U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended May 31, 2009
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________ to ___________
Commission file number: 000-52684
PROGRESSIVE TRAINING, INC.
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(Name of small business issuer in its charter)
Delaware 32-0186005
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(State or other jurisdiction (IRS Employer incorporation or
of organization) Identification No.)
17337 Ventura Boulevard, Suite 208, Encino, California 91316
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(Address of principal executive offices) (Zip Code)
(818) 784-0040
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(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
Title of each class registered: None
Name of each exchange on which registered: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.0001
-------------------------------
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes [_] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [_] No [X]
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 [X] No [ ]
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 (ss.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 [ ] No [ ]
Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [_] Smaller reporting company [X]
Check whether the issuer is a "shell company" as defined in Rule 12b-2 of the
Act Yes [ ] No [X]
The aggregate market value of the registrant's common stock held by
non-affiliates of the registrant on May 31, 2009, the last business day of the
registrant's most recently completed fiscal year was $ 105,000, (based on the
closing sales price of the registrant's common stock on that date).
At August 17, 2009, the registrant had 5,280,000 shares of Common Stock, $0.0001
par value, issued and outstanding.
Documents incorporated by reference: None
CONTENTS
PAGE
PART I
Item 1. Description of Business.......................................5
Item 2. Description of Property......................................12
Item 3. Legal Proceedings............................................12
Item 4. Submission of Matters to a Vote of Security Holders..........12
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.....13
Item 6. Selected Financial Data .....................................13
Item 7. Management's Discussion and Analysis or Plan of Operation....13
Item 8. Financial Statements and Supplementary Data..................19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure..........................31
Item 9A(T) Controls and Procedure.......................................31
Item 9B Other Information............................................33
PART III
Item 10. Directors, Executive Officers, and Corporate Governance......33
Item 11. Executive Compensation.......................................35
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters...................36
Item 13. Certain Relationships and Related Transactions...............36
Item 14 Principal Accountant Fees and Services.......................37
Item 15. Exhibits, Financial Statement Schedules......................37
SIGNATURES .............................................................38
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This fiscal 2009 Annual Report on Form 10-K, including the sections
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," contains "forward-looking statements"
that include information relating to future events, future financial
performance, strategies, expectations, competitive environment, regulation and
availability of resources. These forward-looking statements include, without
limitation, statements regarding: proposed new products or services; our
statements concerning litigation or other matters; statements concerning
projections, predictions, expectations, estimates or forecasts for our business,
financial and operating results and future economic performance; statements of
management's goals and objectives; trends affecting our financial condition,
results of operations or future prospects; our financing plans or growth
strategies; and other similar expressions concerning matters that are not
historical facts. Words such as "may," "will," "should," "could," "would,"
"predicts," "potential," "continue," "expects," "anticipates," "future,"
"intends," "plans," "believes" and "estimates," and similar expressions, as well
as statements in future tense, identify forward-looking statements.
Forward-looking statements should not be read as a guarantee of future
performance or results, and will not necessarily be accurate indications of the
times at, or by which, that performance or those results will be achieved.
Forward-looking statements are based on information available at the time they
are made and/or management's good faith belief as of that time with respect to
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future events, and are subject to risks and uncertainties that could cause
actual performance or results to differ materially from those expressed in or
suggested by the forward-looking statements. Important factors that could cause
these differences include, but are not limited to:
o our inability to raise additional funds to support operations
and capital expenditures;
o our inability to achieve greater and broader market acceptance
of our products and services in existing and new market
segments;
o our inability to successfully compete against existing and
future competitors;
o our inability to manage and maintain the growth of our
business;
o our inability to protect our intellectual property rights; and
o other factors discussed under the headings "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."
Forward-looking statements speak only as of the date they are made. You
should not put undue reliance on any forward-looking statements. We assume no
obligation to update forward-looking statements to reflect actual results,
changes in assumptions or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities laws. If we
do update one or more forward-looking statements, no inference should be drawn
that we will make additional updates with respect to those or other
forward-looking statements.
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ITEM 1. DESCRIPTION OF BUSINESS
(a) Background
We were incorporated in Delaware on October 31, 2006. From the date we were
incorporated until March 1, 2007, we were a wholly owned subsidiary of Dematco,
Inc., formerly Advanced Media Training Inc., a Delaware corporation (hereinafter
"Dematco"). On December 10, 2006, our then parent Dematco acquired all the
remaining outstanding shares of Dematco Ltd., and elected a new slate of
directors and appointed new corporate officers. Concurrent with the acquisition,
the new management of Dematco decided to change its core business from the
production and distribution of workforce training videos to that of its just
acquired company Dematco, Ltd., and to as soon as feasible cease all business
activity related to the video training business. The business of Dematco, Ltd.
is the dematerializing or converting of financial instruments from paper form to
electronic form so as to enable such instruments to be traded in a secure manner
electronically on exchanges or exchange platforms on a peer to peer basis. (see
COMPANY HISTORY page 11)
(b) Description of Business
Progressive Training's core business is the development, production and
distribution of management and general workforce training videos for use by
businesses throughout the world. In addition to distributing videos produced by
us, we market and distribute training videos financed and produced by other
producers. The sale of third party videos currently accounts for approximately
40% of our revenues. We anticipate that this percentage will remain the same for
the foreseeable future.
WORKFORCE TRAINING VIDEO PRODUCTION
Among the videos produced by us are:
THE CUBAN MISSILE CRISIS: A CASE STUDY IN DECISION MAKING AND ITS CONSEQUENCES.
This video is based on the decision making process of President Kennedy and his
Cabinet during the Cuban missile crisis,
OWN IT (i.e., "own" your job) and focuses on four main themes: Caring About What
You Do, Going Above And Beyond, Being A Team Player, and Being Proud Of What You
Do And Where You Do It.
HOW DO YOU PUT A GIRAFFE INTO A REFRIGERATOR? This is an animated short that is
used as a meeting opener to stimulate the thinking of the participants,
TEAMSPEAK: HOW TO ASK POSITIVE QUESTIONS. The video's basic theme is the
importance of asking positive questions at team meetings.
CHARACTER IN ACTION: THE UNITED STATES COAST GUARD ON LEADERSHIP. In this video
author Donald T. Phillips ("Lincoln on Leadership") demonstrates the highest
qualities of leadership, and how to apply them, using the example of the United
States Coast Guard.
PIT CREW CHALLENGE: DRIVEN TO PERFORM. The video uses the example of an
executive team, whose members have little or no experience with cars beyond
driving them, taking the challenge of learning how to function as a NASCAR pit
crew.
WORKTEAMS AND THE WIZARD OF OZ. Utilizing scenes from the classic movie, host
Ken Blanchard demonstrates how workteams can reach their goals, no matter how
diverse their members or how difficult the undertaking.
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GENERATION WHY. Former teacher and coach on camera host Eric Chester shows
organizations how to recruit, train, manage, motivate, and retain the very best
of this new generation.
In most cases the cost of production for the workforce training videos range
from a low of $40,000 to a high of $125,000. Among the factors that determine
the cost are: (a) Script costs, (b) number of cast members, (c) location or
studio photography, (d) on-camera host, (e) music & special effects, and (f)
size of production crew. Given our limited funds we did not produce any new
training videos during fiscal 2008, and do not anticipate producing any new
training videos during calendar 2009.
DISTRIBUTION OF VIDEOS
As stated above, a consequence of our current and very limited financial
resources is that we are unable to develop and produce new training videos on a
regular basis. As a result, we mainly marketed and sold videos produced by third
parties during the period ended May 31, 2009. We anticipate for the foreseeable
future, approximately between 40% and 50% of our revenues will be generated from
the sale of videos produced by others. These producers range in size from large
corporations, to small independent companies. In general, we market and sell
videos they have financed and produced and we receive a discount ranging from
35% to 50% of the gross sale price. It is standard practice within the training
industry for distributors to market and sell videos financed and produced by
third parties. We are not dependent on any one producer as a source of product
for us to sell. To date, no one source or product has accounted for 10% or more
of revenues, nor has any one training video accounted for a significant portion
of our revenue.
In regard to videos produced by us, we have non-exclusive distribution
agreements with a number of distributors to market and sell videos financed and
produced by us. Under the terms of these distribution agreements, we have agreed
to pay a marketing/distribution fee, ranging from 35% to 50% of gross sales to
distributors that sell our video training products. In many instances, we have
mutual non-exclusive distribution agreements to market/distribute their products
for a similar fee. We are not dependent on any one distributor to market or sell
our product. To date, no one distributor has accounted for 10% or more of
revenues derived from the sale of videos produced by us. Currently, we have
twenty-eight domestic distribution agreements, and twenty-seven international
distribution agreements. Most of the domestic distribution agreements are with
companies that both produce and distribute training videos. These agreements are
reciprocal, in that under the terms of the agreements they are licensed to sell
our videos and we are licensed to sell videos that were produced by them. The
foreign distribution agreements, as well as domestic agreements with companies
that only produce training videos provide only a license for us to sell videos
produced by them. Except as mentioned above and along with the percentage of
distribution fees paid or received, the terms and conditions are virtually the
same in all of our distribution contracts.
The material terms of our various agreements with suppliers (which consist of
distributors and producers) are very similar. In general, these agreements
provide us with the right to sell the supplier's video training products on a
non-exclusive basis. Other material terms include: (i) length of contractual
period, automatic renewal for an additional one (1) year terms, subject to
termination on 30 or 60 days prior written notice by either party; (ii) sales
territory; (iii) confirmation of our independent contractor relationship: (iv)
sales commission: and, (v) in two (2) instances we are required to meet monthly
sales minimums, which if not met, permits the supplier, at his option, to
terminate the agreement. As noted above, we market and sell the training videos
for a commission from 35% to 50% of the gross sales price. We are in compliance
with all the terms and conditions of our agreements with suppliers.
