We do not own or lease any properties and at this time have no agreements to own or lease any properties in the near future.
You should read the following discussion together with "Selected Historical Financial Data" and our consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from those we currently anticipate as a result of many factors, including the factors we describe under "Risk Factors” and elsewhere in this Annual Report.
Some of the information in this section contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue," or similar words. You should read statements that contain these words carefully because they:
We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors," "Business" and elsewhere in this Annual Report. See "Risk Factors."
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.
We will not restrict our search for any specific kind of businesses, but may acquire a business which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its business life. It is impossible to predict at this time the status of any business in which we may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which we may offer.
Our audit reflects the fact that we do not have sufficient revenue to cover expenses. Our condition is at present under-capitalized. We have been able to pay off all of our payables as agreed. Further, that without realization of additional capital, it would be unlikely for the Company to continue as a going concern; we have previously sustained ourselves through commission income of ATM machine sales, although the Company has divested itself of the ATM machine sales operations as of October 31, 2008.
We have received a small amount of capital from existing shareholders through periodic stock sales and warrant sales. We may also seek out private equity capital or a strategic partner as possible sources of financing. While we currently have minimal cash, it is anticipated that at least for the near term our controlling shareholder, Paragon Capital LP, will invest at least $15,000 and in exchange we will issue warrants purchasing our common stock. Additional warrants will be sold to fund our operations going forward until we are able to raise larger amounts of capital and complete a business combination. Upon the closing of a business combination and a possible financing, we plan to pay Mr. Goldsmith $400,000 or issue 1,600,000 shares of our common stock, regardless of any stock splits for a period from four years from the date of the issuance of the stock, net of any liabilities not covered in the conveyance of Quick Pay, as the final consideration for amounts owed to him, for the cancellation of his preferred stock and warrants.
Our only operation, Quick Pay, has been discontinued and was conveyed to Mr. Goldsmith on October 31, 2008. We are not allocating any additional capital to Quick Pay. At April 30, 2008, Quick Pay had net liabilities of $58,485, net of related assets. Regardless of the amount of the net liabilities at October 31, 2008, Quick Pay’s net liabilities amount was eliminated from our balance sheet and is not anticipated to result in any further risk or liability.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards required 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 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 evaluation the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
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, 2008, and the results of its operations and its cash flows for the year ended April 30, 2008, in conformity with generally accepted accounting principles in the United States.
August 14, 2008, except for Footnote 8, as to which the date is August 12,
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 30, 2009 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The Company maintains cash balances in a non-interest bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of April 30, 2009 and 2008.
The fair value of cash and cash equivalents and accounts payables approximates the carrying amount of these financial instruments due to their short maturity.
In February 1997, the FASB issued SFAS No. 128, “Earnings per Share.” Basic net loss per common share ("EPS") is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per shares is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. For the year ended April 30, 2009, the Coompany did not have enough authorized and issued common shares to cover the 55,000,000 warrants that were granted. Until such time that the Board of Directors authorized an increase in the authorized number of common shares to cover the 55,000,000 warrants, the weighted average number of shares for the basic and diluted calculations will remian the same. For the year ended April 30,2008, the Company has sustained losses, which would make use of equivalent shares such as convertible preferred stock and warrants anti-dilutive.
The weighted-average number of common shares outstanding for computing basic EPS for the years ended April 30, 2009 and April 30, 2008 were 97,872,933 and 47,838,685, respectively.
For the years ended April 30, 2009 and 2008, the Company did not realize any revenue from continuing operations. Commission income from the sale of ATM machines was recognized at the time of sale. This commission income is presented as part of the loss from discontinued operations.
In December 2004, SFAS No. 123 (revised 2004), "Share-Based Payment"("SFAS 123(R)") was issued. The Company applies SFAS 123(R) in accounting for stock options issued to employees. For stock options and warrants issued to non-employees, the Company applies SFAS No. 123(R), Accounting for Stock-Based Compensation, which requires the recognition of compensation cost based upon the fair value of stock options at the grant date using the Black-Scholes option pricing model.
During the year ended April 30, 2009, the Company did not issue any shares for services.
During the year ended April 30, 2008, 800,000 common shares were issued as payment of services rendered totaling $42,000 (See Note 4 “Stockholders’ Equity” for additional information).
During the fiscal year ended April 30, 2007, 2,000,000 warrants were issued to officers with a $0.10 exercise price, 5 year term, 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. These warrants were cancelled upon signing the Agreement and Release between Paragon Capital LP, Prevention Insurance.com and Mr. Goldsmith dated February 5, 2008.
During the years ended April 30, 2009 and 2008, the Company did not issue any options as stock based compensation to any officers, directors, or non-employees.
Income taxes are provided for using the liability method of accounting in accordance with SFAS No. 109 "Accounting for Income Taxes," and clarified by FIN 48, "Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109." A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133,” (SFAS “161”) as amended and interpreted, which requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. Disclosing the fair values of derivative instruments and their gains and losses in a tabular format provides a more complete picture of the location in an entity’s financial statements of both the derivative positions existing at period end and the effect of using derivatives during the reporting period. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Early adoption is permitted. The Company does not expect the adoption of SFAS 161 will have a material impact on its financial condition or results of operation
In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 which applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. The statement is effective for annual periods beginning after December 15, 2008. The Company does not expect the adoption of SFAS 161 will have a material impact on its financial condition or results of operation
During the year ended April 30, 2009, the divestiture took place and was consideration for satisfaction of all the issued and outstanding shares of preferred stock, warrants and liabilities held by the former Chief Executive Officer, Chief Financial Officer and Director of the Company, Mr. Goldsmith.
