Filing summary
Entity and 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, 2015; the financial statements are unaudited. The company provides property management and consulting services and reports two managed properties, both affiliated with its officers and directors.
Financial performance and position
| Metric | Three months ended Aug. 31, 2015 | Six months ended Aug. 31, 2015 |
|---|---|---|
| Revenue | $3,607 | $7,271 |
| Gross margin | $1,984 (about 55%) | $4,040 (about 56%) |
| Operating expenses | $11,833 | $19,312 |
| Operating loss | $(9,849) | $(15,272) |
| Net loss | $(1,479) | $(6,971) |
- For the six months, operating cash used was $20,378; financing provided $21,000, including $15,000 from stock sales and $6,000 in related-party loan proceeds. Cash rose by $622 to $1,652.
- At August 31, current assets were $2,874 and current liabilities were $34,368, producing negative working capital of $31,494. Total assets were $2,874; stockholders’ deficit was $31,494.
- The balance sheet reports $23,500 of related-party notes payable. Management’s discussion reports $23,959 including accrued interest; the filing does not clearly reconcile the difference. The loans bear 1.5% interest and are due on demand.
- Weighted-average shares for the six-month period were 10,098,290; 10,307,000 shares were outstanding as of October 13, 2015.
Changes versus prior comparable period
- Six-month revenue increased $98 from $7,173; management attributed the increase to higher rents at managed properties. Gross margin rose to $4,040 from $3,945.
- Six-month operating expenses fell $38,628 from $57,940, which management attributed to normalization after initial public filing costs. Net loss narrowed from $54,155 to $6,971.
- Six-month operating cash use improved from $23,276 to $20,378, while ending cash fell from $10,520 to $1,652.
- The company issued 300,000 shares in June 2015 at $0.05 per share, raising $15,000.
Outlook, risks, and unusual items
- Management intends to add third-party clients and expand into nearby Virginia counties, with longer-term statewide ambitions. It estimates approximately $150,000 of additional capital needs over 18 months, expects to seek debt and private equity financing, and warns there is no assurance financing will be available on acceptable terms.
- The filing states that recurring losses, operating cash use, accumulated deficit, and limited cash raise substantial doubt about the company’s ability to continue as a going concern. Management’s plans depend on generating revenue and raising funds; success is not assured.
- An $8,459 gain from debt settlement was recorded in both the three- and six-month results and materially reduced reported net loss. The filing provides limited detail about the settlement.
- All revenue came from two properties partly owned by the CEO and CFO. The company also rents office space from an entity controlled by its chairman and CEO, and relies on demand loans from that related party.
- After quarter-end, CEO and President C. Thomas McMillen resigned those roles effective October 8, 2015, remaining board chairman. CFO Michael T. Brigante became president and acting CEO effective October 9.
- The company reported no legal proceedings as of October 13, 2015, and stated that disclosure controls were effective.
Important facts for investors to verify
- Confirm the filing’s issuer identity: the document names Property Management Corporation of America, whereas the request metadata names Fingermotion, Inc.
- Reconcile the $23,500 notes payable balance with management’s $23,959 figure including accrued interest, and confirm the demand-loan terms and available related-party lending commitment.
- Review the debt-settlement transaction underlying the $8,459 gain and determine whether similar gains are recurring.
- Assess the company’s near-term liquidity, going-concern disclosures, and ability to obtain the estimated $150,000 of financing.
- Evaluate customer concentration and related-party arrangements, including the two affiliated managed properties that generated all revenue.