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WORKFORCE TRAINING INDUSTRY OVERVIEW
GENERAL
Except where specifically indicated the following industry views and analysis
are based on management's interpretations and beliefs resulting from their
experience in the production, sales and marketing of workforce training videos,
and their attendance at industry events such as the annual American Society for
Training & Development meeting where industry trends are discussed.
According to the Annual Industry Report published by Lakewood Publications in
the 2007 issue of its industry publication, TRAINING MAGAZINE:
o $58.5 billion was spent for training in 2007 by U.S.
organizations with 100 or more employees. This compares to
$51.1 billion total industry spending in 2006.
o $16.3 billion of that $58.5 billion was spent on outside
providers of products and services in 2007. This compares to
$15.8 billion in 2006. These products and services include
"off-the-shelf" materials (our videos and work books are
included in this category).
o Training budgets increased by 6% from 2006
"Soft-Skill" training and Information Technology training represent the
industry's two major distinct sources of revenue. Soft-Skill training includes
management skills/development, supervisory skills, communication skills, new
methods and procedures, customer relations/services, clerical/secretarial
skills, personal growth, employee/labor relations, and sales. Information
Technology training includes client/server systems, internet/intranet
technologies, computer networks, operating systems, databases, programming
languages, graphical user interfaces, object-oriented technology and information
technology management.
TRAINING VIDEO PRODUCTION
As stated earlier, approximately 40% to 50% of our revenue is derived from the
sale of training videos produced by other companies. Many of these videos are
produced by producer/distributors that have the financial resources to produce
several videos each year. These producer/distributors then enter into
sub-distribution agreements with other industry distributors to market and sell
these videos. Additionally, there are many independent producers who produce one
or two videos a year. These independent producers then enter into distribution
agreements for the marketing and sale of their videos. Such agreements are
usually on a royalty basis, and may include an advance against royalties.
THE SOFT SKILL TRAINING MARKET
There are over thirty different specific soft-skill training subjects utilized
by organizations to increase employee productivity and awareness. Among the top
ten subjects are: new-employee orientation, leadership, sexual harassment,
new-equipment orientation, performance appraisals, team-building, safety,
problem-solving/decision-making, train-the-trainer, and product knowledge.
We have produced and are marketing training videos that address a number of the
above mentioned soft-skill categories. These videos address such categories as
leadership, team-building, and problem solving/decision-making. These three
categories match the focus of the videos in our current library.
Although many organizations continue to maintain in-house training departments,
outside suppliers represent a significant portion of the training budget.
TRAINING MAGAZINE reported in its recent industry report that training delivered
by outside sources represented approximately 30% of the total dollars spent on
traditional training, and approximately 38% of technology based training.
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THE INFORMATION TECHNOLOGY MARKET
To date, we have not produced any training products for the information
technology market. Nor do we anticipate doing so in the foreseeable future.
However, since we do market such products produced by others, we felt it
appropriate to include a discussion of this sector.
The Annual Industry Report additionally revealed that of all formal training in
U.S. organizations with ten or more employees, approximately 40% of that formal
training is devoted to teaching computer skills. Management believes that the
market for Information Technology will continue to be driven by technological
change, and that the increasing demand for training information technology
professionals is a result of several key factors, including:
o the proliferation of computers and networks throughout all levels of
organizations; o the shift from mainframe systems to new client/server
technologies; o the continuous introduction and evolution of new client/server
hardware and software technologies; o the proliferation of internet and intranet
applications; and o corporate downsizing.
It is our belief that these foregoing factors have resulted in an increase in
training requirements for employees who must perform new job functions or
multiple job tasks that require knowledge of varied software applications,
technologies, business specific information, and other training topics.
Furthermore, since we believe that many businesses use hardware and software
products provided by a variety of vendors, their information technology
professionals require training on an increasing number of products and
technologies which apply across vendors, platforms and operating systems.
PRODUCTS AND SERVICES
Currently, and for at least the next twelve months, we anticipate devoting our
limited resources to the development, production and distribution of workforce
training videos. However, due to the significant amount of cash required to
produce new training videos, ($40,000 to $125,000), we expect that most of our
financial resources will be utilized for the purpose of distributing videos
produced by other companies, and those videos that have already been produced by
us.
Accompanying each of the videos produced by us is a workbook that is designed to
be given to all employees participating in the training program. These workbooks
are written for us by training professionals and serve to reinforce and enhance
the lasting effectiveness of the video. In addition to the workbook, we plan to
offer an audiocassette that gives the trainee a general orientation to the
training material and serves to reinforce the video's salient points. We believe
that the trainees will significantly benefit by being able to use the audio
cassette to strengthen and review their comprehension of the information covered
in the video during periods when it would be impossible to view a video, such as
during drive-time.
8
Training videos typically have a running time of 20 to 35 minutes. The price
range for training videos is from a low of $295 to over $895 per video. Except
for our video entitled HOW DO YOU PUT A GIRAFFE INTO A REFRIGERATOR?, which is
used as a short 3 minute meeting opener, the videos we acquired fall within the
25 to 35 minute running time range and are sold within the price range mentioned
above. The wide variance in the pricing structure is due to such factors as
quality of production, on-camera personalities, source of material,
sophistication of graphics, and accompanying reference materials. To date, our
strategy has been to concentrate on producing high caliber videos utilizing
elements and production values that will generate sales at the higher end of the
price range, where profit margins are greater.
The price differential between a corporate training video and a standard
consumer video is justified by the fact that an organization will purchase a
video and utilize it to train hundreds of employees over many years.
SALES AND MARKETING
As stated earlier, the Company's business is conducted under the dba Advanced
Knowledge. Accordingly, all of our marketing and sales materials incorporate the
Advance Knowledge name and logo. In most cases, the sale of management and
general workforce training videos involve direct mail solicitation, preview
request fulfillment, and telemarketing. We begin our sales effort by identifying
prospective buyers and soliciting them through direct mail appeals that offer
the recipient a free preview. In addition, we market and distribute our work
force training videos via our web site at www.advancedknowledge.com. During the
past year there has been a significant increase within the training industry on
the utilization of the internet to both market and deliver training products.
Preview request fulfillment represents a major part of our sales plan. It has
been our experience that most professional trainers will not purchase a training
video until they have previewed it in its entirety, affording them an
opportunity to evaluate the video's applicability to their specific objective
and to judge its effectiveness as a training tool. When requests are received, a
preview copy is immediately sent to the prospective buyer. To enhance sales
potential, we send preview copies in the form of video catalogues. Each video
catalogue will include several titles in the same general subject area, as the
prospect may be interested in acquiring other videos that deal with similar
issues. Within a short period of time following the shipment of the preview
copy, a telemarketing representative will call the prospective buyer to obtain
their comments and to ascertain their level of interest. As a result of having
to send preview copies to potential customers, the sales cycle may take as
little as a week or as long as several months. We mainly utilize the following
three marketing methods to sell our videos.
TELEMARKETING
We manage our telemarketing efforts by utilizing part-time employees or free
lance telephone representatives who focus primarily on following up on leads
that have been generated through direct mail solicitation. Occasionally, we will
utilize the services of an outside telemarketing firm to supplement our own
efforts. Before calling potential customers our telemarketers are provided with
information on a customer's buying history and past needs.
DIRECT MAIL
We believe one of the most cost efficient ways of generating sales is through
the direct mailing of product catalogues to the purchaser of training products
and materials at organizations having 100 or more employees. This is our prime
target. According to Dun & Bradstreet, there are over 135,000 organizations in
the United States with at least 100 people. However, during the past fiscal
year, as a result of our very limited funds we have not been able to utilize
this sales method.
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COMPANY WEBSITE
Our experience during the past two years has been that increasingly corporate
training managers and others responsible for the purchase of training videos are
utilizing the internet to research and make their purchases. As a result, we
anticipate spending available funds to upgrade our website's functionality by
improving its overall design, and by adding additional features, such as the
ability to preview videos online, broaden the website's database to include more
content information on most videos, increase the website's search capabilities,
and to generally make the website more user friendly.
Additionally, in an effort to increase traffic to our website, we have paid both
Google and Yahoo for better placement on their search engines. We intend to
continue to pay these search engines for prime placement, as our financial
resources permit.
COMPETITION
The workforce training industry is highly fragmented, with low barriers to entry
and no single competitor accounting for a dominant market share. Among our
competitors are companies such as Media Partners Corp., the LearnCom
Corporation, Coastal Training Technologies, and CRM Learning. Many of our
competitors have a competitive edge, as demonstrated by the fact that these
companies were able to spend significantly more money for the production, and
marketing of new videos. Additionally, we compete with the internal training
departments of companies and other independent education and training companies.
INTERNAL TRAINING DEPARTMENTS
We have learned that internal training departments generally provide companies
with the most control over the method and content of training, enabling them to
tailor the training to their specific needs. However, because internal trainers
in many cases find it difficult to keep pace with new training concepts and
technologies and lack the capacity to meet demand, organizations supplement
their internal training resources with externally supplied training in order to
meet their requirements.
INDEPENDENT TRAINING PROVIDERS
Our experience has revealed that independent training providers range in size
and include publishers of texts, training manuals and newsletters, as well as
providers of videos, software packages, training programs, and seminars.
