Filing identity and reporting period
The supplied filing is a Form 10-Q for Property Management Corporation of America, not Fingermotion, Inc. It covers the quarter and six months ended August 31, 2014; the interim financial statements are unaudited. The filing describes a development-stage property-management and consulting company and states that planned principal operations had not commenced.
Financial results and liquidity
| Metric | Three months ended Aug. 31, 2014 | Six months ended Aug. 31, 2014 |
|---|---|---|
| Revenue | $3,586 | $7,173 |
| Cost of revenue | $1,614 | $3,228 |
| Gross profit / margin | $1,972 / approximately 55% | $3,945 / approximately 55% |
| Operating expenses | $28,396 | $57,940 |
| Operating loss | $(26,424) | $(53,995) |
| Net loss | $(26,498) | $(54,155) |
Six-month operating cash use was $23,276. Financing provided $31,350, including $50,350 from a common-stock sale offset by $19,000 of net loan repayments. Cash increased $8,074 to $10,520. At August 31, current liabilities were $28,166, including $24,629 of accounts payable and accrued expenses and $3,537 owed to a related party. Working capital was negative $17,646; stockholders’ deficit was $17,646. The related-party loan bears 1.5% interest and is due on demand. No income-tax provision was recorded. The company reported no potentially dilutive common shares.
Material changes and comparisons
The filing provides no prior-year comparable operating results. Compared with February 28, 2014, cash rose from $2,446 to $10,520, current liabilities rose from $22,537 to $28,166, and accumulated deficit increased from $14,741 to $68,896. Shares outstanding increased from 9,000,000 to 10,007,000 following a July 2014 sale of 1,007,000 shares for $50,350. The filing reports no legal proceedings as of October 10, 2014, and no off-balance-sheet arrangements during the quarter.
Outlook, risks, and notable items
Management planned to seek additional clients and expand in Virginia, including establishing satellite offices. It estimated approximately $50,000 of additional capital would be needed over the next 12 months, expected to seek debt financing, and cautioned that no assurance existed it could obtain financing on acceptable terms. Management said the cash position might not support daily operations. The filing explicitly states that accumulated losses, the period’s net loss, and operating cash use raise substantial doubt about the company’s ability to continue as a going concern; continued operations depend on implementing the business plan, generating revenue, and raising funds.
All reported revenue came from management contracts for two properties partly owned by the CEO and CFO. The company also rented its office from an entity controlled by its chairman and CEO. The filing says $40,000 was repaid to the related-party lender, while the cash-flow statement presents net loan repayments of $19,000; the filing does not clearly reconcile these figures. No formal financial guidance is provided. Management described the local market as underserved and expressed plans to grow, but these are forward-looking statements subject to financing and execution risks.
Important facts for investors to verify
- Confirm the issuer: this filing names Property Management Corporation of America, not Fingermotion, Inc.
- Reconcile the reported $40,000 related-party loan repayment with the $19,000 net repayment in the cash-flow statement.
- Verify related-party loan terms, the outstanding balance, and the lender’s commitment to provide loans up to $50,000 inclusive of the existing balance.
- Assess the company’s going-concern warning, limited cash, negative working capital, and stated need for additional financing.
- Review the concentration of revenue in two properties affiliated with company officers and the company’s progress in securing unaffiliated clients.