U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended August 31, 2008
[_] Transition Report under Section 13 or 15(d) of the Exchange Act for the
Transition Period from ________ to ___________
Commission File Number: 0-50333
PROGRESSIVE TRAINING, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 32-0186005
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17337 Ventura Boulevard, Suite 208
Encino, California 91316
Issuer's Telephone Number: (818) 784-0040
(Address and phone number of principal executive offices)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or 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 is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer"
and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [_] Smaller reporting company [X]
(Do not check if smaller reporting company)
Check whether the issuer is a "shell company" as defined in Rule 12b-2
of the Securities Exchange Act of 1934. Yes [_] No [X]
As of August 31, 2008 the issuer had of 2,280,000 shares of common
stock outstanding.
There currently is no public market for the Company's Stock.
Traditional Small Business Disclosure Format (check one) Yes [_] No [X]
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
PAGE
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements................................................. 3
Condensed Balance Sheets
August 31, 2008 (Unaudited) and May 31, 2008..................... 4
Condensed Statements of Operations and Accumulated Deficit
For the Three Months Ended
August 31, 2008 and 2007 (Unaudited)............................. 5
Condensed Statements of Shareholders' Deficit
For the Three Months Ended August 31, 2008 (Unaudited)........... 6
Condensed Statements of Cash Flows
For the Three Months Ended
August 31, 2008 and 2007 (Unaudited)............................. 7
Condensed Notes to Financial Statements (Unaudited).................. 8
Item 2. Management's Discussion and Analysis or Plan
of Operation.........................................................11
Item 3. Quantitative and Qualitative Disclosures About Market Risk...........15
Item 4T. Controls and Procedures..............................................16
PART II OTHER INFORMATION
Item 1. Legal Proceedings....................................................17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds..........17
Item 3. Defaults upon Senior Securities......................................17
Item 4. Submission of Matters to a Vote of Security Holders..................17
Item 5. Other Information....................................................17
Item 6. Exhibits ............................................................17
Signatures....................................................................18
2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(Financial Statements Commence on Following Page)
3
PROGRESSIVE TRAINING, INC.
CONDENSED BALANCE SHEETS
-------------------------------------------------------------------------------
August 31, May 31,
2008 2008
(Unaudited)
----------- -----------
ASSETS
Cash ........................................... $ 1,319 $ 1,610
Accounts receivable, net of allowance
for doubtful accounts of $20,642 ............. 32,577 21,906
Property and equipment, Net of accumulated
depreciation of $11,709 ...................... -- --
Prepaid expenses and other assets .............. 1,946 1,946
----------- -----------
TOTAL ASSETS ................................... $ 35,842 $ 25,462
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES:
Line of credit ................................. $ 38,059 $ 38,009
Accounts payable and accrued expenses .......... 104,205 95,353
Accrued interest due to shareholder ............ 4,986 2,871
Note payable due to shareholder ................ 118,729 81,055
----------- -----------
Total liabilities .............................. 265,979 217,288
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT:
Common stock, par value - $.0001;
200,000,000 shares authorized; 2,280,000
shares issued and outstanding .............. 228 228
Additional paid-in capital ..................... 1,345,823 1,335,423
Accumulated deficit ............................ (1,576,188) (1,527,477)
----------- -----------
Total shareholders' deficit .................... (230,137) (191,826)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT .... $ 35,842 $ 25,462
=========== ===========
See accompanying notes to financial statements.
4
PROGRESSIVE TRAINING, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED AUGUST 31, 2008 AND 2007 (UNAUDITED)
--------------------------------------------------------------------------------
2008 2007
----------- -----------
REVENUES ................................. $ 46,965 $ 72,904
COST OF REVENUES ......................... 4,107 15,357
----------- -----------
GROSS PROFIT ............................. 42,858 57,547
----------- -----------
EXPENSES:
Selling and marketing .................... 19,484 23,333
General and administrative ............... 66,806 51,537
Research and development ................. 36 1,151
Interest expense ......................... 4,443 966
----------- -----------
Total expenses ........................... 90,769 76,987
----------- -----------
INCOME(LOSS) BEFORE INCOME TAXES ......... (47,911) (19,440)
INCOME TAXES ............................. 800 800
----------- -----------
NET INCOME (LOSS) ........................ $ (48,711) $ (20,240)
=========== ===========
BASIC AND DILUTED INCOME (LOSS) PER SHARE $ (0.02) $ (0.01)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING ...... 2,280,000 2,280,000
=========== ===========
See accompanying notes to financial statements.