As a result of the need for external training products and services, many large
corporations have entered the field by establishing corporate training
divisions. Among the larger competitors are: Times Mirror Corporation; Sylvan
Learning Systems, Inc.; Berkshire Hathaway; and Harcourt General. Additional
competitors currently producing training products include Blanchard Training &
Development, Career Track, American Media, Pfeiffer & Company, CRM Films,
Charthouse International, and Learning Works. In all cases, the companies listed
above have established credibility within the training industry and, compared to
us, have substantially greater name recognition and greater financial,
technical, sales, marketing, and managerial resources.
The workforce training market is characterized by significant price competition,
and we expect to face increasing price pressures from competitors as company
training managers demand more value for their training budgets. There can be no
assurance that we will be able to provide products that compare favorably with
workforce instructor-led training techniques, interactive training software or
other video programs, or that competitive pressures will not require us to
reduce our prices significantly.
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COMPANY HISTORY
We were incorporated in Delaware on October 31, 2006. From the date we were
incorporated until March 1, 2007, we were a wholly owned subsidiary of Dematco,
Inc., formerly Advanced Media Training Inc., a Delaware corporation (hereinafter
"Dematco"). On December 10, 2006, our then parent Dematco acquired all the
remaining outstanding shares of Dematco Ltd., and elected a new slate of
directors and appointed new corporate officers. Concurrent with the acquisition,
the new management of Dematco decided to change its core business to that of its
just acquired company Dematco, Ltd., and to as soon as feasible cease all
business activity related to its unrelated business of producing and
distributing workforce training videos. The business of Dematco, Ltd. is the
dematerializing or converting of financial instruments from paper form to
electronic form so as to enable such instruments to be traded in a secure manner
electronically on exchanges or exchange platforms on a peer to peer basis.
On March 1, 2007, to facilitate its exit from the training business, the Company
and Dematco entered into an Asset and Liability Assumption Agreement, whereby
the Company acquired all of Dematco's assets and liabilities related to the
production and distribution of workforce training videos in exchange for
1,750,000 shares of the Company's common stock. The assets included distribution
rights to twelve workforce training videos, its distribution contracts with
other producers of related videos, accounts receivable totaling approximately
$9,000, the name Advanced Knowledge for use by a division of the Company, and
the Advanced Knowledge website. As stated earlier, the training video business
has been and currently is conducted under the dba Advanced Knowledge. The
liabilities we assumed included approximately $28,500, in accounts payable, an
outstanding line of credit balance of $12,000, and an outstanding credit card
balance of approximately $23,500.
Additionally, on March 1, 2007 Dematco's Board of Directors approved and agreed
to a debt conversion agreement between three parties, namely, (i) Dematco as the
parent company, (ii) us, as the then wholly owned subsidiary of Dematco, and
(iii) our president, Buddy Young. Under the terms of the agreement, Mr. Young
agreed to convert $80,000 of the $138,173 owed to him by the Company under a
promissory note, to equity in exchange for Dematco's transfer of 1,000,000
shares of the Company's common stock to Mr. Young. As a result, Mr. Young became
our principal shareholder, while Dematco retained 750,000 shares of our common
stock. As a result of that transfer we were no longer a subsidiary of Dematco.
Further, on January 31, 2008, the Company as the creditor, entered into a Note
Satisfaction and Exchange Agreement with Dematco as debtor, pursuant to which
the Company forgave the principal amount of approximately $30,000 owed to it by
Dematco in exchange for Dematco's distribution of all of its interest in the
Company (which interest consists of seven hundred and fifty thousand (750,000)
shares of Progressive's common stock to Dematco's shareholders, as of March 25,
2008. As a result, Dematco no longer owns any shares of the Company, nor does it
have any other relationship with or interest in us.
On March 16, 2009, the Company entered into an agreement to issue 3.0 million
shares of restricted common stock of the Company in exchange for a total of
$180,000 of debt due to the Company's President.
Since our inception, we have been engaged in the development, production and
distribution of management and general workforce training videos for use by
businesses throughout the world.
As a result of our very limited cash position we currently only have two part
time consultants who assist with the marketing and administration functions. We
mainly utilize outside services to handle our accounting and other
administrative requirements, and commissioned sales personnel to handle the
selling and marketing of our videos. If cash flow permits we anticipate hiring
one or two additional full-time employees to assist in our sales and marketing
requirements. In addition, Mr. Buddy Young, our Chief Executive Officer, Chief
Financial Officer and Chairman of the Board of Directors works on a part-time
basis. During the year ended May 31, 2009, Mr. Young contributed non-cash
compensation (representing the estimated value of services contributed to the
Company of $41,600).
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ITEM 2. DESCRIPTION OF PROPERTY
We lease office space consisting of a total of approximately 1,150 square feet,
from Encino Gardens LLC, an unaffiliated third party for $2,500 per month,
located at 17337 Ventura Boulevard, Suite 208, Encino, California 91316. The
lease terminates August 31, 2009. In an effort to reduce our expenditures we
have relocated to a smaller office located in the same building and our monthly
rent is $900 on a month-to-month basis.
ITEM 3. LEGAL PROCEEDINGS
As of the date hereof, we are not a party to any material legal proceedings, and
we are not aware of any such claims being contemplated against us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year ended May 31, 2009.
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PART 11
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
On November 17, 2008 our common stock began trading on the over-the-counter
Bulletin Board system (also known as OTC:BB), under the stock symbol, (PRTR).
The Over-The-Counter Bulletin Board System requires that the company's stock be
registered with the Securities and Exchange Commission, that the company be
current with its Securities and Exchange Commission filing requirements, and
have at least one (1) market maker. There are no requirements as to stock price,
bid and asked quotes, number of shareholders, the number of shares held by each
shareholder, or the number of shares traded.
HOLDERS
As of May 31, 2009, we have 5,280,000 shares of common stock issued and
outstanding held by approximately 190 shareholders of record. We currently have
no outstanding options or warrants for the purchase of our common stock and have
no securities outstanding which are convertible into common stock. We have not
yet adopted or developed any plans to adopt any stock option, stock purchase or
similar plan for our employees.
COMMON STOCK
The Company's certificate of incorporation provides for the authorization of
100,000,000 shares of common stock, $0.0001 par value. As of May 31, 2009,
5,280,000 shares of common stock were issued and outstanding, all of which are
fully paid and non-assessable.
DIVIDEND POLICY
We have not declared any cash dividends on our common stock since our inception
and do not anticipate paying such dividends in the foreseeable future. We plan
to retain any future earnings for use in our business. Any decisions as to
future payments of dividends will depend on our earnings and financial position
and such other facts as the board of directors deems relevant. We are not
limited in our ability to pay dividends on our securities.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
You should read this section together with our financial statements and related
notes thereto included elsewhere in this report. In addition to the historical
information contained herein, this report contains forward-looking statements
that are subject to risks and uncertainties. Forward-looking statements are not
based on historical information but relate to future operations, strategies,
financial results or other developments. Forward-looking statements are based
upon estimates and assumptions that are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many of
which are beyond our control and many of which, with respect to future business
decisions, are subject to change. Certain statements contained in this Form 10,
including, without limitation, statements containing the words "believe,"
"anticipate," "estimate," "expect," "are of the opinion that" and words of
similar import, constitute "forward-looking statements." You should not place
any undue reliance on these forward-looking statements.
13
You should be aware that our results from operations could materially be
effected by a number of factors, which include, but are not limited to the
following: economic and business conditions specific to the workforce training
industry, competition from other producers and distributors of training videos;
our ability to control costs and expenses, access to capital, and our ability to
meet contractual obligations. There may be other factors not mentioned above or
included elsewhere in this report that may cause actual results to differ
materially from any forward-looking information.
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations
are based upon our statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses. In
consultation with our Board of Directors, we have identified two accounting
policies that we believe are key to an understanding of our financial
statements. These are important accounting policies that require management's
most difficult, subjective judgments.
The first critical accounting policy relates to revenue recognition. We
recognize revenue from product sales upon shipment to the customer. Rental
income is recognized over the related period that the videos are rented. Based
on the nature of our product, we do not accept returns. Damaged or defective
product is replaced upon receipt. Such returns have been negligible since the
Company's inception.
The second critical accounting policy relates to production costs. The Company
periodically incurs costs to produce new management training videos and to
enhance current videos. Historically, the Company has been unable to accurately
forecast revenues to be earned on these videos and has, accordingly, expensed
such costs as incurred.
INTRODUCTION
As noted elsewhere in this report, the Company's principal customers are
companies having 100 or more employees with an established training department.
In many cases, training departments are part of and supervised by the company's
human resource department. In order to maintain our relationship with these
customers, we must work closely with them to make sure that we are in a position
to satisfy their training requirements.
We face competition from numerous other providers of training videos. We believe
many of these competitors are larger and better capitalized than the Company.
Additionally, if the Company is to grow its business by financing and producing
additional training videos, it will require additional capital. Further, as
reflected in our fiscal 2008 financial statements, our revenues are greatly
impacted by general economic conditions. Corporations tend to severely reduce
training budgets during an economic slowdown.
To date our cash flows from operations have been minimal. Other than from
operations and our line of credit, our only source of capital is an agreement
with our President and majority shareholder to fund any shortfall in cash flow
up to $250,000 at 8% interest through June 30, 2010. Repayment is to be made
when funds are available with the balance of principal and interest due December
31, 2010. On March 16, 2009, the Company entered into an agreement to issue 3.0
million shares of restricted common stock of the Company in exchange for a total
of $180,000 of debt due to the Company's President. As a result, the Company
owes Mr. Young $16,262 as of May 31, 2009.
We anticipate that the cash flow from operations, together with the available
funds under the above referenced agreement with our president will be sufficient
to fulfill our capital requirements through fiscal year 2010.
