Profit Planners Management, Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Profit Planners Management, Inc.	Financial_Report.xls
EX-32.1 - CERTIFICATION - Profit Planners Management, Inc.	f10q0214ex32i_profitplanners.htm
EX-31.1 - CERTIFICATION - Profit Planners Management, Inc.	f10q0214ex31i_profitplanners.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: February 28, 2014

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

For the transition period from: ______ to ______

PROFIT PLANNERS MANAGEMENT, INC.

(Exact name of registrant as specified in its charter)

Nevada

(State or other Jurisdiction of

Incorporation or Organization)

350 Madison Avenue, 8th Floor, New York, New York 10017

(Address of Principal Executive Offices) (Zip Code)

(646) 837-0351 

(Registrant’s telephone number, including area code)

N/A 

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

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

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

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 Act). Yes o No þ

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of the issuer's common stock, as of the latest practical date: As of April 1, 2014, the issuer had 53,737,972 outstanding shares of Common Stock

Profit Planners Management, Inc.

TABLE OF CONTENTS

	PART I	Page
Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets as of February 28, 2014 (Unaudited) and May 31, 2013 (Audited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months and nine months ended February 28, 2014 and 2013 (Unaudited)	2
	Condensed Consolidated Statements of Cash Flows for the nine months ended February 28, 2014 and 2013 (Unaudited)	3
	Notes to the Condensed Consolidated Financials (Unaudited)	4

Item 2.	Management’s Discussion and Analysis or Plan of Operation	7
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4T	Controls and Procedures	12

	PART II
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Submission of Matters to a Vote of Security Holders	13
Item 5.	Other Information	13
Item 6.	Exhibits	13

SIGNATURES		14

PART I.

ITEM 1. FINANCIAL INFORMATION

Profit Planners Management, Inc.

Condensed Consolidated Balance Sheets

	(Unaudited)
	February 28, 2014			May 31, 2013
Assets
Current assets:
Cash	$	21,664		$	127,984
Accounts receivable (net of allowance of $60,173 and $0, respectively)		80,652			93,432
Other current assets		12,876			22,411
Current assets of discontinued operations		905			-
Total current assets		116,097			243,827

Property and equipment:
Property and equipment		13,172			11,522
Less: accumulated depreciation		(5,741	)		(2,494	)
Net property and equipment		7,431			9,028

Non-current assets of discontinued operations		7,227			-

Total Assets	$	130,755		$	252,855

Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses	$	54,438		$	35,873
Accounts payable and accrued expenses - related parties		35,650			35,650
Accrued expenses - officer's compensation		350,687			218,641
Deferred revenue		-			51,250
Current liabilities of discontinued operations		3,319			-
Total Liabilities		444,094			341,414

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;
53,737,972 and 50,562,972 shares issued and outstanding, respectively		53,737			50,562
Common stock - $.001 par value; 314,816 shares subscribed not issued		314			314
Additional paid-in capital		276,479			154,904
Less: amount due from subscriber under subscription agreement		(28,334	)		(28,334	)
Accumulated deficit		(615,535	)		(266,005	)
Net Stockholders' Deficit		(313,339	)		(88,559	)
Total Liabilities And Stockholders' Deficit	$	130,755		$	252,855

See accompanying notes to condensed consolidated financial statements.

Profit Planners Management, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three			Three			Nine			Nine
	Months Ended			Months Ended			Months Ended			Months Ended
	February 28, 2014			February 28, 2013			February 28, 2014			February 28, 2013

Revenues:
Consulting and management services fees	$	142,576		$	177,845		$	507,982		$	631,055
Consulting and management services fees - related party		3,000			-			3,000			-
Total revenues		145,576			177,845			510,982			631,055

Cost of revenues - personnel and overhead costs		142,275			128,611			413,883			395,605

Gross Profit		3,301			49,234			97,099			235,450

Selling, general and administrative expenses:
Corporate management		71,337			33,659			158,843			82,731
Consulting and professional expenses		25,443			14,979			72,056			59,857
Other operating expenses		52,043			77,216			186,016			151,482
Total selling, general and administrative expenses		148,823			125,854			416,915			294,070

