Filing summary
Period and issuer: Form 10-K for the fiscal year ended February 28, 2017, filed by Property Management Corporation of America (PMCA). Although the request identifies Fingermotion, the filing covers PMCA; it describes a proposed later name change to FingerMotion, Inc., which had not taken effect as of June 13, 2017.
Business context and results
During the reporting period, PMCA provided property-management and consulting services and managed two residential and commercial properties in Virginia. All revenue came from contracts involving properties partly owned by the company’s then-chairman and acting CEO/CFO. Those contracts expired February 28, 2017 and were not renewed.
| Metric | FY ended Feb. 28, 2017 | Prior year |
|---|---|---|
| Revenue | $14,054 | $14,558 |
| Gross profit | $7,734 | $8,007 |
| Gross margin | 55.0% | 55.0% |
| Operating expenses | $21,070 | $20,797 |
| Operating loss | $(13,336) | $(12,790) |
| Interest expense | $413 | $343 |
| Net loss | $(13,749) | $(13,133) |
| Cash used in operations | $(838) | $(23,876) |
| Cash at year-end | $1,316 | $2,154 |
At February 28, 2017, total assets were $2,989, current liabilities were $54,394, and stockholders’ deficit was $51,405. Current liabilities included $27,500 of demand notes payable to a company controlled by the former chairman, plus $1,057 accrued interest. No separate operating margin or liquidity ratio is stated in the filing.
Material changes and subsequent events
- Revenue fell $504, attributed to greater-than-expected vacancies. Cost of revenue declined $231, while operating expenses rose $273, including a substantial increase in professional fees.
- Management and control changed on April 14, 2017: Wong H’Sien Loong acquired 9,000,000 shares (about 87.4%) for $200,000 and became chairman, CEO, president and CFO. The previous principal officers/directors resigned.
- The company entered a worldwide license agreement for several role-playing games on April 28, 2017. In consideration, it agreed to issue 100,000 Series A preferred shares to Finger Motion principals. Each preferred share is convertible into one common share but carries 200 votes, giving the recipients 20 million votes in aggregate. The company bears related license and performance costs.
- Shareholders authorized a 1-for-4 reverse split, an increase in authorized common shares from 18 million to 200 million, and a company-name change to FingerMotion, Inc.; none had taken effect by June 13, 2017. A separate agreement to issue 2,850,000 common shares for approximately $65,000 was also reported as not yet completed.
- The related-party loan and accrued interest were repaid after year-end; the filing gives April 14 in some sections and April 24 in a financial-statement note. The former related-party office sublease ended in March 2017.
Outlook, risks and unusual items
The auditor and management reported substantial doubt about the company’s ability to continue as a going concern, citing recurring losses, operating cash use, low cash, and the stockholders’ deficit. The financial statements contain no adjustments for a possible failure to continue. The former lender withdrew its commitment to provide loans up to $50,000, and the company stated that additional capital would be needed. The filing gives no quantitative forecast or revenue guidance.
Key risks include the loss of the business’s only customers when the affiliated-property contracts expired; dependence on related parties for both revenue and prior funding; the transition from property services to game licensing; and the substantial voting power attached to the preferred shares. The filing reports no pending or threatened lawsuits and no off-balance-sheet arrangements. Management concluded that disclosure controls and internal control over financial reporting were effective; the auditor did not provide an internal-control attestation.
Important facts for investors to verify
- Whether the preferred shares, proposed common-share issuance, reverse split, authorized-share increase and name change were completed, and the resulting voting control and dilution.
- Whether the game license produced commercial releases, revenue or material costs, and what rights and obligations apply under its terms.
- Whether the company obtained financing and resolved the going-concern uncertainty after the former lender’s commitment was withdrawn.
- Whether any new customers or revenue replaced the expired property-management contracts, which accounted for all fiscal 2017 revenue.
- The timing and amount of repayment of the related-party debt, given the filing’s differing April 14 and April 24 dates.