14
Our efforts during the next 12 months will mainly be focused on, increasing
revenue by (a) seeking to retain additional free lance commissioned sales
representatives, (b) improve the functionality of our website by adding features
such as providing customers the ability to preview videos online, and by
enhancing the website's search capabilities and user interface, and (c) by
allocating a greater portion of available cash flow for both the emailing and
direct mailing of marketing materials such as catalogues and notices of special
discounts to our customers. Further, in all probability, we will attempt to
raise additional funds through the sale of equity, which may have a substantial
dilutive effect on the holdings of existing shareholders.
If during the next twelve months our revenue is insufficient to continue
operations, and we are unable to raise funds through the sale of additional
equity, or from traditional borrowing sources, we may be required to totally
abandon our business plan and seek other business opportunities in a related or
unrelated industry. Such opportunities may include a reverse merger with a
privately held company. The result of which could cause the existing
shareholders to be severely diluted.
RESULTS OF OPERATIONS
GENERAL
Progressive Training's current core business is the development, production and
distribution of management and general workforce training videos for use by
businesses throughout the world. Workforce training industry trends have
demonstrated that the amount of money allocated by companies for the training of
their employees varies according to general economic conditions. In many cases
in a good economy training department budgets are increased, and as a result
more funds are available to purchase training videos and other employee training
products. Conversely, when economic conditions are not good companies tend to
cut back on the amount of funds spent on the purchase of workforce training
products. We anticipate that general economic conditions will continue to have a
direct effect on our revenues.
FOR THE YEARS ENDED MAY 31, 2009 AND 2008
SELECT FINANCIAL INFORMATION
Statement of Operations Data
2009 2008
------------ ------------
Revenue ............. $ 132,181 $ 239,676
Cost of revenues .... $ 24,302 $ 57,473
Gross profit ........ $ 107,879 $ 182,203
Total expenses ...... $ 246,583 $ 331,232
Net loss after taxes $ (139,504) $ (149,829)
Net loss per share .. $ (0.05) $ (0.07)
Balance Sheet Data
Total assets ........ $ 9,688 $ 25,462
Total liabilities ... $ 119,418 $ 217,288
Stockholder's deficit $ (109,730) $ (191,826)
15
REVENUES
Our revenues for the year ended May 31, 2009 were $132,181. Revenues for the
prior year ended May 31, 2008, were $239,676. This represents a decrease of
$107,495 This substantial decrease is mainly the result of the following
factors:(a) the slowdown in the general economy which has a direct impact on
corporate training budgets, (b) the aging of the videos produced by us and the
fact that we have not introduced any new videos into the marketplace during
fiscal years 2009 and 2008, and (c) the loss of the full time services of two of
our sales personnel. Product sales made up approximately 60% of the total
revenue. Royalties earned from the sales of our product amounted to
approximately $55,000 during the year ended May 31, 2009 and $69,000 during the
year ended May 31, 2008. Rental of videos were less than 1% of our sales. We
expect the rentals of videos to continue to represent approximately the same
percentage of revenues for the foreseeable future. Sales of videos produced by
other companies accounted for approximately 40% of revenues.
COST OF REVENUES
The cost of revenues during the year ended May 31, 2009, was $24,302 as compared
to $57,473 during the year ended May 31, 2008. The cost of revenues, as a
percent of sales was 18% during the year ended May 31, 2009 and 24% during the
year ended May 31, 2008. Although there may be occasional variances, we
anticipate that the cost of goods sold (excluding production costs expensed) as
a percentage of total revenues will, in general, continue to be approximately
within the 20 to 40 percent range.
During most periods a significant portion of our revenue is generated from the
sale of training videos produced by companies with which we have distribution
contracts with. The terms of these distribution contracts vary with regard to
percentage of discount we receive. These discounts range from a low of 35% to a
high of 50% of gross receipts. As we cannot predict which companies will produce
better selling videos in any one period, we cannot predict future product mix.
However, although there may be some variances, we anticipate that the cost of
goods sold as a percentage of revenues derived from the sale of third party
videos will in general, be approximately within the 25 to 40 percent range.
EXPENSES
Selling and marketing expenses were $36,776 for the year ended May 31, 2009 as
compared to $82,681 for the year ended May 31, 2008. This represents a decrease
of $45,905. This decrease is the result of a decrease in our business promotion
expense to $14,659 during the year ended May 31, 2009 from $50,205 during the
year ended May 31, 2008 as we lost a key employee and cash flow limited our
ability to continue online promotions. We also experienced a decrease in our
commission expense of $3,208 to $7,502 during the year ended May 31, 2009 from
$10,710 during the year ended May 31, 008. Our selling and marketing costs are
directly affected by the number of new training products we introduce into the
marketplace.
General and administrative expenses for the year ended May 31, 2009 were
$197,409 as compared to $226,400 for the year ended May 31, 2008. This
represents a decrease of $28,991. This decrease is the result of a decrease in
our outside service fees of $38,527to $15,211for the year ended May 31, 2009
from $53,738 during the year ended May 31, 2008 due to the loss of a
consultant's services. We also experienced a decrease in our bad debt expense of
$3,217 to $3,783 during the year ended May 31, 2009 from $7,000 during the year
ended May 31, 2008. These decreases were partially offset by an increase of
$19,200 in our professional fees to $81,052 during the year ended May 31, 2009
from $61,852 during the year ended May 31, 2008. Professional fees consist of
audit and accounting fees in relation to our quarterly and annual filings along
with legal fees. During the years ended May 31, 2009 and 2008, our President
contributed $41,600 of services.
16
Research and development expenses were $36 for the year ended May 31, 2009 as
compared to $10,477 for the year ended May 31, 2008. This decrease was due to
the fact that as a result of our very limited funds, we did not develop any new
training videos. If cash flow permits, we anticipate that we will incur research
and development costs as we evaluate and develop new training video products
during the next fiscal period.
Interest expense totaled $12,362 for the year ended May 31, 2008 and $11,674 for
the year ended May 31, 2008. Interest expense relates to our line of credit and
borrowings from our principal shareholder. On May 31, 2009 our total term debt
outstanding was $54,988 as compared to $119,064 on May 31, 2008.
NET LOSS
As a result of the aforementioned, our net loss was $139,504 for the year ended
May 31, 2009 and $149,829 for the year ended May 31, 2008.
PLAN OF OPERATION
We will continue to devote our very limited resources to marketing and
distributing workforce training videos and related training materials, through
our website. At this time these efforts are focused on the sale of videos
produced by third parties. Approximately 40% of our revenue is derived from
these sales. Additionally, we will continue to market videos produced by us,
Among these are "The Cuban Missile Crisis: A Case Study In Decision Making And
Its Consequences," "What It Really Takes To Be A World Class Company," "How Do
You Put A Giraffe In The refrigerator?." In addition, we anticipate spending
some of our resources on the production and marketing of additional training
videos produced by us. The amount of funds available for these expenditures will
be determined by cash flow from operations, as well as, our ability to raise
capital through an equity offering or further borrowing from our President, and
other traditional borrowing sources. There can be no assurance that we will be
successful in these efforts.
Management expects that sales of videos and training materials, along with
available funds under an agreement with its President and majority shareholder
should satisfy our cash requirements through fiscal 2010. The Company's
marketing expenses and the production of new training videos will be adjusted
accordingly.
As previously stated, if during the next twelve months our revenue is
insufficient to continue operations, and we are unable to raise funds through
the sale of additional equity, or from traditional borrowing sources, we may be
required to totally abandon our business plan and seek other business
opportunities in a related or unrelated industry. Such opportunities may include
a reverse merger with a privately held company. The result of which could cause
the existing shareholders to be severely diluted.
We currently have no full time employees. We do have two part time consultants
who assist with the administration functions. We mainly utilize outside services
to handle our accounting and other administrative requirements, and commissioned
sales personnel to handle the selling and marketing of our videos. During the
next 12 months if cash flow permits, we anticipate hiring one or two full-time
employees to assist in our sales and marketing requirements. In addition, Mr.
Buddy Young, our Chief Executive Officer, Chief Financial Officer and Chairman
of the Board of Directors works on a part-time basis. During the year ended May
31, 2009, Mr. Young contributed non-cash compensation (representing the
estimated value of services contributed to the Company) of $41,600.
17
LIQUIDITY AND CAPITAL RESOURCES
Our working capital deficit was $88,566 at May 31, 2009.
Our cash flows used by operations were $110,216 for the year ended May 31, 2009.
This is the result of our net loss of $139,504 along with cash used by accounts
payable and accrued expenses of $28,794, offset by decrease in our accounts
receivable of $16,482.
Our cash flows used by operations were $94,512 for the year ended May 31, 2008.
This is the result of our net loss of $149,829 along with cash used by accounts
receivable in the amount of $15,377, offset by an increase in our allowance of
$5,770, related party in the amount of $5,701 and the increase of accounts
payable and accrued expenses in the amount of $17,204.
During the years ended May 31, 2009 and 2008 we did not use any cash for
investing activities.
Our cash flows provided by financing activities were $110,924 for the year ended
May 31, 2009. This is the result of borrowing from a shareholder in the amount
of $110,207 along with borrowing on our line of credit in the amount of $717.
Our cash flows provided by financing activities were $84,064 for the year ended
May 31, 2008. This is the result of borrowing from a shareholder in the amount
of $81,055 along with borrowing on our line of credit in the amount of $3,009.
We currently have no material commitments at this time to fund development of
new videos or to acquire any significant capital equipment.
We are a company with a limited operating history and a history of net losses.