Net loss and comprehensive loss from continuing operations		(145,522	)		(76,620	)		(319,816	)		(58,620	)
Net income (loss) and comprehensive income (loss) from discontinued operations, net of tax		2,044			-			(29,714	)		-

Net loss and comprehensive loss	$	(143,478	)	$	(76,620	)	$	(349,530	)	$	(58,620	)

Basic net (loss) income per weighted-average shares common stock
Continuing operations	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Discontinued operations		0.00			-			(0.00	)		-
Net income (loss)	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)

Diluted net (loss) income per weighted-average shares common stock
Continuing operations	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Discontinued operations		0.00			-			(0.00	)		-
Net income (loss)	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)

Weighted-average number of shares of common stock to be issued and outstanding
Basic		53,737,972			50,507,416			53,036,965			50,468,588
Diluted		54,052,788			51,077,788			53,351,781			51,077,788

See accompanying notes to condensed consolidated financial statements.

Profit Planners Management, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine			Nine
	Months Ended			Months Ended
	February 28, 2014			February 28, 2013

Net cash (used in) provided by operating activities	$	(166,275	)	$	19,443

Net cash used in investing activities		(10,545	)		(6,376	)

Net cash provided by financing activities		70,500			5,000

Net change in cash		(106,320	)		18,067
Cash, beginning of period		127,984			80,537
Cash, end of period	$	21,664		$	98,604

See accompanying notes to condensed consolidated financial statements

Profit Planners Management, Inc.

Notes to Condensed Consolidated Financial Statements

February 28, 2014

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

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

The condensed consolidated financial information for the three months and nine months ended February 28, 2014 include the accounts of the Company and its wholly-owned subsidiaries and all intercompany balances and transactions have been eliminated in consolidation.

The balance sheet at May 31, 2013 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The unaudited interim financial information should be read in conjunction with the Company’s Form 10-K, which contains the audited consolidated financial statements and notes thereto, together with Management’s Discussion and Analysis, for the year ended May 31, 2013. The interim results for the period ended February 28, 2014 are not necessarily indicative of the results for the full fiscal year.

NOTE 2 – REVENUE RECOGNITION

The Company’s revenues are derived from management, financial and accounting advisory service fees. Product sales from the Company’s Organic Innovations subsidiary’s e-commerce sites are reflected in discontinued operations. 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.

NOTE 3 – DISCONTINUED OPERATIONS

As of February 28, 2014 the Company reached a decision to sell the assets of its Organic Innovations business. The assets consist of three domain names, trademarks, websites and customer lists. The domain names were purchased from third parties and a related party (Note 6) and have a carrying value of $7,227 as of February 28, 2014. The other assets were internally developed and have no carrying value. The Company currently is in discussions with interested parties and intends to sell the assets within a year. Cash flows from the business arise primarily from the gross margin of the products and working capital timing.

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

The following table summarized the results of the Organic Innovations business for the three and nine months ended February 28, 2014 and 2013.

	Three Months Ended February 28,					Nine Months Ended February 28,
	2014			2013		2014			2013
Net product sales	$	14,142		$	-	$	21,024		$	-

Cost of sales		(10,765	)		-		(15,743	)		-
Other operating expenses		(1,333	)		-		(34,995	)		-

Income (loss) from discontinued operations		2,044			-		(29,714	)		-
Income taxes		-			-		-			-

Net income (loss) from discontinued operations, net of taxes	$	2,044			-	$	(29,714	)		-

Cash flows from discontinued operations	$	1,899		$	-	$	(25,632	)	$	-

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

NOTE 4 – NET LOSS PER COMMON SHARE

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were 314,816 and 370,372 potentially dilutive shares outstanding as of February 28, 2014 and February 28, 2013, respectively. Due to the loss for the periods presented, the shares are not included in the calculation as they would be anti-dilutive.

NOTE 5 – GOING CONCERN

As reflected in the accompanying condensed consolidated financial statements, the Company had a net loss of $349,530 for the nine months ended February 28, 2014 and the Company has minimal historical evidence of positive earnings as evidenced by the accumulated deficit of $615,535 at February 28, 2014. The historical trend of losses raises substantial doubt about the Company’s ability to continue as a going concern.