5
PROGRESSIVE TRAINING, INC.
CONDENSED STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED AUGUST 31, 2008 (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------
COMMON STOCK ADDITIONAL
------------------------- PAID-IN SHAREHOLDER
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
----------- ----------- ----------- ----------- -----------
BALANCE, MAY 31, 2008 ... 2,280,000 $ 228 $ 1,335,423 $(1,527,477) $ (191,826)
CONTRIBUTED CAPITAL ....... -- -- 10,400 -- 10,400
NET LOSS .................. -- -- -- (48,711) (48,711)
----------- ----------- ----------- ----------- -----------
BALANCE, AUGUST 31, 2008 .. 2,280,000 $ 228 $ 1,345,823 $(1,576,188) $ (230,137)
=========== =========== =========== =========== ===========
See accompanying notes to financial statements.
6
PROGRESSIVE TRAINING, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 2008 AND 2007 (UNAUDITED)
-------------------------------------------------------------------------------
2008 2007
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................... $(48,711) $(20,240)
Adjustments to reconcile net loss to net
cash used by operating activities:
Contribution of capital for services ............. 10,400 10,400
Provision for doubtful accounts ................... -- 7,000
Changes in operating assets and liabilities:
Accounts receivable ............................ (10,671) (13,626)
Other assets ................................... -- (4,291)
Accounts payable and accrued expenses .......... 10,967 (6,607)
-------- --------
Net cash used by operating activities .................. (38,015) (27,364)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft ......................................... -- 3,928
Net borrowings (repayments) from (to) shareholder .. ... 37,674 10,500
Net borrowings (repayments) on line of credit .......... 50 878
-------- --------
Net cash provided (used) by financing activities ....... 37,724 15,306
-------- --------
NET DECREASE IN CASH ................................... (291) (12,058)
CASH, BEGINNING OF PERIOD .............................. 1,610 12,058
-------- --------
CASH, END OF PERIOD .................................... $ 1,319 $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ................................. $ 698 $ 791
Cash paid for income taxes ............................. $ -- $ --
See accompanying notes to financial statements
7
PROGRESSIVE TRAINING, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS BACKGROUND
Progressive Training, Inc. 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.
2. INTERIM CONDENSED FINANCIAL STATEMENTS
FISCAL PERIODS
The Company's fiscal year-end is May 31. References to a fiscal year refer to
the calendar year in which such fiscal year ends.
PREPARATION OF INTERIM CONDENSED FINANCIAL STATEMENTS
These interim condensed financial statements for the three months ended August
31, 2008 and 2007 have been prepared by the Company's management, without audit,
in accordance with accounting principles generally accepted in the United States
of America and pursuant to the rules and regulations of the United States
Securities and Exchange Commission ("SEC"). In the opinion of management, these
interim condensed consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments, unless otherwise noted)
necessary to present fairly the Company's financial position, results of
operations and cash flows for the fiscal periods presented. Certain information
and note disclosures normally included in annual financial statements prepared
in accordance with accounting principles generally accepted in the United States
of America have been condensed or omitted in these interim financial statements
pursuant to the SEC's rules and regulations, although the Company's management
believes that the disclosures are adequate to make the information presented not
misleading. The financial position, results of operations and cash flows for the
interim periods disclosed herein are not necessarily indicative of future
financial results. These interim condensed consolidated financial statements
should be read in conjunction with the annual financial statements and the notes
thereto included in the Company's most recent Annual Report on Form 10K (as
amended) for the fiscal year ended May 31, 2008.
RECLASSIFICATIONS
Certain 2007 amounts have been reclassified to conform to presentation in 2008.
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
8
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.
SIGNIFICANT CUSTOMERS
During the three months ended August 31, 2008, the Company had one customer that
accounted for 36% of the Company's net sales. During the three months ended
August 31, 2007 the Company had one customer that accounted for 12% of the
Company's net sales. Foreign sales (primarily royalty income from Canada)
amounted to $23,729 and $11,320 for the three months ended August 31, 2008 and
2007, respectively.
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 August 31, 2008 and 2007, the Company had no potentially
dilutive shares.
RECENTLY ISSUED ACCOUNTING STANDARDS
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS No. 162"). SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements presented in conformity with
generally accepted accounting principles in the United States of America. SFAS
No. 162 will be effective 60 days following the SEC's approval of the Public
Company Accounting Oversight Board (PCAOB) amendments to AU Section 411, "The
Meaning of, Present fairly in conformity with generally accepted accounting
principles". The Company does not believe the implementation of SFAS No. 162
will have a material impact on its consolidated financial statements.