We had a cash balance of $2,318 on May 31, 2009. We have an agreement with our
President and majority shareholder to fund any shortfall in cash flow up to
$250,000 at 8% interest through June 30, 2010. We owed our President a total of
$16,262 in principal under the agreement as of May 31, 2009. The note is
collateralized by all of our right, title and interest in and to our video
productions and projects, regardless of their stage of production, including all
related contracts, licenses, and accounts receivable. Any unpaid principal and
interest under the Note will be due and payable on December 31, 2010.
The Company has a revolving line of credit with Bank of America. This line of
credit permits the Company to borrow up to $40,000. The line of credit is
guaranteed by the Company's President. Interest is payable monthly at 2.22%
above the bank's prime rate of interest (5.47% at May 31, 2009). The line of
credit does not require the Company to meet performance criteria or maintain any
minimum levels of income or assets. It does require the Company to maintain
insurance, maintain a modern system of accounting in accordance with generally
accepted accounting principles ("GAAP") and to comply with the law. The Company
is in compliance with the terms and conditions of the line of credit. The
outstanding balance as of May 31, 2009, was $38,726.
If revenues from the sale of our videos do not provide sufficient funds to
maintain operations, then we believe the raising of funds through further
borrowings from our President or the sale of additional equity will be
sufficient to satisfy our budgeted cash requirements through June 30, 2010.
Additionally, we may attempt a private placement sale of our common stock.
Further, our ability to pursue any business opportunity that requires us to make
cash payments would also depend on the amount of funds that we can secure from
these various sources. If funding is not available from any of these sources to
meet our needs, we will further scale back our operations, and seek other
business opportunities.
18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
PROGRESSIVE TRAINING, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
Report of Independent Registered Public Accounting Firm................ 20
Balance Sheets as of May 31, 2009 and 2008............................. 21
Statements of Operations............................................... 22
Years Ended May 31, 2009 and 2008
Statements of Stockholders' Deficit.................................... 23
Years ended May 31, 2009 and 2008
Statements of Cash Flows............................................... 24
Years Ended May 31, 2009 and 2008
Notes to Financial Statements - May 31, 2009........................... 25
19
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF PROGRESSIVE TRAINING, INC.:
We have audited the accompanying balance sheets of Progressive Training, Inc. as
of May 31, 2009 and 2008, and the related statements of operations,
shareholders' deficit, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company determined that it was
not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, based on our audits, such financial statements present fairly,
in all material respects, the financial position of the Company as of May 31,
2009 and 2008, and the results of its operations and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.
/S/ FARBER HASS HURLEY LLP
-----------------------------------
CAMARILLO, CALIFORNIA
AUGUST 11, 2009
20
PROGRESSIVE TRAINING, INC.
BALANCE SHEETS
-------------------------------------------------------------------------------
May 31, May 31,
2009 2008
----------- -----------
ASSETS
Cash ........................................... $ 2,318 $ 1,610
Accounts receivable, net of allowance
for doubtful accounts of $4,000
and $20,642, respectively .................... 5,424 21,906
Property and equipment, Net of accumulated
depreciation of $11,709 ...................... -- --
Prepaid expenses and other assets .............. 1,946 1,946
----------- -----------
TOTAL ASSETS ................................... $ 9,688 $ 25,462
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES:
Line of credit ................................. $ 38,726 $ 38,009
Accounts payable and accrued expenses .......... 57,582 95,353
Accrued interest due to shareholder ............ 6,848 2,871
Note payable due to shareholder ................ 16,262 81,055
----------- -----------
Total liabilities .............................. 119,418 217,288
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT:
Common stock, par value - $.0001;
100,000,000 shares authorized; 5,280,000
and 2,280,000 shares issued and
outstanding, respectively .................. 528 228
Additional paid-in capital ..................... 1,556,723 1,335,423
Accumulated deficit ............................ (1,666,981) (1,527,477)
----------- -----------
Total shareholders' deficit .................... (109,730) (191,826)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT .... $ 9,688 $ 25,462
=========== ===========
See accompanying notes to financial statements.
21
PROGRESSIVE TRAINING, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MAY 31, 2009 AND 2008
-------------------------------------------------------------------------------
2009 2008
----------- -----------
REVENUES .............................. $ 132,181 $ 239,676
COST OF REVENUES ...................... 24,302 57,473
----------- -----------
GROSS PROFIT .......................... 107,879 182,203
----------- -----------
EXPENSES:
Selling and marketing ................. 36,776 82,681
General and administrative ............ 197,409 226,400
Research and development .............. 36 10,477
Interest expense ...................... 12,362 11,674
----------- -----------
Total expenses ........................ 246,583 331,232
----------- -----------
INCOME(LOSS) BEFORE INCOME
TAXES ............................. (138,704) (149,029)
INCOME TAXES .......................... 800 800
----------- -----------
NET INCOME (LOSS) ..................... $ (139,504) $ (149,829)
=========== ===========
BASIC AND DILUTED INCOME
(LOSS)PER SHARE .................... $ (0.05) $ (0.07)
=========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING ........................ 2,904,658 2,280,000
=========== ===========
See accompanying notes to financial statements.
22
PROGRESSIVE TRAINING, INC.
STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED MAY 31, 2009 AND 2008
-----------------------------------------------------------------------------------------------------------
COMMON STOCK ADDITIONAL
------------------------- PAID-IN SHAREHOLDER
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
----------- ----------- ----------- ----------- -----------
BALANCE, MAY 31, 2007 2,280,000 $ 228 $ 1,323,912 $(1,377,648) $ (53,508)
CONTRIBUTED CAPITAL .......... -- -- 41,600 -- 41,600
RELATED PARTY DEBT FORGIVENESS -- -- (30,089) -- (30,089)
NET LOSS ..................... -- -- -- (149,829) (149,829)
----------- ----------- ----------- ----------- -----------
BALANCE, MAY 31, 2008 2,280,000 228 1,335,423 (1,527,477) (191,826)
CONTRIBUTED CAPITAL .......... -- -- 41,600 -- 41,600
STOCK ISSUED FOR DEBT ........ 3,000,000 300 179,700 -- 180,000
NET LOSS ..................... -- -- -- (139,504) (139,504)
----------- ----------- ----------- ----------- -----------
BALANCE, MAY 31, 2009 5,280,000 $ 528 $ 1,556,723 $(1,666,981) $ (109,730)
=========== =========== =========== =========== ===========
See accompanying notes to financial statements.
23
PROGRESSIVE TRAINING, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MAY 31, 2009 AND 2008
-------------------------------------------------------------------------------
2009 2008
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................... $ (139,504) $ (149,829)
Adjustments to reconcile net loss to net
cash used by operating activities:
Contribution of capital for services .......... 41,600 41,600
Provision for doubtful accounts ............... -- 5,770
Changes in operating assets and liabilities:
Accounts receivable ....................... 16,482 (15,377)
Accounts receivable, related party ........ -- 5,701
Other assets .............................. -- 419
Accounts payable and accrued expenses ..... (28,794) 17,204
---------- ----------
Net cash used by operating activities .............. (110,216) (94,512)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) from (to) shareholder .. 110,207 81,055
Net borrowings (repayments) on line of credit ...... 717 3,009
---------- ----------
Net cash provided by financing activities .......... 110,924 84,064
---------- ----------
NET INCREASE IN CASH ............................... 708 (10,448)
CASH, BEGINNING OF YEAR ............................ 1,610 12,058
---------- ----------
CASH, END OF YEAR .................................. $ 2,318 $ 1,610
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ............................. $ 2,488 $ 3,479
Cash paid for income taxes ......................... $ 800 $ --
NON-CASH ACTIVITY:
On March 16, 2009, the Company issued 3.0 million shares of restricted common
stock of the Company in exchange for a total of $180,000 of debt due to the
Company's President.
See accompanying notes to financial statements
24
PROGRESSIVE TRAINING, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS BACKGROUND
Progressive Training, Inc. (formerly Advanced Media Training, Inc.; the
"Company") was incorporated under this name in Delaware on October 31, 2006. The
Company is engaged in the development, production and distribution of training
and educational video products and services and has been in operation since
March 2000. From August 10, 2004 through December 11, 2006 the business of the
development, production and distribution of management and general workforce
training videos was previously conducted under the name Advanced Media Training,
Inc.
RECLASSIFICATIONS
Certain 2008 amounts have been reclassified to conform to presentation in 2009.
UNCLASSIFIED BALANCE SHEET
In accordance with the provisions of AICPA Statement of Position 00-2,
"ACCOUNTING BY PRODUCERS OR DISTRIBUTORS OF FILMS," the Company has elected to
present unclassified balance sheets.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
certain estimates and assumptions that affect the reported amounts and timing of
revenue and expenses, the reported amounts and classification of assets and
liabilities, and the disclosure of contingent assets and liabilities. These
estimates and assumptions are based on the Company's historical results as well
as management's future expectations. The Company's actual results could vary
materially from management's estimates and assumptions.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of accounts receivable. Accounts receivable are
unsecured and the Company is at risk to the extent such amount becomes
uncollectible. The Company normally does not require collateral to support its
accounts receivable. As of May 31, 2009, one customer accounted for
approximately 48% of gross accounts receivable. As of May 31, 2008, one customer
accounted for approximately 20% of gross accounts receivable.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of all financial instruments potentially subject to
valuation risk (principally consisting of accounts receivable, accrued expenses,
line of credit and note payable approximates fair value due to the short term
maturities of such instruments.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with original maturity
dates of three months or less when purchased to be cash equivalents. At May 31,
2009 there were no cash equivalents. The Company maintains its cash in a
reputable bank which, at times, may exceed federally insured limits. The Company
has not experienced any losses in such accounts.
