting and professional fees of $56,218, rent expense of $34,650, and other expenses of $46,496.
Capital Resources and Liquidity
As of May 31, 2013, the Company had cash of $127,984 as compared to cash of $80,537 as of May 31, 2012. Net cash provided by operating activities totaled $51,819 for the year ended May 31, 2013. Net cash provided by operating activities totaled $13,454 for the year ended May 31, 2012. Net cash used in investing activities totaled $9,372 for the purchase of equipment for the year ended May 31, 2013.
Net cash provided by financing activities resulted from $5,000 received under a stock subscription agreement for common stock purchased through private placement.
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. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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, 2013.
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.
13
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:
| o | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
| o | 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 |
| o | 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, 2013. Based on this evaluation and those criteria, our management, with the participation of our CEO and CFO, concluded that, as of May 31, 2013, such controls and procedures were not effective and there is a 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.
During 2013, certain elements of the internal control system that may prevent the possibility of a misstatement being prevented or detected on a timely basis were found to be missing. These elements principally relate to the timely review in the financial reporting process. Management has identified the material weakness and is taking the necessary steps to mitigate the possible impact on the Company’s financial statements.
The presence of the material weakness does not mean that a material misstatement has occurred in our financial statements, but only that our present controls might not be adequate to detect or prevent a material misstatement in a timely manner. Management believes that the material weakness set forth above did not have an effect on our financial results.
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.
14
Changes in Internal Control over Financial Reporting. There were no changes in internal control over financial reporting during the year; however, subsequent to the year the Company hired a consultant to assist with financial reporting and we anticipate this to significantly improve control over financial reporting.
Item 9B. OTHER INFORMATION
On June 10, 2013, the Company authorized the issuance of 325,000 restricted shares of its common stock to three (3) of its employees as a discretionary bonus approved by the Board of Directors in June 2013.
On July 1, 2013, the Company entered into a six-month services agreement with a consultant for performance of CFO and similar services to the Company and its clients. Under the agreement, the consultant will be compensated through the issuance to him of 500,000 restricted shares of the Company’s common stock. These compensation shares will be delivered to the consultant in equal monthly installments over the six (6) month term of the services agreement.
In August 2013, the Company closed a private placement transaction with two investors through which the Company issued 2,350,000 shares of its common stock at a price of $.03 per share. The total proceeds to the Company from the August 2013 private placement was $70,500. The investors in the August 2013 private placement were “accredited investors” 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 August 2013 private placement and did not pay any commissions or fees in connection with the transaction. The August 2013 private placement 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.
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, 2013:
| Name | Age | Position | ||
| Wesley Ramjeet | 47 | Chief Executive Officer and Director | ||
| Bradley L. Steere II | 51 | Secretary 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, 47, 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.
15
Bradley L. Steere II, Esq. - Secretary and Director
Mr. Steere, 51, has been our Secretary and a member of our board of directors since the formation of the company in January 2009. Mr. Steere is a lawyer admitted to practice in the states of New York and Rhode Island who specializes in the practice areas of securities, corporate and commercial law. Mr. Steere was admitted to practice law in the states of New York and Rhode Island in 1990. From 1990 to 1994, Mr. Steere was an attorney in the Enforcement Division of the Northeast Regional Office of the United States Securities and Exchange Commission. From 1994 to the present, Mr. Steere has been in private practice in New York, New York during which time he has been an Associate with the law firm Kane Kessler PC, a partner in the firm of Steere & May, and, since 2000, a sole practitioner. Mr. Steere received his B.A. degree from Boston University in 1984 and his J.D. degree from the Hofstra University School of Law in 1990.
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.
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.