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's adoption of SFAS No. 159 did not have a material impact on its
consolidated financial statements.
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
9
beginning after November 15, 2007. The Company adopted the provisions of SFAS
No. 157 for the financial assets and liabilities recognized at fair value on a
recurring and non-recurring basis effective March 1, 2008. FSP No. 157-2 delays
the effective date of FAS Statement No. 157 for nonfinancial assets and
nonfinancial liabilities. The adoption of SFAS No. 157 did not have a material
impact on the Company's consolidated financial statements.
3. 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 (7.22% at
August 31, 2008). The line is callable upon demand.
4. 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 $2,364 per month in Encino,
California under an operating lease which expires August 31, 2009. Rent expense
was $7,209 and $7,228 for the three months ended August 31, 2008 and 2007
respectively.
5. RELATED PARTY TRANSACTIONS
The Company has paid a monthly fee to Howard Young, the son of Buddy Young (the
Company's Chief Executive Officer) for administrative and sales consultation.
The fee is allocated equally between General and Administrative and Selling and
Marketing expense in the Statement of Operations for the three months ended
August 31, 2008 and 2007. Total expense was $25,200 and $25,200 for the three
months ended August 31, 2008 and 2007, respectively.
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, 2009. 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, 2009. As of
August 31, 2008, the Company has borrowed $118,729 from Mr. Young.
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ITEM 2. 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-Q, 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.
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.
11
INTRODUCTION
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 strive to accomplish this by being up to date and knowledgeable about the
content of the many videos currently available. This product awareness provides
us the opportunity to assist the customer in quickly and accurately selecting
videos that focus on subject matter that will fulfill their particular training
needs.
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. 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, 2009. Repayment is to be made when funds are available
with the balance of principal and interest due December 31, 2009. As of August
31, 2008, the Company has borrowed $118,729 from Mr. Young. We expect 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 calendar year 2008.
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.
SELECT FINANCIAL INFORMATION
For the Three Months Ended
08/31/08 08/31/07
----------- -----------
(Unaudited)
Statement of Operations Data
Total revenue .................................. $ 46,965 $ 72,904
Net loss ....................................... $ (48,711) $ (20,240)
Net loss per share ............................. $ (0.02) $ (0.01)
Balance Sheet Data
Total assets ................................... $ 35,842 $ 61,371
Total liabilities .............................. $ 265,979 $ 124,719
Stockholder's deficit .......................... $ (230,137) $ (63,348)
12
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. In addition to distributing videos produced by
us, we market and distribute training videos financed and produced by other
producers, which currently account for approximately 54% of our sales revenues.
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.
THREE-MONTH PERIOD ENDED AUGUST 31, 2008 COMPARED TO THREE-MONTH PERIOD ENDED
AUGUST 31, 2007
REVENUES
Our revenues for the three month period ended August 31, 2008 were $46,965.
Revenues for the prior three month period ended August 31, 2007, were $72,904.
This represents a decrease of $25,939. The decrease was mainly due to the fact
that we did not introduce any new training video produced by us into the
marketplace during this period, the aging of the videos in our library, and the
substantial downturn in the general economy.
Domestic product sales and rentals, royalties resulting from the closed circuit
telecast of our videos, and royalties derived from international sales made up
100% of the total revenue in the three-month periods ended August 31, 2008 and
2007. Sales of videos produced by other companies accounted for approximately
54% of sales in the three-month period ended August 31, 2008 and approximately
60% in the same period in 2007. As a result of our limited financial resources
which prevent us from financing and producing many new videos, we expect that
the sale of videos produced by others will continue to represent approximately
60 to 75% of revenues.
COSTS AND EXPENSES
Our cost of goods sold during the three month period ended August 31, 2008,
decreased to $4,107 from $15,357 during the three months ended August 31, 2007.
This represents a decrease of $11,250. The cost of goods sold as a percent of
sales decreased by approximately 10% (9% in 2008 to 19% in 2007). This decrease
is a direct result of the sales mix during the quarter ended August 31, 2008
shifting to higher gross profit items (i.e., internally produced videos) and
royalties.
13
Approximately 54% 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, we
anticipate that excluding production costs, the cost of goods sold as a
percentage of revenues will be approximately within the 15 to 35 percent range.
