We believe we will be able to meet these costs through use of funds in our treasury, through deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors. As of the date of the period covered by this report, the Company has $0 in cash. There are no assurances that the Company will be able to secure any additional funding as needed. Currently, however our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going concern is also dependent on our ability to find a suitable target company and enter into a possible reverse merger with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances; however there is no assurance of additional funding being available.
The Company has not conducted any active operations since the divesture of the ATM machine sales operations as of October 31, 2008. No revenue has been generated by the Company for the fiscal years ended April 30, 2016 and 2015. It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance. It is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern. The Company’s plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates.
As of April 30, 2016, the Company had no assets. This compares with assets of $516, comprised exclusively of cash, as of April 30, 2015. The Company’s current liabilities as of April 30, 2016 totaled $16,939 comprised of $5,242 of accounts payable and $11,697 due to a related party. This compares with total liabilities of $141,068 comprised of $14,068 of accounts payable and $127,000 due to a related party, as of April 30, 2015. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Prevention Insurance.Com as of April 30, 2016 and 2015, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.
The Company recognizes compensation cost based upon the fair value of stock options at the grant date using the Black-Scholes pricing model. During the years ended April 30, 2016 and 2015, the Company did not issue any shares for services nor did the Company issue any options as stock based compensation to any officers, directors, or non-employees.
The Company evaluates tax positions in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as long term liabilities in the financial statements.
The Company has evaluated all transactions from April 30, 2016 through the financial statement issuance date for subsequent event disclosure consideration.
On August 31, 2015, the Company exchanged the aggregate $127,000 non-interest bearing demand notes payable to Paragon Capital LP for a new promissory note in the aggregate amount of $127,000. The note was due on August 31, 2017 and bore an interest rate of 6% per annum. While the note was outstanding, the outstanding principal amount of and all unpaid accrued interest under the note was convertible into shares of Common Stock of the Company at $0.01 per share.
Effective December 8, 2015, the $127,000 principal balance of the convertible note payable was converted into 12,700,000 shares of our common stock, the unamortized balance of $124,762 debt discount was expensed in full and accrued interest of $2,066 was forgiven. As the accrued interest was with a related party, the gain on forgiveness of the interest has been recognized in additional paid-in capital.
Following the change of control of the Company effective December 8, 2015 through March 9, 2016, an entity related the Company’s then sole officer and director advanced funds totaling $11,444 to the Company to meet its working capital requirements. The advances were unsecured, interest free and due on demand. Effective March 9, 2016, the full $11,444 balance of the loan was forgiven. As the loan was with a related party, the gain on forgiveness of the loan has been recognized in additional paid in capital.
On August 31, 2015, the Company exchanged the aggregate $127,000 non-interest bearing demand notes payable to Paragon Capital LP, at that time, the Company’s controlling shareholder, for a new promissory note in the aggregate amount of $127,000. The note was due on August 31, 2017 and bore an interest rate of 6% per annum. While the note was outstanding, the outstanding principal amount and all unpaid accrued interest under the note were convertible into shares of Common Stock of the Company at $0.01 per share. The Company assessed the embedded conversion feature and determined that the intrinsic value of the beneficial conversion feature at inception exceeded the face value of this note and accordingly recorded at beneficial conversion feature (capped at the face value of the of the note) of $127,000. Such beneficial conversion feature was accounted for as a debt discount, which was amortized to interest expense using the effective interest rate method over the life of the note. Effective December 8, 2015, the $127,000 principal balance of the loan was converted into 12,700,000 shares of our common stock, the unamortized balance of $124,762 debt discount was expensed in full and accrued interest of $2,066 was forgiven. As the accrued interest was with a related party, the gain on forgiveness of the interest has been recognized in additional paid in capital.
As of April 30, 2016, the Company had a federal net operating loss carryforward of approximately $940,000, which expires beginning in 2018 and through 2036. This carryforward is limited due to the changes in control that took place in the years ended April 30, 2008 and April 30, 2016 and maybe further limited in the future upon change(s) in control of the Company in accordance with the provisions under Internal Revenue Code Section 381.
During the period from May 1, 2015 through December 8, 2015, the Company maintained office space in New York, New York with the Company’s then majority shareholder at no cost to the Company.
As of April 30, 2016, the Company was authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001.
Effective December 8, 2015, Convertible Notes Payable with principal balances totaling $199,500 were converted into 19,950,000 shares of our common stock.