Management believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern. These actions include continuing to grow the Company’s revenues sufficient to support its cost structure through existing and new clients. In addition, management intends to obtain capital in the near future through additional private placement offerings. In August 2013, the Company obtained $70,500 through private placement offerings.

There can be no assurance that anticipated revenue growth and the raising of equity will be successful nor is there assurance that the Company’s anticipated financing will be available in the future, at terms satisfactory to the Company. Failure to achieve revenue growth and 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 6 – RELATED PARTY

On October 1, 2013 the Company purchased for $4,000, a domain name and site from Golden Age Medical Inc., a company owned by the CEO.

In January 2014, the Company received a retainer of $5,000 and provided services totaling $3,000 to a company in which the CEO has a controlling interest.

The Company also had accrued officer’s salary expense payable to the CEO, who has a controlling ownership interest in the Company. The net compensation owed to the CEO totaled $350,687 and $218,641 as of February 28, 2014 and May 31, 2013, respectively.

NOTE 7 – INCOME TAXES

The Company has not recorded any income tax expense or benefit for the nine months ended February 28, 2014. Any taxable income generated will be offset by net operating losses (“NOL”) generated in previous years. At the present time, management cannot determine if the Company will be able to generate sufficient taxable income to realize the benefit of the NOL carryforwards; accordingly, a valuation allowance has been established to offset the asset.

NOTE 8 – STOCKHOLDERS’ EQUITY

On June 10, 2013, the Company issued 325,000 restricted shares of Company common stock, valued at $29,250, to employees and advisors of the Company as a discretionary bonus approved by the Board of Directors. The value of the common stock was based on a market price of $.09 per common share on the date of issuance. The amounts are reflected as salary and consulting expenses in the condensed consolidated financial statements.

Effective 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, approved by the parties and the Company’s Board of Directors on August 2, 2013, the consultant will be compensated through the issuance of 500,000 restricted shares of the Company’s common stock valued at $25,000. The value of the common stock was based on a market price of $.05 per common share on August 2, 2013. The value of the stock issued will be recognized as consulting expenses over the contract period as services are rendered and reflected in cost of sales and operating expenses as appropriate.

On August 7, 2013, the Company entered into agreements with accredited investors whereby the Company issued 2,350,000 shares of common stock at a price of $.03 per share for total proceeds of $70,500.

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

Forward-Looking Statements

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

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

Operations

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

Our current operations are divided into the following revenue streams:

	· CFO, Accounting and Tax Services
	· Insurance and Healthcare Insurance Services
	· Management Services

Our CFO, Accounting and Tax Services business continues to be our main revenue generator with most of our revenues coming from these services. In the future, we expect this percentage to decrease as our other businesses gain traction in the market place.

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 by concentrating more resources to it.

In February 2014, management reached a decision to sell the assets of its Organic Innovations Inc. business. Organic Innovations, Inc. consists primarily of two e-commerce platforms and websites branded under the “Golden Age Medical” and “Organically Crafted” names. The Golden Age Medical brand website provides for the growing demand from consumers for health related products for the aging population. Organically Crafted website offers “organic” and health-care related products and potential services to the consumer by creating a consumer friendly on-line experience. We are presently in discussions with interested parties and expect to sell the assets within a year. The business operations, assets and liabilities related to this business have been reflected as discontinued operations on the financial statements.

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. 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.

For our Organic Innovations business, our marketing efforts for the Organically Crafted brand target the health conscious consumer regardless of age and for our the Golden Age Medical brand target the aging senior population and their support providers. Both brands are primarily focused on the North American consumer, but we plan to continue to expand the reach until the business is sold. We utilize e-mail campaigns, social media and promotional opportunities utilizing consumer lists and contacts.

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

	· www.profitplannersmgt.com
	· www.organicinnovations.com
	· www.organicallycrafted.com
	· www.twinpeaksplus.com
	· www.profitplannersinsurancegroup.com
	· www.goldenagemedical.com
	· www.ppmtgroup.com

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

Our marketing costs for the nine months ended February 28, 2014 related to our continuing business operations were approximately $3,200. Ongoing marketing expenses consisted of e-mails, promotions and use of social media to communicate to potential customers. In prior quarters, development expenses of $33,685 were predominantly for the development of the Organically Crafted brand name, logo, web-site, relationships with suppliers. These expenses were related to the Organic Innovations business and are reflected as part of the discontinued operations on the financial statements.