25
ACCOUNTS RECEIVABLE
Accounts receivable are reported at the customers' outstanding balances less any
allowance for doubtful accounts. Interest is not accrued on overdue accounts
receivable. The Company normally does not require advance payments on orders of
products.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts on accounts receivable is charged to income
in amounts sufficient to maintain the allowance for uncollectible accounts at a
level management believes is adequate to cover any probable losses. Management
determines the adequacy of the allowance based on historical write-off
percentages and information collected from individual customers. Accounts
receivable are charged off against the allowance when collectibility is
determined to be permanently impaired (bankruptcy, lack of contact, age of
account balance, etc).
PRODUCTION COSTS
The Company periodically incurs costs to produce new management training videos
and enhance current videos. Historically, the Company has been unable to
accurately forecast revenues to be earned on these videos and has, accordingly,
expensed such costs as incurred. The Company expensed no production costs in the
years ended May 31, 2009 and 2008.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over an estimated useful life of five years. Property and
equipment consists of a telephone system and office equipment costing $11,709
which is fully depreciated at May 31, 2009.
LONG-LIVED ASSETS
Statement of Financial Accounting Standards No. 121, "Accounting For The
Impairment of Long-Lived Assets and For Long-Lived Assets to Be Disposed of",
requires that long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the historical cost-carrying value of an
asset may no longer be appropriate. The Company assesses recoverability of the
carrying value of an asset by estimating the future net cash flows expected to
result from the asset, including eventual disposition. If the future net cash
flows are less than the carrying value of the asset, an impairment loss is
recorded equal to the difference between the asset's carrying value and fair
value. The Company did not record any impairment loss in the year ended May 31,
2009.
REVENUE RECOGNITION
Sales are recognized upon shipment of videos and training manuals to the
customer. Royalty income is earned from third-party sellers of our videos.
Royalty income averages 30% of the sales price and is recorded upon receipt.
Total royalty income amounted to $55,367 and $68,873 for the years ended May 31,
2009 and 2008, respectively. Rental income is recognized over the related period
that the videos are rented. Total rental income amounted to $665 and $698 for
the years ended May 31, 2009 and 2008, respectively. The Company's products may
not be returned by the customer. Accordingly, the Company has made no provision
for returns.
SIGNIFICANT CUSTOMERS
During the year ended May 31, 2009, the Company had one customer that accounted
for 23% of the Company's revenues During the year ended May 31, 2008, the
Company had one customer that accounted for 18% of the Company's net sales.
Foreign sales (primarily royalty income from Canada) amounted to $55,367 and
$68,873 for the years ended May 31, 2009 and 2008, respectively.
26
ADVERTISING EXPENSE
The Company expensed advertising costs amounting to $-0- and $111 for the years
ended May 31, 2009 and 2008, respectively. The Company does not conduct direct
response advertising.
CONTRIBUTION OF SERVICES
The Company's President and majority shareholder does not receive compensation
for his services. A total of $41,600 was determined by management to be a fair
value of his services to the Company on an annual basis and has been recorded as
a contribution of capital for the years ended May 31, 2009 and 2008,
respectively.
RESEARCH AND DEVELOPMENT
Company-sponsored research and development costs related to both present and
future products are expensed currently as a separate line item in the
accompanying statements of operations.
DISTRIBUTION AND SHIPPING COSTS
The Company's policy is to classify distribution and shipping costs as part of
selling and marketing expenses on the statement of operations. The Company
incurred distribution and shipping costs in the amounts of $6,028 and $8,095 for
the years ended May 31, 2009 and 2008, respectively.
INCOME TAXES
The Company accounts for its income taxes under the provisions of Statement of
Financial Accounting Standards 109 ("SFAS 109"). The method of accounting for
income taxes under SFAS 109 is an asset and liability method. The asset and
liability method requires the recognition of deferred tax liabilities and assets
for the expected future tax consequences of temporary differences between tax
bases and financial reporting bases of other assets and liabilities. The
provision for income taxes for the years ended May 31, 2009 and 2008 represents
the California corporate minimum franchise tax.
VALUE OF STOCK ISSUED FOR SERVICES
The Company periodically issues shares of its common stock in exchange for, or
in settlement of, services. The Company's management values the shares issued in
such transactions at either the then market price of the Company's common stock,
as determined by the Board of Directors and after taking into consideration
factors such as volume of shares issued or trading restrictions, or the value of
the services rendered, whichever is more readily determinable.
NET LOSS PER SHARE
Basic and diluted net loss per share has been computed by dividing net loss by
the weighted average number of common shares outstanding during the applicable
fiscal periods. At May 31, 2009 and 2008, the Company had no potentially
dilutive shares.
RECENTLY ISSUED ACCOUNTING STANDARDS
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." The
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles and expands disclosures about fair
value measurements, and does not require any new fair value measurements. This
Statement applies under other accounting pronouncements that require or permit
fair value measurements. The Statement is effective for the fiscal years
beginning after November 15, 2007. The Company has no financial instruments that
are carried at fair value.
27
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities," which permits entities to choose to
measure many financial instruments and certain other items at fair value. SFAS
No. 159 also includes an amendment to SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" which applies to all entities with
available-for-sale and trading securities. This Statement is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
The Company did not elect the fair value option for any existing eligible items.
In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff
Position (FSP) Financial Accounting Standard (FAS) 157-4, DETERMINING FAIR VALUE
WHEN THE VOLUME AND LEVEL OF ACTIVITY FOR THE ASSET OR LIABILITY HAVE
SIGNIFICANTLY DECREASED AND IDENTIFYING TRANSACTIONS THAT ARE NOT ORDERLY. Based
on the guidance, if an entity determines that the level of activity for an asset
or liability has significantly decreased and that a transaction is not orderly,
further analysis of transactions or quoted prices is needed, and a significant
adjustment to the transaction or quoted prices may be necessary to estimate fair
value in accordance with Statement of Financial Accounting Standards (SFAS) No.
157 FAIR VALUE MEASUREMENTS. This FSP is to be applied prospectively and is
effective for interim and annual periods ending after June 15, 2009 with early
adoption permitted for periods ending after March 15, 2009. The Company adopted
this FSP for the year ending May 31, 2009. There was no impact upon adoption.
In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, RECOGNITION AND
PRESENTATION OF OTHER-THAN-TEMPORARY IMPAIRMENTS. The guidance applies to
investments in debt securities for which other-than-temporary impairments may be
recorded. If an entity's management asserts that it does not have the intent to
sell a debt security and it is more likely than not that it will not have to
sell the security before recovery of its cost basis, then an entity may separate
other-than-temporary impairments into two components: 1) the amount related to
credit losses (recorded in earnings), and 2) all other amounts (recorded in
other comprehensive income). This FSP is to be applied prospectively and is
effective for interim and annual periods ending after June 15, 2009 with early
adoption permitted for periods ending after March 15, 2009. The Company adopted
this FSP for the year ending May 31, 2009. There was no impact upon adoption.
In April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board
(APB) 28-1, INTERIM DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS. The
FSP amends SFAS No. 107 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS to
require an entity to provide disclosures about fair value of financial
instruments in interim financial information. This FSP is to be applied
prospectively and is effective for interim and annual periods ending after June
15, 2009 with early adoption permitted for periods ending after March 15, 2009.
The Company included the required disclosures in the year ending May 31, 2009.
In December 2007, the FASB issued SFAS No. 141(R), BUSINESS COMBINATIONS, which
became effective January 1, 2009 via prospective application to business
combinations. This Statement requires that the acquisition method of accounting
be applied to a broader set of business combinations, amends the definition of a
business combination, provides a definition of a business, requires an acquirer
to recognize an acquired business at its fair value at the acquisition date and
requires the assets and liabilities assumed in a business combination to be
measured and recognized at their fair values as of the acquisition date (with
limited exceptions). The Company adopted this Statement on January 1, 2009.
There was no impact upon adoption, and its effects on future periods will depend
on the nature and significance of business combinations subject to this
statement.
In April 2009, the FASB issued FSP FAS 141(R)-1, ACCOUNTING FOR ASSETS ACQUIRED
AND LIABILITIES ASSUMED IN A BUSINESS COMBINATION THAT ARISE FROM CONTINGENCIES.
This FSP requires that assets acquired and liabilities assumed in a business
combination that arise from contingencies be recognized at fair value if fair
value can be reasonably estimated. If fair value cannot be reasonably estimated,
the asset or liability would generally be recognized in accordance with SFAS No.
5, "Accounting for Contingencies" and FASB Interpretation No. 14, "Reasonable
Estimation of the Amount of a Loss". Further, the FASB removed the subsequent
accounting guidance for assets and liabilities arising from contingencies from
SFAS No. 141(R). The requirements of this FSP carry forward without significant
revision the guidance on contingencies of SFAS No. 141, "Business Combinations",
which was superseded by SFAS No. 141(R) (see previous paragraph). The FSP also
eliminates the requirement to disclose an estimate of the range of possible
outcomes of recognized contingencies at the acquisition date. For unrecognized
contingencies, the FASB requires that entities include only the disclosures
required by SFAS No. 5. This FSP was adopted effective January 1, 2009. There
was no impact upon adoption, and its effects on future periods will depend on
the nature and significance of business combinations subject to this statement.
28
In May 2009, the FASB issued SFAS No. 165, SUBSEQUENT EVENTS , which provides
general standards of accounting for and disclosure of subsequent events. SFAS
No. 165 clarifies that management must evaluate, as of each reporting period,
events or transactions that occur after the balance sheet date "through the date
that the financial statements are issued or are available to be issued." It also
requires management to disclose the date through which subsequent events have
been evaluated and whether that is the date on which the financial statements
were issued or were available to be issued. Statement 165 is effective
prospectively for interim or annual financial periods ending after June 15,
2009.
