contain projections of our future results of operations or of our financial condition; and
Unless stated otherwise, the words “we,” “us,” “our,” “the Company” or “Prevention Insurance” in this Annual Report collectively refers to the Company.
We will attempt to locate and negotiate with a business entity for the merger of that target business into the Company. In certain instances, a target business may wish to become a subsidiary of the Company or may wish to contribute assets to the Company rather than merge. No assurances can be given that we will be successful in locating or negotiating with any target business.
The Board of Directors has passed a resolution which contains a policy that we will not seek an acquisition or merger with any entity in which our officer, director, stockholders or his affiliates or associates serve as officer or director or hold more than a 10% ownership interest.
We have, and will continue to have, no capital with which to provide the owners of business opportunities. However, management believes we will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in a publicly registered company without incurring the cost and time required to conduct an initial public offering. Our officer and director have not conducted market research and are not aware of statistical data to support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity. Due to the plan of operations the historical results do not show or provide any trends with which the Company can forecast the future of the Company.
Since we divested our only operating division historical results provide no meaningful trend analysis for future financial results.
We have audited the accompanying balance sheet of Prevention Insurance.com as of April 30, 2008 and the related statements of operations, stockholders’ deficit, and cash flows for of the year ended April 30, 2008. 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 audit.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 9 to the financial statements, the Company has limited operations and continued net losses. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 9. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We have audited the accompanying balance sheet of Prevention Insurance.com (“the Company”) as of April 30, 2009 and the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for the year 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 audit.
We conducted our audit 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 is 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 over financial reporting 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 9 to the financial statements, as of April 30, 2009, the Company is a shell company as defined in Rule 12b-2 of the Exchange Act. The Company’s current business is to pursue a business combination through acquisition, or merger with, an existing company. The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital, locate and complete a merger with another company and ultimately achieve profitable operations. No assurances can be given that the Company will be successful in locating or negotiating with any target company. These conditions raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Prevention Insurance.Com (the “Company”) was incorporated under the laws of the State of Nevada in 1975 as Vita Plus Industries, Inc. In March 1999, the Company sold its remaining inventory and changed its name to Prevention Insurance.com. Since 2005, the Company added a second line of business and has been focused on its development of its ATM machine sale operations. On December 28, 2007, the Company entered into an agreement where the Company had a change in control and which resulted in the divestiture of the ATM division “Quick Pay”. The Company divested itself of the ATM machine sales operations on October 31, 2008.
As of April 30, 2009, the Company is a shell company as defined in Rule 12b-2 of the Exchange Act. The Company’s business is to pursue a business combination through acquisition, or merger with, an existing company. No assurances can be given that the Company will be successful in locating or negotiating with any target company.
In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60.” SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. SFAS 163 will be effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company does not expect the adoption of SFAS 163 will have a material impact on its financial condition or results of operation.
In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting Principles,” (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of non-governmental entities that are presented in conformity with generally accepted accounting principles in the United States of America. SFAS 162 will be effective 60 days after the Security and Exchange Commission approves the Public Company Accounting Oversight Board’s amendments to AU Section 411. The Company does not anticipate the adoption of SFAS 162 will have an impact on its financial statements.
The following is a summary of the net assets at April 30, 2008:
The following is a summary of activities from discontinued operations for the year ended April 30, 2009 and 2008:
As of April 30, 2009, the authorized common stock of the Company consists of 100,000,000 shares of common stock with a par value of $0.01 and 2,000,000 shares of preferred stock with a par value of $0.01 and 8,000,000 shares of preferred stock with a par value of $0.001.
During the year ended April 30, 2007, the Company issued 1,000,000 restricted shares of preferred stock valued at $40,000 to Mr. Goldsmith. The shares were convertible into two shares of common stock. These preferred shares were cancelled during the year ended April 30, 2008.
On April 15, 2008, the Company purchased and cancelled 1,000,000 of the preferred shares and 2,000,000 warrants from a prior officer of the Company for partial consideration of $605,420 under the Agreement and Release dated February 5, 2008.