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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, 2013 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, | 2011 | 18,000 | 0 | 60,000 | 0 | 0 | 0 | 0 | 78,000 | ||||||||||||||||||||||||||
CEO (1) (2) (4) | 2012 | 87,666 | 0 | 0 | 0 | 0 | 0 | 0 | 87,666 | ||||||||||||||||||||||||||
| 2013 | 215,167 | 0 | 0 | 0 | 0 | 0 | 0 | 215,167 | |||||||||||||||||||||||||||
Bradley Steere, Secretary (3) | 2011 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
| 2012 | 8,000 | 0 | 0 | 0 | 0 | 0 | 0 | 8,000 | |||||||||||||||||||||||||||
| 2013 | 12,000 | 0 | 0 | 0 | 0 | 0 | 0 | 12,000 | |||||||||||||||||||||||||||
(1) On November 21, 2011, we entered into a three year Employment Agreement with Mr. Wesley Ramjeet pursuant to which Mr. Ramjeet will receive an 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. 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) On October 1, 2011, we entered into a consulting agreement with Mr. Bradley Steere pursuant to which Mr. Steere is paid a consulting fee of $1,000 per month.
(4) For the year ended May 2013, Mr. Ramjeet was paid $72,863 and the remaining balance of $142,304 was accrued.
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 August 29, 2013.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
There were no stock options outstanding or exercised during the year ended May 31, 2013 by the executive officers named in the Summary Compensation Table.
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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. The amounts of Mr. Ramjeet’s potential bonus payments are described in greater detail in Schedule A to the Ramjeet Employment Agreement.
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.
On October 1, 2011, we entered into a consulting agreement with Bradley Steere, our Secretary and a member of our board of directors, which has an initial term of one (1) year. Under the terms of the consulting agreement, Mr. Steere will be paid $1,000 per month for services related to the preparation and filing of our SEC periodic reports, and other legal matters.
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.
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Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 29, 2013, 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.
Shares of Common Stock Beneficially Owned (1) | ||||||||
| Name | Number of Shares | Percent of Class | ||||||
| Wesley Ramjeet | 30,431,000 | (2) | 59.55 | % | ||||
| Bradley L. Steere II | 4,800,000 | (3) | 9.39 | % | ||||
| All directors and executive officers | 35,231,000 | 68.94 | % | |||||
(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 30,431,000 shares of our common stock.
(3) Mr. Steere personally owns 4,800,000 shares of our common stock.
The percentages in the above table are computed based upon a total of 51,102,788 shares or common stock being outstanding on August 29, 2013.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
On March 1, 2009, we entered into an agreement to provide CFO and accounting services to 3A Media, Inc., a private New Jersey corporation (“3A Media”). Under the terms of this agreement, we provided general CFO and accounting services to 3A Media for a fee of $1,000 per month. The term of this agreement expired on August 31, 2010 and continued on a monthly basis until August 1, 2011.
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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 | |||||||
| May 31, | May 31, | |||||||
| 2013 | 2012 | |||||||
| Audit fees (1) | $ | 32,216 | $ | 20,910 | ||||
| (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, 2013 and May 31, 2012 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, 2013 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.
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PART IV
Item 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
(a) Consolidated Financial Statements
Profit Planners Management, Inc.
FORM 10-K
YEAR ENDED MAY 31, 2013
TABLE OF CONTENTS
| Page | |||
| Item 1. | Consolidated Financial Statements | ||
| F-2 | |||
| F-3 | |||
| F-4 | |||
| F-5 | |||
| F-6 | |||
| F-7 |
F-1
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, 2013 and 2012, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the years in the two year period ended May 31, 2013. 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 audits to obtain reasonable assurance about whether the 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, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the two-year period ended May 31, 2013 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Coulter & Justus, P.C.
