The Company neither rents nor owns any properties. The Company utilizes the office space and equipment of its management at a nominal charge. Management estimates such amounts to be immaterial. The Company currently has no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
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.
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 of April 30, 2010, the Company had assets equal to $4,060, comprised exclusively of cash. This compares with assets of $4,253, comprised exclusively of cash, as of April 30, 2009. The Company’s current liabilities as of April 30, 2010 totaled $21,911 comprised exclusively of accounts payable. This compares with total liabilities of $408,754 comprised exclusively of $8,754 in accounts payable and $400,000 of monies due to stockholders, as of April 30, 2009. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the fiscal years ended April 30, 2010 and 2009.
Our audit reflects the fact that we do not have sufficient revenue to cover expenses. Our condition is at present under-capitalized. 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. The Company is dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.
The Company has not conducted any active operations since the divestment 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, 2010 and 2009. 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.
For the fiscal year ended April 30, 2009, the Company had a net income of $9,544 comprised of $37,620 in general and administrative expenses including legal, accounting, audit, and other professional service fees incurred in relation to the filing of the Company’s periodic reports on Form 10-K and Form 10-Q and $10,000 of a gain on contingency and $37,164 of income from discontinued operations due to the divestiture of the ATM operations in October 2008.
We have audited the accompanying balance sheets of Prevention Insurance.com (“the Company”) as of April 30, 2010 and 2009 and the related statements of operations, changes in stockholders’ equity (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 audit.
As of April 30, 2010, 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.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Because of the use of estimates inherent in the financial reporting process, actual results may differ significantly from those estimates.
For the years ended April 30, 2010 and 2009, the Company did not realize any revenue. For the year ended April 30, 2009, commission income from the sale of ATM machines was recognized at the time of sale, which is presented as part of the loss from discontinued operations.
Income taxes are provided for using the liability method of accounting. 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.
The following is a summary of activities from discontinued operations for the year ended April 30, 2009:
On September 22, 2009, the Company issued 1,600,000 shares of restricted common stock as payment for the $400,000 note payable to Mr. Goldsmith. As of April 30, 2010, this transaction is being reflected on the Company’s balance sheet as a reclassification from a current liability to equity.
During the year ended April 30, 2009, the Company did not issue any shares of common or preferred stock.
As of April 30, 2010, if Mr. Donenfeld and Paragon Capital, LP exercised the warrants that have been granted, they would be required to pay $775,000, except for a cashless exercise right.
During the year ended April 30, 2010, the Company issued warrants to purchase 90,000,000 shares of the Company’s common stock at a weighted average exercise price of $0.005. Paragon Capital LP paid $90,000 to purchase these warrants. The Company’s Chief Executive Officer, Alan P. Donenfeld, as a beneficial owner for securities held by Paragon Capital LP, holds the warrants granted.
During the year ended April 30, 2009, the Company issued warrants to purchase 45,000,000 shares of the Company’s common stock at a weighted average exercise price of $0.007. Paragon Capital LP paid $45,000 to purchase these warrants. The Company’s Chief Executive Officer, Alan P. Donenfeld, as a beneficial owner for securities held by Paragon Capital LP, holds the warrants granted.
As of April 30, 2010, the Company maintains office space in New York, New York with the Company’s majority shareholder at no cost to the Company.
For the year ended April 30, 2009, the Company leased office space for the ATM division, under a non-cancelable operating lease. The lease required minimum monthly payments of approximately $550 per month and was to expire January 31, 2010. For the year ended April 30, 2009, the rent expense was $1,683. This lease obligation was part of the divestiture of the Company’s assets on October 31, 2008.
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 merger.
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. 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 October 31, 2008, the Company conveyed $59,914 in net liabilities of Quick Pay to Mr. Goldsmith. The Company does not anticipate any additional liability related to the conveyance of Quick Pay.
As part of the amendment to the February 5, 2008 agreement the Company had agreed that a $10,000 penalty would be paid to Mr. Goldsmith if the Company did not convey the net assets of Quick Pay by October 31, 2008. The Company previously accrued for the penalty as of April 30, 2008. The Company has conveyed Quick Pay and therefore a gain due to compliance of the contingency was recognized in the amount of $10,000.
Upon adoption of ASC 740 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. As of April 30, 2010, 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. The Company has not accrued any additional interest or penalties as a result of the adoption of ASC 740. No tax benefit has been reported in connection with the net operating loss carry forwards in the interim 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 2031subject to change in control provisions under the Internal Revenue Code.
The Company files income tax returns in the United States. The 2008, 2009 and 2010 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.