On February 19, 2008, the Company issued 165,000 restricted shares of common stock to one individual for cash. These shares were valued at $1,000 (an average of approximately $.006 per share).
On December 3, 2007, the Company issued 500,000 restricted shares of common stock to one individual for cash. These shares were valued at $5,000 (an average of approximately $.01 per share).
On October 15, 2007, the Company sold 200,000 restricted shares of common stock to one individual for cash. These shares were valued at $2,000 (an average of approximately $.01 per share).
On October 15, 2007, the Company issued 700,000 restricted shares for consulting services performed in prior periods. These shares were valued at $40,000 (an average of approximately $0.06 per share).
On September 25, 2007, the Company sold 1,465,000 restricted shares of common stock to several individuals for cash. These shares were valued at $15,500 (an average of approximately $.01 per share).
On August 20, 2007, the Company sold a total of 545,000 restricted shares of common stock to one individual for cash. These shares were valued at $8,000 (an average of approximately $.01 per share).
On June 19, 2007, the Company sold a total of 250,000 restricted shares of common stock to one individual for cash. These shares were valued at $5,000 (an average of approximately $.02 per share).
During the year ended April 30, 2009, the Company granted 45,000,000 warrants to Paragon Capital LP who holds majority interest in the Company. The Company received $45,000 cash as consideration for the warrants.
For the years ended April 30, 2009 and 2008, $0 and $38,062 of officer compensation was included as continuing operations.
During the year ended April 30, 2008, the Company incurred $24,114 in consulting expense paid to Mr. Goldsmith, the previous officer of the Company and shareholder.
On February 5, 2008, Mr. Goldsmith, Paragon Capital LP and the Company signed an Agreement and Release providing for, among other items, (1) cancellation of Mr. Goldsmith’s Preferred stock, (2) cancellation of Mr. Goldsmith’s warrants, in exchange for (1) payment in full of all of the Company’s liabilities, debts, and payables, (2) an initial payment to Mr. Goldsmith of $200,000, (3) conveyance of the assets and liabilities of Quick Pay, Inc. to Mr. Goldsmith, (4) an additional payment to Mr. Goldsmith upon certain events happening such as a reverse merger with a private company of $400,000 or 1,600,000 shares of common stock, and (5) future assignment of warrants held by Paragon to Mr. Goldsmith upon completion of a reverse merge.
As of April 30, 2009 and 2008, the Company recognized a liability of $400,000 due to Mr. Goldsmith as a result of the transactions that took place on February 5, 2008.
As part of the amendment to the February 5, 2008 agreement, the Company agreed that a $10,000 penalty was to be paid to Mr. Goldsmith if the Company did not convey the net assets of Quick Pay by October 31, 2008. The Company had accrued for the penalty as of April 30, 2008. The transaction took place on October 31, 2008, therefore, as of April 30, 2009, this contingency was eliminated.
Components of net deferred tax assets, including a valuation allowance, are as follows (numbers are tax effected)
The Company received $22,000 as of April 30, 2007 and $5,000 as of July 31, 2007 as a deposit related to a potential merger. These amounts were initially recorded as an acquisition liability, because the final terms and requisite due diligence had not been completed. In accordance with the Letter of Intent between the Company and Yin Sen Enterprise Co. Ltd., should the merger not go through due to cancelation by Yin Sen Enterprise, the funds are to be recognized as a non-refundable deposit.
During the year ended April 30, 2008, the Company issued 10,000,000 fully vested warrants to Paragon Capital LP for a consideration of $10,000. The warrants are exercisable over a three year period at $0.01 each to purchase 10,000,000 shares of common stock subject to enough authorized common stock of the Company being available to cover all common stock equivalents.
During the year ended April 30, 2007, 2,000,000 warrants were issued to an officer with a $0.10 exercise price, a 5 year term, with an applied 297% volatility based on historical data, which resulted in the Black-Scholes calculated value of $44,350 as expense during the year in accordance with SFAS 123(R). The Company used a 2.5 year term for purposes of calculating the Black-Scholes value. During the year ended April 30, 2008, these 2,000,000 warrants were cancelled.
During the year ended April 30, 2009, the Company divested itself of the ATM machine sales operations.