Knoxville, Tennessee
September 6, 2013
F-2
Consolidated Balance Sheets
| May 31, 2013 | May 31, 2012 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 127,984 | $ | 80,537 | ||||
| Accounts receivable | 93,432 | 77,425 | ||||||
| Other current assets | 22,411 | 11,288 | ||||||
| Total current assets | 243,827 | 169,250 | ||||||
| Property and Equipment: | ||||||||
| Property and equipment | 11,522 | 3,550 | ||||||
| Less: Accumulated depreciation | (2,494 | ) | (237 | ) | ||||
| Net property and equipment | 9,028 | 3,313 | ||||||
| Total Assets | $ | 252,855 | $ | 172,563 | ||||
| Liabilities and Stockholders' Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 35,873 | $ | 19,299 | ||||
| Accounts payable and accrued expenses - related parties | 35,650 | 33,150 | ||||||
| Accrued expenses - officer's compensation | 218,641 | 122,145 | ||||||
| Deferred revenue | 51,250 | - | ||||||
| Total Liabilities | 341,414 | 174,594 | ||||||
| Stockholders' Deficit | ||||||||
| Preferred stock - $.001 par value; 50,000,000 shares authorized; none and none issued and outstanding | - | - | ||||||
| Common stock - $.001 par value; 500,000,000 shares authorized; 50,562,972 and 50,407,416 shares issued and outstanding, respectively | 50,562 | 50,406 | ||||||
| Common stock - $.001 par value; 314,816 and 370,372 shares subscribed not issued, respectively | 314 | 370 | ||||||
| Additional paid-in capital | 154,904 | 144,120 | ||||||
| Less: Amount due from subscriber under subscription agreement | (28,334 | ) | (33,334 | ) | ||||
| Accumulated deficit | (266,005 | ) | (163,593 | ) | ||||
| Net Stockholders' Deficit | (88,559 | ) | (2,031 | ) | ||||
| Total Liabilities And Stockholders' Deficit | $ | 252,855 | $ | 172,563 | ||||
See accompanying notes to the consolidated financial statements
F-3
Profit Planners Management, Inc.
| Year Ended | Year Ended | |||||||
| May 31, 2013 | May 31, 2012 | |||||||
| Revenues: | ||||||||
| Revenue | $ | 843,172 | $ | 504,910 | ||||
| Revenue - Related Parties | - | 5,660 | ||||||
| Total revenue | 843,172 | 510,570 | ||||||
| Cost of revenue | ||||||||
| Staff salaries - project related | 540,839 | 284,148 | ||||||
| Related parties - project related | - | 74,036 | ||||||
| Other outsourced services | 11,509 | 9,393 | ||||||
| Total cost of revenues | 552,348 | 367,577 | ||||||
| Gross Profit | 290,824 | 142,993 | ||||||
| Operating expenses: | ||||||||
| Officer's compensation | 105,129 | 58,544 | ||||||
| Consulting & professional expenses | 67,657 | 56,218 | ||||||
| Other operating expenses | 220,450 | 81,146 | ||||||
| Total operating expenses | 393,236 | 195,908 | ||||||
| Net Loss | $ | (102,412 | ) | $ | (52,915 | ) | ||
| Basic and diluted net loss per weighted-average shares common stock | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted-average number of shares of common stock to be issued and outstanding - basic and diluted | 50,517,340 | 50,308,246 | ||||||
See accompanying notes to the consolidated financial statements
F-4
Profit Planners Management, Inc.
| Common Shares | Additional | Amount Due Under | ||||||||||||||||||||||||||
| Issued and | Common | Common Stock | Paid-in | Subscription | Accumulated | |||||||||||||||||||||||
| Outstanding | Stock | Subscribed | Capital | Agreement | Deficit | Total | ||||||||||||||||||||||
| Balance June 1, 2011 | 50,037,046 | $ | 50,036 | $ | 740 | $ | 131,724 | $ | (66,667 | ) | $ | (110,678 | ) | $ | 5,155 | |||||||||||||
| Amount due under subscription agreement | 370,370 | 370 | (370 | ) | - | 33,333 | - | 33,333 | ||||||||||||||||||||
| Stock compensation due under agreement, less cancelled shares | - | - | - | 12,396 | - | - | 12,396 | |||||||||||||||||||||
| Net loss for the year ended May 31, 2012 | - | - | - | - | - | (52,915 | ) | (52,915 | ) | |||||||||||||||||||
| Balance May 31, 2012 | 50,407,416 | $ | 50,406 | $ | 370 | $ | 144,120 | $ | (33,334 | ) | $ | (163,593 | ) | $ | (2,031 | ) | ||||||||||||
| Issuance of common stock vested | 100,000 | 100 | - | (100 | ) | - | - | - | ||||||||||||||||||||
| Amount due under subscription agreement | 55,556 | 56 | (56 | ) | - | 5,000 | - | 5,000 | ||||||||||||||||||||
| Stock compensation due under agreement, less cancelled shares | - | - | - | 10,884 | - | - | 10,884 | |||||||||||||||||||||
| Net loss for the year ended May 31, 2013 | - | - | - | - | - | (102,412 | ) | (102,412 | ) | |||||||||||||||||||
| Balance May 31, 2013 | 50,562,972 | $ | 50,562 | $ | 314 | $ | 154,904 | $ | (28,334 | ) | $ | (266,005 | ) | $ | (88,559 | ) | ||||||||||||
See accompanying notes to the consolidated financial statements
F-5
Profit Planners Management, Inc.
