Business Context and Reporting Period
Filing identity mismatch: The request identifies Fingermotion, Inc., but the supplied 10-K is for Property Management Corporation of America (PMCA). This summary reflects the filing text, not Fingermotion.
PMCA reported for the fiscal year ended February 29, 2016, compared with the year ended February 28, 2015. The company was an early-stage property-management and consulting business operating in Fauquier County, Virginia, with two managed properties and two customers. Both customers and the properties were affiliated with company leadership. The filing describes monthly recurring revenue of approximately $1,120.
Financial Performance and Position
| Metric | FY ended Feb. 29, 2016 | Prior year |
|---|---|---|
| Revenue | $14,558 | $14,259 |
| Cost of revenue | $6,551 | $6,906 |
| Gross profit / margin | $8,007 / 55.0% | $7,353 / 51.6% |
| Operating expenses | $20,797 | $83,121 |
| Net loss | $13,133 | $76,032 |
| Cash used in operations | $23,876 | $46,729 |
At year-end, cash was $2,154; total assets were $2,154; current liabilities were $39,810; and stockholders’ deficit was $37,656. The filing reports negative working capital of $37,656. Financing activities provided $25,000, including $15,000 from issuing shares and $10,000 in related-party loans; cash increased by $1,124 for the year. The balance sheet lists $27,500 of related-party notes payable. No dividends have been paid or are expected in the foreseeable future.
Changes, Outlook, and Risks
- Revenue increased $299 year over year. Gross profit improved by $654, while operating expenses fell $62,324, primarily because professional fees normalized after the prior-period public offering. Net loss narrowed substantially.
- Management discussed service agreements for six additional properties, comprising three commercial units and 58 residential units, but said final agreements had not been reached. All were partly owned by the company’s two directors.
- In January 2016, PMCA began a private placement of up to 500,000 units at $0.50 each, with each unit comprising two common shares and a warrant to buy one share at $0.75. The proposed proceeds of up to $250,000 were intended for working capital and exploration of online real-estate investment or crowdfunding. The filing does not state how much was raised.
- Management estimated it would need approximately $75,000 over the next 12 months to carry out its business plan and said expansion would require additional capital. It gave no specific revenue or profitability guidance and cautioned that it could not assure financing would be available on acceptable terms.
- The auditor’s report and management disclosed substantial doubt about PMCA’s ability to continue as a going concern, citing operating losses, operating cash use, and stockholders’ deficit. The company depended on financing from an entity controlled by its chairman and had only $2,154 cash at year-end.
- All revenue came from two related-party customers. The chairman-controlled Washington Capital Advisors LLC also provided loans and office space. The filing reports no pending or threatened lawsuits and no off-balance-sheet arrangements. Management said disclosure controls and internal control over financial reporting were effective; the auditor did not express an opinion on internal-control effectiveness.
Important Facts to Verify
- Confirm the issuer and filing: the supplied document is PMCA’s 10-K, not a Fingermotion filing.
- Reconcile related-party debt disclosures: the filing describes notes as due on demand in one section, but elsewhere gives a January 17, 2018 maturity; it also reports $27,500 principal and $644 accrued interest while another passage states $28,144 total due.
- Check the prior-year net loss: the audited statements show $76,032, while one MD&A passage states $76,023.
- Verify whether the proposed private placement closed, how much capital was raised, and whether any proposed property-management contracts were finalized.
- Assess the company’s ability to fund operations, given its going-concern warning, low cash, related-party customer concentration, and reliance on related-party financing.