In June 2009, the FASB issued SFAS No. 168, THE FASB ACCOUNTING STANDARDS
CODIFICATION AND THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES--A
REPLACEMENT OF FASB STATEMENT NO. 162 . SFAS No. 168 establishes the FASB
Accounting Standards Codification as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in accordance with GAAP. All guidance
included in the Codification will be considered authoritative at that time, even
guidance that comes from what is currently deemed to be a non-authoritative
section of a standard. Once the Codification becomes effective, all
non-grandfathered, non-SEC accounting literature not included in the
Codification will become non-authoritative. SFAS No. 168 is applicable for
interim and annual periods ending after September 15, 2009. This pronouncement
will have no effect on the Company's financial position, results of operations,
or cash flows. However, upon adoption, all current references to FASB accounting
standards will be replaced with references to the applicable codification
sections.
2. LINE OF CREDIT
The Company has a revolving line of credit with a bank which permits borrowings
up to $40,000. The line is guaranteed by the Company's President. Interest is
payable monthly at 2.22% above the bank's prime rate of interest (5.47% at May
31, 2009). The line is callable upon demand.
3. STOCKHOLDERS' DEFICIT
During March 2009, the Company issued 3,000,000 shares of its common stock to
its President and majority shareholder in payment of $180,000 debt.
4. INCOME TAXES
The Company has net operating loss carryforwards totaling approximately $402,000
at May 31, 2009 for Federal income tax purposes available to offset future
taxable income through 2027. Deferred tax assets (approximately $88,000 at May
31, 2009) consist substantially of the net operating loss carryforward. The
Company has made a 100% valuation allowance against the deferred tax asset. The
allowance increased approximately $36,000 due to the losses incurred in fiscal
2009. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considered the scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this assessment.
5. COMMITMENTS AND CONTINGENCIES
The Company has agreements with companies to pay a royalty on sales of certain
videos (co produced with these companies). The royalty is based on a specified
formula, which averages approximately 35% of net amounts collected.
The Company leases its operating facility for $2,500 per month in Encino,
California under an operating lease which expires August 31, 2009. The Company
relocated to a smaller space and is renting the space for $900 per month on a
month-to-month basis. Rent expense was $29,709 and $28,855 for the years ended
May 31, 2009 and 2008 respectively.
Future minimum lease payments are as follows:
29
For the year ended May 31,
2010 $ 7,500
6. LEGAL
The Company is, from time to time, subject to legal and other matters in the
normal course of its business. While the results of such matters cannot be
predicted with certainty, management does not believe that the final outcome of
any pending matters will have a material effect on the financial position and
results of operations of the Company.
7. RELATED PARTY TRANSACTIONS
The Company had a consulting agreement with Howard Young, the son of Buddy Young
(the Company's Chief Executive Officer) for administrative and sales
consultation through November 2008. The fee was allocated equally between
General and Administrative and Selling and Marketing expense in the Statement of
Operations for the years ended May 31, 2009 and 2008. Total expense was $29,120
and $100,370 for the years ended May 31, 2009 and 2008, respectively.
The Company has an agreement with its President and majority shareholder to fund
any shortfall in cash flow up to $250,000 at 8% interest through June 30, 2010.
The note is secured by all right, title and interest in and to the Company's
video productions and projects, regardless of their state of production,
including all related contracts, licenses, and accounts receivable. Any unpaid
principal and interest under the Note will be due and payable on December 31,
2010. On March 16, 2009, the Company issued 3,000,000 shares of its common stock
to its President in payment of $180,000 on this note. As of May 31, 2009, the
balance on the note and related accrued interest was $16,262 and $6,948,
respectively.
30
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9AT. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
We carried out an evaluation of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of May
31, 2009 (the "Evaluation Date"). This evaluation was carried out under the
supervision and with the participation of Buddy Young, who serves as both our
Chief Executive Officer and Chief Financial Officer. Based upon that evaluation,
Mr. Young concluded that our disclosure controls and procedures were not
effective as of the Evaluation Date as a result of the material weaknesses in
internal control over financial reporting discussed below.
Disclosure controls and procedures are those controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act are recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
Notwithstanding the assessment that our internal control over financial
reporting was not effective and that there were material weaknesses as
identified in this report, we believe that our financial statements contained in
our Annual Report on Form 10-K for the year ended May 31, 2009 accurately
present our financial condition, results of operations and cash flows in all
material respects.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, for the Company.
Internal control over financial reporting includes those policies and procedures
that: (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our assets;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of its management and directors; and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
31
Management recognizes that there are inherent limitations in the effectiveness
of any system of internal control, and accordingly, even effective internal
control can provide only reasonable assurance with respect to financial
statement preparation and may not prevent or detect material misstatements. In
addition, effective internal control at a point in time may become ineffective
in future periods because of changes in conditions or due to deterioration in
the degree of compliance with our established policies and procedures.
A material weakness is a significant deficiency, or combination of significant
deficiencies, that results in there being a more than remote likelihood that a
material misstatement of the annual or interim financial statements will not be
prevented or detected.
Under the supervision and with the participation of Buddy Young our Chief
Executive Officer and Chief Financial Officer, management conducted an
evaluation of the effectiveness of our internal control over financial
reporting, as of the Evaluation Date, based on the framework set forth in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on its evaluation under
this framework, management concluded that our internal control over financial
reporting was not effective as of the Evaluation Date.
Management assessed the effectiveness of the Company's internal control over
financial reporting as of Evaluation Date and identified the following material
weaknesses:
INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite
expertise in the key functional areas of finance and accounting.
INSUFFICIENT WRITTEN POLICIES & PROCEDURES: We have insufficient written
policies and procedures for accounting and financial reporting.
LACK OF AUDIT COMMITTEE: We do not have a functioning audit committee resulting
in ineffective oversight in the establishment and monitoring of required
internal controls and procedures.
Management is committed to improving its internal controls and will (1) continue
to use third party specialists to address shortfalls in staffing and to assist
the Company with accounting and finance responsibilities, (2) increase the
frequency of independent reconciliations of significant accounts which will
mitigate the lack of segregation of duties until there are sufficient personnel
and (3) prepare and implement sufficient written policies and checklists for
financial reporting and closing processes and (4) may consider appointing an
audit committee comprised of both management and outside board members in the
future.
Management, including our Chief Executive Officer and the Chief Financial
Officer, has discussed the material weakness noted above with our independent
registered public accounting firm.
This Annual Report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this Annual Report.
32
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
As of the Evaluation Date, there were no changes in our internal control over
financial reporting that occurred during the fiscal year ended May 31, 2009 that
have materially affected, or that are reasonably likely to materially affect,
our internal control over financial reporting.
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS AND PROCEDURES
Our management, including Buddy Young our Chief Executive Officer and the Chief
Financial Officer, do not expect that our controls and procedures will prevent
all potential errors or fraud. A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met.
ITEM 9B. OTHER INFORMATION
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table sets forth the current officers and directors of Progressive
Training:
NAME AGE POSITION
Buddy Young 74 President, Chief Executive Officer,
Chief Financial Officer and Chairman
David Leedy 68 Director
Dennis Spiegelman 61 Director
Mel Powell 43 Director
Buddy Young has served as president, chief executive officer, chief financial
officer and chairman of the board of directors of Progressive Training, Inc.
since its inception in December 2006. From 1999 through December 10, 2006, Mr.
Young served as an officer and director of Dematco, Inc., formerly known as
Advanced Media Training, Inc. From the date of our incorporation through March
1, 2007, we were a wholly owned subsidiary of Dematco. From March 1998 until
July 1999, Mr. Young served as president, executive officer, and a director of
MGPX Ventures, Inc., now known as Contango Oil & Gas. From 1992 until July 1996,
Mr. Young served as president and chief executive officer of Bexy
Communications, Inc., a publicly held company, now known as Cheniere Energy,
Inc. From June 1983 until December 1991, Mr. Young was president, chief
executive officer and a director of Color Systems Technology, Inc., a publicly
held company. Color Systems' major line of business was the use of its patented
computer process for the conversion of black and white motion pictures to color.
Prior to joining Color Systems, Mr. Young served from 1965 to 1975 as Director
of West Coast Advertising and Publicity for United Artists Corporation, from
1975 to 1976 as Director of Worldwide Advertising and Publicity for Columbia
Pictures Corp., from 1976 to 1979 as Vice President of Worldwide Advertising and
Publicity for MCA/Universal Pictures, Inc., and from 1981 to 1982 as a principal
in the motion picture consulting firm of Powell & Young. For over thirty-five
years, Mr. Young has been an active member of The Academy of Motion Picture Arts
and Sciences and has served on a number of industry-wide committees.
33
David Leedy has served as a director of Progressive Training, Inc. since its
inception in December 2006. He is a certified public accountant with many years
of experience in establishing and managing corporate financial controls. In 1963
he began his career at Haskins & Sells (now Deloitte & Touche). He is now
retired and resides in Texas. From 1994 through the end of 1995 he was Chief
Operations/Financial Officer of Reel EFX, Inc., a special effects company whose
operations included manufacturing and sales, equipment rentals, and special
effects for movies, TV, commercials and live performances. Mr. Leedy retired
when he resigned his position at Reel EFX in 1995. In 1993 he served as a
Production Accountant at Games Animations/Nickelodeon-MTV. From 1989 through
1992, he served as a consultant to a number of film producers, distributors and
foreign sales agents. From 1984 through 1989, he served as Sr. Vice President
and Chief Financial Officer of Color Systems Technology, Inc. From 1975 through
1979, he served as Controller of MCA/Universal Pictures. Additionally, he
authored and published a book on accounting for royalties in the motion picture
industry in 1980, and co-authored another in 1988.