| Year Ended | ||||||||
| May 31, 2013 | May 31, 2012 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | (102,412 | ) | $ | (52,915 | ) | ||
| Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||
| Depreciation | 2,257 | 237 | ||||||
| Net loss on disposal of fixed assets | 1,400 | - | ||||||
| Stock compensation | 10,884 | 12,396 | ||||||
| Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (16,007 | ) | (77,425 | ) | ||||
Other current assets | (11,123 | ) | (10,000 | ) | ||||
Accounts payable and accrued expenses | 16,574 | 4,741 | ||||||
Accounts payable and accrued expenses - related parties | 2,500 | - | ||||||
Accrued expenses payable - officer's compensation | 96,496 | 136,420 | ||||||
Deferred revenue | 51,250 | - | ||||||
| Net Cash Provided by Operating Activities | 51,819 | 13,454 | ||||||
| Cash Flows from Investing Activities | ||||||||
| Purchases of property and equipment | (9,372 | ) | (3,550 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds from the issuance of common stock under subscription agreement | 5,000 | 33,333 | ||||||
| Net Increase in Cash | 47,447 | 43,237 | ||||||
| Cash, beginning of period | 80,537 | 37,300 | ||||||
| Cash, end of period | $ | 127,984 | $ | 80,537 | ||||
See accompanying notes to the consolidated financial statements
F-6
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.
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: Organic Innovations, Inc., Twin Peaks Benefits Plus, Inc., Enertel Plus, Inc. and Profit Management, Inc. All inter-company balances and transactions have been eliminated in consolidation.
Reclassifications
Certain amounts in prior periods presented have been reclassified to conform to current period financial statement presentation. Reclassifications have no effect on previously prepared net income.
Property and equipment
Property and equipment consisted 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 totaled $2,257 and $237 for the years ended May 31, 2013, and May 31, 2012, 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 has determined that as of May 31, 2013 and May 31, 2012, no allowance for doubtful accounts was required. The Company does not require collateral to support customer receivables. Three customers accounted for 60% and 92% of accounts receivable as of May 31, 2013 and 2012, respectively.
F-7
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. The Company’s three largest customers accounted for 62% and 66% of revenue during 2013 and 2012, respectively.
Deferred Revenue
Deferred revenue represents revenues collected but not earned as of May 31, 2013. This is primarily comprised of proceeds from service contracts that span a year or more and 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 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 its uncertain tax positions and a loss would be recognized when it is probable that a liability has been incurred as of the date of the financial statements and the amount of the loss can be reasonably estimated. 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 2010 and after.
Net loss per common share
Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were 314,816 and 370,372 potentially dilutive shares outstanding as of May 31, 2013 and May 31, 2012.
F-8
NOTE 3 – GOING CONCERN
As reflected in the accompanying audited financial statements, the Company has a net loss of $102,412 for the year ended May 31, 2013; and an accumulated deficit of $266,005 at May 31, 2013. 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. In addition, management intends to obtain capital in the near future through additional private placement offerings.
There can be no assurance that the 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 4 – RELATED PARTY TRANSACTIONS
The Company had revenues totaling $5,660 reflected in the financial statements for the year ended May 31, 2012 (and none in 2013) related to affiliated companies for which the Company’s CEO had a controlling interest.
The Company also had accrued officer’s salary expense payable to the CEO, Wesley Ramjeet, who has a controlling ownership interest in the Company. The compensation owed to the CEO totaled $218,641 and $122,145 as of May 31, 2013 and 2012, respectively.