Total operating expenses increased to $90,769 during the three months ended
August 31, 2008 from $76,987 in the three month period ended August 31, 2007.
This represents an increase of $13,782.
Selling and marketing expenses decreased to $19,484 during the three months
ended August 31, 2008 from $23,333 during the three months ended August 31,
2007. This represents a decrease of $3,849. Our selling and marketing costs are
substantially related to the introduction of new videos produced by us. These
costs are mainly comprised of the creation of advertising and publicity
materials, the making of preview copies of the video to be sent to other
distributors, advertising space in trade publications, commissions on sales and
consulting fees paid to Howard Young (son of Buddy Young, CEO), of which, $4,200
per month is allocated to selling and marketing duties.
General and administrative expenses increased to $66,806 during the three months
ended August 31, 2008 from $51,537 during the three months ended August 31,
2007. This represents an increase of $15,269. The main components in these
general and administrative expenses are salaries for our employees, consulting
fees, and professional fees for accounting and legal services, and rent. We
anticipate that our general and administrative expenses will remain at this
level until we generate additional revenues to support an increase in our
infrastructure.
The Company incurred no significant research and development expenses in either
period. This was due to the fact that we did not research any new training
products during these periods due to negative cash flows in 2008 and 2007.
Interest expense increased to $4,443 during the three months ended August 31,
2008 from $966 during the three months ended August 31, 2007. This represents an
increase of $3,477. This increase is primarily due to further borrowings from
our President and principal shareholder. As of August 31, 2008, the Company has
borrowed $118,729 from Mr. Young pursuant to an agreement to fund any shortfall
in cash flow up to $250,000 at 8% interest through June 30, 2009. Repayment is
to be made when funds are available with the balance of principal and interest
due December 31, 2009.
14
Our net loss increased to $48,711 during the three months ended August 31, 2008
from $20,240 during the three months ended August 31, 2007. This is an increase
of $28,471. The primary cause of this increase is the decrease in sales along
with the increase in professional fees related to the Filing of a Form 10-SB
Registration Statement, and interest expense.
LIQUIDITY AND CAPITAL RESOURCES
Our working capital deficit decreased to $111,407 during the three months ended
August 31, 2008 from $109,846 during the three months ended August 31, 2007.
This is the result of an increase in our accounts receivable that was partially
offset by an increase in our accounts payable.
Our cash flows used by operations were $38,015 during the three months ended
August 31, 2008. This is the result of our net loss of $48,711 partially offset
by a contribution of capital for services in the amount of $10,400, and an
increase in accounts receivable in the amount of $10,671 that was partially
offset by an increase in accounts payable and accrued expenses of $10,967.
Our cash flows used by operations were $27,364 during the three months ended
August 31, 2007. This is the result of our net loss of $20,240 partially offset
by a contribution of capital for services in the amount of $10,400 and the
provision for doubtful accounts in the amount of $7,000, along with increases in
accounts receivable in the amount of $13,626 and other assets in the amount of
$4,291 and a decrease in accounts payable and accrued expenses in the amount of
$6,607.
During 2008 and 2007 we did not use any cash for investing activities.
Our cash flows provided by financing activities were $37,724 during the three
months ended August 31, 2008. During the three months ended August 31, 2008 we
borrowed an additional $37,674 from our shareholder and an additional $50 on our
line of credit.
Our cash flows provided by financing activities were $15,306 during the three
months ended August 31, 2007. During the three months ended August 31, 2007 we
borrowed an additional $10,500 from our shareholder and an additional $878 on
our line of credit. We also had a $3,928 bank overdraft at August 31, 2007.
We currently have no material commitments at this time to fund development of
new videos or to acquire any significant capital equipment
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Based on the nature of our current operations, we have not identified any issues
of market risk at this time.
15
ITEM 4T. 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
August 31, 2008 (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 our annual report on Form 10-K, for our year ended May 31, 2008,
we believe that our financial statements contained in our Quarterly Report on
Form 10-Q for the quarter ended August 31, 2008 accurately present our financial
condition, results of operations and cash flows in all material respects.
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 quarter ended August 31, 2008 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.
16
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended August 31, 2008, no matters were submitted to
the Company's security holders.
ITEM 5. OTHER INFORMATION None.
ITEM 6. EXHIBITS
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.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PROGRESSIVE TRAINING, INC.
(Registrant)
Dated: October 15, 2008 /S/ BUDDY YOUNG
------------------------------------
Buddy Young, President and Chief
Executive Officer
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