Dennis Spiegelman has served as a director of Progressive Training, Inc. since
March 1, 2007. He previously had served as a director of Advanced Media
Training. For 8 years he served as vice president, sales and marketing for Cast
& Crew Entertainment Services, Inc., a position he accepted in April 1998. From
1995 to April 1998, Mr. Spiegelman was the senior vice president of sales and
marketing for Axium Entertainment, Inc. In 2004, he returned to Axium as Sr. VP
worldwide sales, and in 2006 he formed Spiegelman Entertainment Services, Inc.
Mel Powell has served as a director of Progressive Training, Inc. since March 1,
2007. He previously served as a director of Advanced Media Training. Mr. Powell
brings a background in law, writing, and marketing to the Company. He attended
Yale College as an undergraduate (B.A. 1985), and graduated from UCLA Law School
in 1988. Mr. Powell is a member of the California Bar Association, and practiced
family law from 1988 through 1992 at the Los Angeles based law firm of Trope &
Trope. Since 1992 Mr. Powell has been self employed through his privately held
company, Breakaway Entertainment. During his time at Breakaway, he has written
feature screenplays, teleplays, radio scripts for Premiere Radio Networks, and
scripts for corporate training videos.
Directors are elected in accordance with our bylaws to serve until the next
annual stockholders meeting and until their successors are elected and qualified
or until their earlier resignation or removal. Officers are elected by the board
of directors and hold office until the meeting of the board of directors
following the next annual meeting of stockholders and until their successors
shall have been chosen and qualified. Any officer may be removed, with or
without cause, by the board of directors. Any vacancy in any office may be
filled by the board of directors.
Buddy Young, our President, Chief Executive Officer, Chief Financial Officer,
has various outside business interests that preclude him from devoting full time
to the operations of the Company. We anticipate that Mr. Young will continue to
be able to only devote approximately one day per week of his respective time to
our operations.
There are no family relationships between any directors or executive officers
and any other director or executive officer of Progressive Training, Inc.
34
ITEM 11. EXECUTIVE COMPENSATION
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- --------------------------------------
Other Securities
Name and Annual Restricted Underlying LTIP All other
Principal Position Year Salary Bonus Compensation Stock Awards Option Payouts Comp.
----------------------- ---- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Buddy Young,
CEO, CFO & Director 2005 -0- -0- -0- -0- -0- -0- -0-
2006 -0- -0- -0- -0- -0- -0- -0-
2007 -0- -0- -0- -0- -0- -0- -0-
2008 -0- -0- -0- -0- -0- -0- -0-
2009 -0- -0- -0- -0- -0- -0- -0-
Dennis Spiegelman,
Director (1) 2005 -0- -0- -0- -0- -0- -0- -0-
2006 -0- -0- -0- -0- -0- -0- -0-
2007 -0- -0- -0- -0- -0- -0- -0-
2008 -0- -0- -0- -0- -0- -0- -0-
2009 -0- -0- -0- -0- -0- -0- -0-
David J. Leedy,
Director (2) 2004 -0- -0- -0- -0- -0- -0- -0-
2005 -0- -0- -0- -0- -0- -0- -0-
2006 -0- -0- -0- -0- -0- -0- -0-
2007 -0- -0- -0- -0- -0- -0- -0-
2008 -0- -0- -0- -0- -0- -0- -0-
Mel Powell
Director (2) 2005 $ 9,600 -0- -0- -0- -0- -0- -0-
2006 0 -0- -0- -0- -0- -0- -0-
2007 -0- -0- -0- -0- -0- -0- -0-
2008 -0- -0- -0- -0- -0- -0- -0-
2009 -0- -0- -0- -0- -0- -0- -0-
During the years ended May 31, 2009, 2008 and 2007, Mr. Young devoted time to
the development process of our Company. Compensation expense of approximately
$41,600 has been recorded for each of these years. As Mr. Young has waived
reimbursement of this expense, the amount has been recorded as additional
paid-in capital in each year.
(1) As compensation for joining and serving as a director of the Company, on
April 2, 2007, the Company issued 10,000 shares of common stock to each of Mr.
Spiegelman, Mr. Leedy, and Mr. Powell. The shares were valued at $0.08 per share
for a total value of $2,400.
(2) As compensation for serving as an officer of the Company and conducting most
of the day to day operations of the Company, on April 2, 2007 we issued 200,000
shares of common stock to Mr. Young. The shares were valued at $0.08 per share
for a total value of $16,000.
EMPLOYMENT AND CONSULTING AGREEMENTS
We do not have any employment or consulting agreements with any of our executive
officers. Other than the compensation paid to Mr. Howard Young no other
compensation has been paid or accrued to any officer or director since the
incorporation of Progressive Training, Inc. in December 2006. During the year
ended May 31, 2009, Mr. Buddy Young received non-cash compensation (representing
the estimated value of services contributed to the Company of $41,600).
35
OPTION/SAR GRANTS
We have not granted any options or stock appreciation rights to any of our
executive officers or employees.
AGGREGATED OPTION/SAR EXERCISES
Since we have never granted any options or stock appreciation rights to any of
our executive officers or employees, none exist to be exercised.
COMPENSATION OF DIRECTORS
Other than the initial issuance of common stock as described above, directors of
the Company have not and do not receive any compensation for serving on the
board or for attending any meetings. Directors who are also officers of the
Company receive no additional consideration for their service as a director.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information about the beneficial ownership of our
outstanding common stock by each person beneficially owning more than 5% of the
shares, by each of our directors and officers, and by all of our directors and
officers as a group. The table shows the number and percentage of shares held by
each person as of May 31, 2009. The address of each person listed in the table
is 17337 Ventura Boulevard, Suite 208, Encino, California 91316.
NUMBER OF PERCENTAGE
NAME AND ADDRESS SHARES OWNED OF CLASS OWNED
---------------- ------------ --------------
Young Family Trust (1) 4,005,716 75.87%
David Leedy (2) 10,000 0.19%
Mel Powell (3) 10,000 0.19%
Dennis Spiegelman (3) 10,000 0.19%
All officers and directors as a group
(4 persons) 4,035,716 76.43%
---------------
(1) All of the shares beneficially owned by the Young Family Trust are also
beneficially owned by Buddy Young and Rebecca Young, who, as
co-trustees of the Trust, share voting and investment power over the
shares. Buddy Young is a director and executive officer of Progressive
Training and the Chief Executive Officer of the Company.
(2) Director, and Secretary
(3) Director
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Through December 31, 2008, the Company had a consulting agreement with Howard
Young, the son of Buddy Young (the Company's Chief Executive Officer) which
provided a monthly fee for administrative and sales consultation. The fee was
allocated equally between General and Administrative and Selling and Marketing
expense in the Statement of Operations for the years ended May 31, 2009 and
2008. Total expense was $29,120 and $100,370 for the years ended May 31, 2009
and 2008, respectively.
36
We have an agreement with our President and majority shareholder to fund any
shortfall in cash flow up to $250,000 at 8% interest through June 30, 2010. The
note is secured by all our right, title and interest in and to our video
productions and projects, regardless of their state of production, including all
related contracts, licenses, and accounts receivable. Any unpaid principal and
interest under the Note will be due and payable on December 31, 2010. As of May
31, 2009, the Company has borrowed $16,262 from Mr. Young. On March 16, 2009,
the Company entered into an agreement to issue 3.0 million shares of restricted
common stock of the Company to Mr. Young, in exchange for a total of $180,000 of
debt due to the Company's President.
Since the inception of the Company, we have not had a relationship with any
outside promoters. However, our officers and directors are considered promoters,
as that term is defined by Rule 405 of Regulation C. As indicated in the
Executive Compensation Table above, including the footnotes, we have issued
stock to our officers and directors as consideration for services. Thus, these
stock issuances are considered to be transactions with promoters and the
information regarding these transactions is provided in the Executive
Compensation Table above.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES
The aggregate fees billed for professional services rendered by our principal
accountants for the audit of our financial statements and for the reviews of the
financial statements included in our annual report on Form 10-K and 10-Qs
respectively, and for other services normally provided in connection with
statutory filings were $30,059 and $38,843, respectively, in the years ended May
31, 2009 and May 31, 2008.
TAX FEES
The aggregate fees billed by our auditors for tax compliance matters were $1,565
and $1,495 in the fiscal years ended May 31, 2009 and May 31, 2008,
respectively.
ALL OTHER FEES
We did not incur any fees for other professional services rendered by our
independent auditors during the years ended May 31, 2009 and May 31, 2008.
ITEM 15. EXHIBITS
The following documents are included or incorporated by reference as exhibits to
this report:
31.1 Certification of CEO Pursuant to Securities Exchange Act Rules 13a-14
and 15d-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
37
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PROGRESSIVE TRAINING, INC.
By: /S/ BUDDY YOUNG
--------------------------------------------------
Buddy Young, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
NAME TITLE DATE
/S/ BUDDY YOUNG President, Chief Executive August 31, 2009
------------------------
Buddy Young Officer, Chief Financial
Officer and Director (Principal
Executive, Financial and
Accounting Officer)
/S/ DAVID LEEDY Director August 31, 2009
------------------------
David Leedy
/S/ MEL POWELL Director August 31, 2009
------------------------
Mel Powell
/S/ DENNIS SPIEGELMAN Director August 31, 2009
------------------------
Dennis Spiegelman
38