NOTE 5 – INCOME TAXES
The Company has federal net operating loss carryovers available to offset future taxable income as follows:
Year Generated | Year of Expiration | Amount | ||||
| 2009 | 2029 | $ | 617 | |||
| 2010 | 2030 | 16,939 | ||||
| 2011 | 2031 | 93,121 | ||||
| 2012 | 2032 | 53,830 | ||||
| 2013 | 2033 | 2,506 | ||||
| $ | 167,013 | |||||
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:
| 2013 | 2012 | |||||||
| Deferred tax asset – net operating loss carryovers | $ | 17,819 | $ | 17,305 | ||||
| Deferred tax asset—accrued expenses | 22,082 | 7,233 | ||||||
| Valuation allowance | (39,901 | ) | (24,538 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
F-9
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 asset. The valuation allowance increased by $15,363 in 2013 and $7,936 in 2012.
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, | ||||||||
| 2013 | 2012 | |||||||
| Income tax at U.S. statutory rate of 15% | $ | (15,363 | ) | $ | (7,936 | ) | ||
| Increase in valuation allowance | 15,363 | 7,936 | ||||||
| Income tax benefit | $ | - | $ | - | ||||
NOTE 6 – SUBSCRIPTION AGREEMENT
In May 2011, the Company entered into a Stock Purchase Agreement with Orchid Island Capital Partners LP (“Orchid”) whereby Orchid agreed to purchase 1,111,112 shares of the Company’s restricted common stock for $100,000. As of May 30, 2013, the Company received $71,667 of the $100,000 by subscription agreement through the private placement.
NOTE 7 – EQUITY
On September 26, 2012, the board of directors of the Company approved a stock dividend payable to the holders of its issued and outstanding common stock, par value $.001 per share (the Stock Dividend). Under the terms of the Stock Dividend approved by the board, the holders of the Company’s common stock as of September 28, 2012 (the Record Date) were issued one (1) share of the Registrant’s common stock for each one (1) share owned by such holders on the Record Date. The Stock Dividend was effective on October 10, 2012 (the Payment Date).
As a result of the Stock Dividend, 25,203,708 shares of the Registrant’s common stock were issued to the Registrant’s shareholders of record as of the Record Date.
All periods presented in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect the issuance of the stock dividend.
Profit Planners South entered into an employment agreement with an employee on August 1, 2011. In connection with the agreement the Company agreed to issue 50,000 shares of Company common stock to the employee as stock compensation. The common stock vested over two years from the date of the employment agreement. In connection with the agreement, the Company recognized stock compensation expense of $3,646 in 2012. During 2012, the employee associated with this agreement was terminated and no additional compensation expense will be incurred.
On November 18, 2011, the Company entered into an agreement with a consultant. The agreement had an initial term of three (3) years. Under the terms of the agreement, the Company paid the consultant a fee of $10,000 per month and agreed to grant 300,000 total shares of restricted common stock. The shares vested over the term of the agreement at the rate of 100,000 shares per year. In connection with the consulting agreement, the Company recognized stock compensation expense of $10,884 in 2013 and $8,750 in 2012. The fair value of the grants noted above was determined by the most recent trade price of the common stock at the grant date. This agreement was terminated in May 2013.
F-10
NOTE 8 – SUBSEQUENT EVENTS
On June 10, 2013, the Company issued 325,000 restricted shares of Company common stock to employees of the Company as a discretionary bonus approved by the Board of Directors.
On July 1, 2013, the Company entered into a six-month services agreement with a consultant for performance of CFO and similar services. Under the agreement, the consultant will be compensated through the issuance of 500,000 restricted shares of the Company’s common stock. The compensation shares will be delivered to the consultant in equal monthly installments over the six (6) month term of the services agreement.
In August 2013, the Company closed a private transaction with two investors whereby the Company issued 2,350,000 shares of our common stock at a price of $.03 per share for total proceeds of $70,500.
F-11
(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. | |
| 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. |
| # | Incorporated by reference. |
| @ | Management contract or compensatory plan. |
| * | Filed herewith. |
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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 September 9, 2013 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 | September 9, 2013 | Chief Executive Officer and Director | ||
| Wesley Ramjeet | ||||
| /s/ Bradley L Steere II | September 9, 2013 | Secretary and Director | ||
| Bradley L Steere II |
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