Apple iSports Group, Inc. - Quarter Report: 2010 January (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
_______
FORM
10-Q
(Mark
One)
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended January 31, 2010
OR
|
¨
|
TRANSACTION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period
from ___________________________ to ___________________________
Commission
file number: 000-32389
PREVENTION
INSURANCE.COM
(Exact
Name of Registrant as Specified in Its Charter)
|
Nevada
|
88-0126444
|
|
|
(State of Other Jurisdiction of Incorporation or
Organization)
|
(I.R.S. Employer Identification Number)
|
|
|
c/o
Paragon Capital LP
110
East 59th
Street, 29th
Floor
New
York, NY
|
10022
|
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(212)
593-1600
(Registrant’s
Telephone Number, Including Area Code)
N/A
(Former
Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
Copies
to:
The
Sourlis Law Firm
Virginia
K. Sourlis, Esq.
214 Broad
Street
Red Bank,
New Jersey 07701
T: (732)
530-9007
F: (732)
530-9008
www.SourlisLaw.com
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for 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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes ¨ No o
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,”
"non-accelerated filer" and “smaller reporting company” in Rule 12b-2 of
the Exchange Act. (Check one):
|
Large
accelerated filer
|
o
|
Accelerated
filer
|
o
|
|
Non-accelerated
filer
|
o
|
Smaller
reporting company
|
x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes x No
___
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.
As of
March 11, 2010, there were 99,472,933 shares of Common Stock, $0.01 par value
per share, and no shares of preferred stock outstanding.
TABLE OF
CONTENTS
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Page
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||
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PART
I – FINANCIAL INFORMATION
|
1 | |
|
Item
1.
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Financial
Statements
|
1 |
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Plan of
Operations
|
9 |
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
11 |
|
Item
4T.
|
Controls
and Procedures
|
12 |
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PART
II – OTHER INFORMATION
|
12 | |
|
Item
1.
|
Legal
Proceedings
|
12 |
|
Item
1A.
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Risk
Factors
|
12 |
|
Item
2.
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Unregistered
Sale of Equity Securities and Use of Proceeds
|
12 |
|
Item
3.
|
Defaults
Upon Senior Securities
|
13 |
|
Item
4.
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Submission
of Matters to a Vote of Security Holders
|
13 |
|
Item
5.
|
Other
Information
|
13 |
|
Item
6.
|
Exhibits
|
13 |
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SIGNATURES
|
14 | |
PART
I
Item 1. Financial
Statements.
|
PREVENTION
INSURANCE.COM
|
||||||||
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BALANCE
SHEETS
|
||||||||
|
ASSETS
|
||||||||
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January
31, 2010
|
April
30, 2009
|
|||||||
|
(Unaudited)
|
(Audited)
|
|||||||
|
Current assets
|
||||||||
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Cash
|
$ | 74,381 | $ | 4,253 | ||||
|
Total
current assets
|
74,381 | 4,253 | ||||||
|
Total
assets
|
$ | 74,381 | $ | 4,253 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
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Current liabilities
|
||||||||
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Accounts
payable
|
$ | 3,425 | $ | 8,754 | ||||
|
Due to
shareholder
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- | 400,000 | ||||||
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Total
current liabilities
|
3,425 | 408,754 | ||||||
|
Total
liabilities
|
$ | 3,425 | $ | 408,754 | ||||
|
Commitments
and contingencies
|
- | - | ||||||
|
Stockholders' deficit
|
||||||||
|
Preferred
stock, par value $0.001; 8,000,000 shares authorized;
|
- | - | ||||||
|
zero
shares issued
|
||||||||
|
Preferred
stock, par value $0.01; 2,000,000 shares authorized:;
|
- | - | ||||||
|
zero
shares issued
|
||||||||
|
Common
stock, $0.01 par value; 100,000,000 shares
authorized;
|
||||||||
|
99,472,933
shares as of January 31, 2010 and 97,872,933 shares
|
||||||||
|
as
of April 30, 2009, issued and outstanding, respectively
|
994,730 | 978,730 | ||||||
|
Additional
paid in capital
|
3,194,226 | 2,720,226 | ||||||
|
Treasury
stock, 24,142 shares, at cost
|
(52,954 | ) | (52,954 | ) | ||||
|
Accumulated
deficit
|
(4,065,046 | ) | (4,050,503 | ) | ||||
|
Total
stockholders' equity (deficit)
|
70,956 | (404,501 | ) | |||||
|
Total
liabilities and stockholders' equity (deficit)
|
$ | 74,381 | $ | 4,253 | ||||
|
The
financial information presented herein has been prepared by
management
|
|
|
without
audit by independent certified public accountants
|
|
|
The
accompanying notes are an integral part of these financial
statements.