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

Recent Developments

In February 2014, upon completion of the e-commerce platforms for our Organic Innovations business, we decided to seek potential acquirers for the assets of the business. During the nine months ended February 28, 2014, we completed the development of our organic product e-commerce platform and launched a web-site that offers on-line ordering of products categorized under our “Organically Crafted” brand. We also acquired a domain name and site for Golden Age Medical, an e-commerce platform that resells health related products for the senior community using an on-line web-site, for $4,000. Both web-sites are managed under our Organic Innovations, Inc. subsidiary and complement each other. We will continue to evaluate and improve the product offerings for each web-site and utilize marketing to maintain and grow the business through the future sale date.

Critical Accounting Policies

Accounts receivable

Accounts receivable represents open invoices from customers. The Company periodically evaluates the collectability of its accounts receivable and considers the need to record or adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates. The Company has determined that as of the nine months ended February 28, 2014, an allowance for doubtful accounts of $60,173 was still required as a result of the Company believing certain receivables for consulting services will no longer be collected either fully or partially. The Company does not require collateral to support customer receivables.

Revenue recognition

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

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

Net income (loss) per common share

Results of operations

Three Months Ended February 28, 2014 and 2013

Continuing operations

For the three months ended February 28, 2014 and 2013, we had revenue of $145,576 and $177,845, respectively. Cost of revenues for the three months ended February 28, 2014 and 2013 totaled $142,275 and $128,611, respectively. Selling, general and administrative expenses for the three months ended February 28, 2014 and 2013 totaled $148,823 and $125,854, respectively, resulting in a net loss from continuing operations of $145,522 and $76,620, respectively.

Consulting service income for the three months ended February 28, 2014 consisted of CFO, Accounting and Tax Services of $145,576. For the comparable three months ended February 28, 2013, consulting service income consisted of CFO, Accounting and Tax Services of $141,845 and Management Services of $36,000. The changes in service income are attributable to fluctuations in the client base, the completion of non-recurring projects and the timing of acquiring new clients.

Cost of revenues for the three months ended February 28, 2014 comprised of personnel and overhead costs of $142,275. The personnel and overhead costs were comprised of salaries and compensation expenses of $126,576 and other overhead expenses of $15,699. Cost of revenues for the three months ended February 28, 2013 comprised of personnel and overhead expenses of $128,611. The personnel and overhead expenses were comprised of salaries and compensation expenses of $126,853 and other overhead expenses of $1,758.

Selling, general and administrative expenses for the three months ended February 28, 2014 was $148,823 comprised of net compensation expense for corporate management of $71,337, consulting and professional expenses of $25,443, rent expense of $16,338, travel-related expenses of $7,531, computer related expenses of $5,281, office supplies and filings fees of $4,435, corporate communications of $3,413 and other expenses of $15,045. Selling, general and administrative expenses for the three months ended February 28, 2013 was $125,854, comprised of net compensation expense for corporate management of $33,659, consulting and professional expenses of $14,979, corporate communications of $15,391, rent expense of $11,355, office supplies and filing fees of $10,877, travel-related expenses of $13,933, computer related expenses of $2,455, and other expenses of $23,205. Fluctuations in consulting and professional expenses and the corporate management for the comparative periods result from time spent on general and administrative duties versus working directly on client accounts.

Discontinued operations

For the three months ended February 28, 2014, the Organic Innovations business had product sales of $14,142, cost of revenue of $10,765 and other operating expense of $1,333 for net income of $2,044. Activity in the Organic Innovation business did not begin until the first fiscal quarter of 2014. As such, the comparative three months ended February 28, 2013, had no activity.

Nine Months Ended February 28, 2014 and 2013

Continuing operations

For the nine months ended February 28, 2014 and 2013, we had revenue of $510,982 and $631,055, respectively. Cost of revenue for the nine months ended February 28, 2014 and 2013, totaled $413,883 and $395,605, respectively. Selling, general and administrative expenses for the nine months ended February 28, 2014 and 2013, totaled $416,915 and $294,070, resulting in a net loss from continuing operations of $319,816 and $58,620, respectively.