As of April 30, 2008, 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.
On December 31, 2007, the Company issued 71,428,571 restricted shares of common stock to a company for cash. These shares were valued at $250,000 (an average of approximately $.0035 per share).
On December 31, 2007, the Company issued 700,000 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 December 31, 2007, the Company issued 100,000 restricted shares of common stock to one individual for services. These shares were valued at $2,000 (an average of approximately $.02 per share).
On October 25, 2007, the Company sold 100,000 restricted shares of common stock to one individual for cash. These shares were valued at $1,000 (an average of approximately $.01 per share).
For the years ended April 30, 2009 and 2008, officer compensation totaled $0 and $76,124, respectively. Of the respective amounts approximately fifty percent (50%) was attributable to discontinued operations since a portion of the expense was related to the operations of the ATM division, which was conveyed to Mr. Goldsmith on October 31, 2008.
As of April 30, 2009, the Company maintains office space in New York City with the Company’s majority shareholder at no cost to the Company.
As of April 15, 2008, as partial consideration for the cancellation of the 2,000,000 warrants and 1,000,000 preferred shares, the Company paid $200,000 to Mr. Goldsmith who designated that the capital be transferred to Quick Pay which will be conveyed to Mr. Goldsmith on October 31, 2008. The $200,000 paid to Quick Pay was recorded as a liability to Mr. Goldsmith and is included under net liabilities held for sale caption. As of April 30, 2008 approximately $119,000 remains due to Mr. Goldsmith by Quick Pay, this liability was conveyed to Mr. Goldsmith on October 31, 2008. As of April 30, 2008, the Company had no further liability to Mr. Goldsmith in relation to the initial payment to Mr. Goldsmith of $200,000.
At April 30, 2009 and 2008, the Company had a federal net operating loss carryforward of approximately $691,856 and $701,400, respectively, which expires through 2029. This carryforward may be limited upon due to the change in controls provisions under Internal Revenue Code Section 381.
The valuation allowance for deferred tax assets as of April 30, 2009 and 2008 was $242,150 and $286,100, respectively.
In assessing the recovery of the deferred tax assets, management of the Company 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 in the periods in which those temporary differences become deductible. Management of the Company considers the scheduled reversals of future deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As a result, management of the Company determined it was more likely than not the deferred tax assets would not be realized as of April 30, 2009 and 2008, and recorded a full valuation allowance.
Reconciliation between the statutory rate and the effective tax rate is as follows:
Upon adoption of FIN 48 as of May 1, 2007, the Company had no gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. At April 30, 2009 and April 30, 2008, the amount of gross unrecognized tax benefits before valuation allowances and the amount that would favorably affect the effective income tax rate in future periods after valuation allowances were $0. These amounts consider the guidance in FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48". The Company has not accrued any additional interest or penalties as a result of the adoption of FIN 48. No tax benefit has been reported in connection with the net operating loss carry forwards in the consolidated financial statements as the Company believes it is more likely than not that the net operating loss carry forwards will expire unused. Accordingly, the potential tax benefits of the net operating loss carry forwards are offset by a valuation allowance of the same amount. Net operating loss carryforwards start to expire in 2021.
The Company files income tax returns in the United States. The Company has filed its US federal income tax return as of and for the year ended April 30, 2008. The Company will file its U.S. federal return for the year ended April 30, 2009 before its due date including the allowable extension period. These U.S. federal returns are considered open tax years as of the date of these financial statements. No tax returns are currently under examination by any tax authorities.
During the year ended April 30, 2008, the merger talks ceased due to non-performance by the merger candidate and per the terms of the agreement, the funds were recognized as a non-refundable deposit and reclassified to other income.
The Company has adopted FASB No. 123(R) and accounts for stock issued for services, stock options, and warrants for compensation under the fair value method.
During the year ended April 30, 2009, the Company issued 45,000,000 fully vested warrants to Paragon Capital LP for a consideration of $45,000. The warrants are exercisable over a three year period (see table below on) to purchase 45,000,000 shares of common stock subject to enough authorized common stock of the Company being available to cover all common stock equivalents.
There were no other options granted or exercised by the directors and executive officers outstanding as of April 30, 2009 and April 30, 2008.
The following table summarizes information about the Company's common stock warrants outstanding at April 30, 2009.
As of April 30, 2009 and 2008, the common stock equivalents of the Company exceeded the total common stock available for issuance by approximately 52,872,933 and 7,872,933 common shares, respectively. The Company’s Chief Executive Officer, Alan P. Donenfeld, as a beneficial owner for securities held by Paragon Capital LP, holds warrants that are exercisable into 55,000,000 common shares of the Company.
As of April 30, 2009 and 2008, the Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.
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
As shown in the accompanying financial statements, for the year ended April 30, 2009, the Company reported net income of $9,544 as a direct result of the divestiture of the ATM machine sales operations and as of April 30, 2009 has reported an accumulated deficit of $4,050,503.