Consulting service income for the nine months ended February 28, 2014 consisted of CFO, Accounting and Tax Services of $459,658 and Management Services of $51,324. For the comparable nine months ended February 28, 2013, consulting service income consisted of CFO, Accounting and Tax Services of $531,055 and Management Services of $100,000. The changes in service income are attributable to changes in the client base and the completion of non-recurring projects. As clients grow or change, certain functional responsibilities are brought in-house and our services are no longer necessary.

Cost of revenues for the nine months ended February 28, 2014 totaled $413,883 and was comprised of salaries and compensation expenses of $365,677 and other overhead expenses of $48,206. Cost of revenues for the nine months ended February 28, 2013 comprised of personnel and overhead expenses of $395,605. The personnel and overhead expenses were comprised of salaries and compensation expenses of $384,279 and other overhead expenses of $11,326.

Selling, general and administrative expenses for the nine months ended February 28, 2014 was $416,915, comprised of net compensation expense for corporate management of $158,843, consulting and professional expenses of $72,056, rent expense of $46,403, bad debt expense of $60,173, travel-related expenses of $20,478, computer related expenses of $15,813, office supplies and filing fees of $13,944, corporate communications of $8,299, and other expenses of $20,906. Selling, general and administrative expenses for the nine months ended February 28, 2013 was $294,070, comprised of net compensation expense for corporate management of $82,731, consulting and professional expenses of $59,857, rent expense of $32,416, corporate communications of $26,333, travel-related expenses of $26,332, office supplies and filing fees of $18,921, computer related expenses of $8,557, and other expenses of $38,923. During fiscal year 2014, certain former client accounts have had difficulty in meeting their obligations to us and we have conservatively recorded an allowance against our accounts receivables, while we continue to pursue collection for our services.

Discontinued operations

For the nine months ended February 28, 2014, the Organic Innovations business had product sales of $21,024, cost of revenue of $15,743, development expense of $33,685, and other operating expense of $1,310 for a net loss of $29,714. The development expenses for the Organic Innovation e-commerce platform to sell “organic” products consisted of salaries and compensation of $12,250, consulting and professional fees of $18,000 and other web-development expenses of $3,435. Activity in the Organic Innovation business did not begin until the first fiscal quarter of 2014. As such, the comparative nine months ended February 28, 2013, had no activity.

Liquidity and Capital Resources

As of February 28, 2014, we had cash of $21,664 as compared to cash of $127,984 as of May 31, 2013. The decrease in net cash of $106,320 was the result of net cash used in operating activities totaling $166,275, used in investing activities totaling $10,545 and provided by financing activities totaling $70,500 for the nine months ended February 28, 2014.

For the nine months ended February 28, 2014, net cash used in operating activities was attributable to a net loss of $349,530, non-cash adjustments for depreciation expense of $4,915 and stock compensation expense of $54,249, and a net increase from the change in operating assets and liabilities of $124,091. Net cash provided by financing activities for the nine months ended February 28, 2014 resulted from $70,500 received for 2,350,000 restricted shares of common stock purchased through private placement.

For the nine months ended February 28, 2013, the Company increased cash of $18,067 was the result of $19,443 provided by operating activities, $6,376 used in investing activities and $5,000 provided by financing activities.

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

N/A

ITEM 4T. CONTROLS AND PROCEDURES.

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

Changes in Internal Control Over Financial Reporting. During the most recent quarter ended February 28, 2014, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS.

We were not a party to any legal proceedings as of the date of filing of this Quarterly Report.

ITEM 1A. RISK FACTORS.

Our Annual Report on Form 10K for the fiscal year ended May 31, 2013 contains a description of the risk factors relating to our operations and to an investment in our common stock.

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

We did not issue or sell any equity shares during the fiscal quarter covered by this Quarterly Report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

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

None

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS

Exhibit Number		Description of Exhibit

31.1		Certifications required by Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer and Principal Accounting Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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

Date: April 10, 2014	Profit Planners Management, Inc.

	By:	/s/ Wesley Ramjeet
		Wesley Ramjeet Chief Executive Officer, Chief Financial , Chief Accounting Officer, Officer and Director

Profit Planners Management, Inc. - FORM 10-Q - April 10, 2014

Attached files

Profit Planners Management, Inc. Reports