|
|
-1-
|
PREVENTION
INSURANCE.COM
|
||||||||||||||||
|
STATEMENTS
OF OPERATIONS
|
||||||||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
January
31,
|
January
31,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
|
Revenue
|
$ | - | $ | - | $ | - | $ | - | ||||||||
|
Operating
expenses
|
||||||||||||||||
|
General
and administrative
|
3,599 | 10,361 | 14,543 | 26,866 | ||||||||||||
|
Total
operating expenses
|
3,599 | 10,361 | 14,543 | 26,866 | ||||||||||||
|
Operating
(loss) from continuing operations
|
(3,599 | ) | (10,361 | ) | (14,543 | ) | (26,866 | ) | ||||||||
|
Other
income (expense)
|
||||||||||||||||
|
Gain
on contingency
|
- | - | - | 10,000 | ||||||||||||
|
Total
other income (expense)
|
- | - | - | 10,000 | ||||||||||||
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(Loss)
from continuing operations
|
(3,599 | ) | (10,361 | ) | (14,543 | ) | (16,866 | ) | ||||||||
|
Discontinued
operations
|
||||||||||||||||
|
Gain
on disposal of operating activity
|
59,914 | 59,914 | ||||||||||||||
|
(Loss)
on discontinued operations
|
- | (24,437 | ) | (22,750 | ) | |||||||||||
|
Income
from discontinued operations
|
- | 35,477 | - | 37,164 | ||||||||||||
|
Net
income (loss)
|
$ | (3,599 | ) | $ | 25,116 | $ | (14,543 | ) | $ | 20,298 | ||||||
|
Earnings
per common share - basic and dilutive:
|
||||||||||||||||
|
Income
(loss) from continuing operations
|
$ | Nil | $ | Nil | $ | Nil | $ | Nil | ||||||||
|
Income
(loss) from discontinued operations
|
$ | Nil | $ | Nil | $ | Nil | $ | Nil | ||||||||
|
Net
income (loss)
|
$ | Nil | $ | Nil | $ | Nil | $ | Nil | ||||||||
|
Weighted
average common shares outstanding
|
||||||||||||||||
|
Basic
and dilutive
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99,472,933 | 97,872,933 | 98,240,348 | 97,872,933 | ||||||||||||
|
Nil
= < $.01
|
||||||||||||||||
|
The
financial information presented herein has been prepared by
management
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||||||||||||||||
|
without
audit by independent certified public accountants
|
||||||||||||||||
|
The
accompanying notes are an integral part of these financial
statements
|
||||||||||||||||
-2-
|
STATEMENTS
OF CASH FLOWS
|
||||||||
|
Nine
Months Ended
|
||||||||
|
January
31,
|
||||||||
|
2010
|
2009
|
|||||||
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(Unaudited)
|
(Unaudited)
|
|||||||
|
Cash flows from operating
activities:
|
||||||||
|
Net
income (loss)
|
$ | (14,543 | ) | $ | 20,298 | |||
|
Adjustments
to reconcile net loss
|
||||||||
|
to
net cash (used in) operating activities:
|
||||||||
|
Gain
on disposal of operating activity
|
- | (59,914 | ) | |||||
|
Gain
on contingency
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- | (10,000 | ) | |||||
|
(Increase)
decrease in assets:
|
||||||||
|
Prepaid
expenses
|
- | (2,000 | ) | |||||
|
Increase
(decrease) in liabilities:
|
||||||||
|
Accounts
payable
|
(5,329 | ) | - | |||||
|
Net
cash flows (used in) operating activities
|
(19,872 | ) | (51,616 | ) | ||||
|
Cash flows from investing
activities:
|
||||||||
|
Change
in net liabilities spun-off
|
- | 1,428 | ||||||
|
Net
cash flows provided by investing activities
|
- | 1,428 | ||||||
|
Cash flows from financing
activities:
|
||||||||
|
Proceeds
from issuance of warrants
|
90,000 | 45,000 | ||||||
|
Net
cash flows provided by financing activities
|
90,000 | 45,000 | ||||||
|
Net
increase (decrease) in cash and cash equivalents
|
70,128 | (5,187 | ) | |||||
|
Cash
and cash equivalents, beginning of period
|
4,253 | 9,440 | ||||||
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Cash
and cash equivalents, end of period
|
$ | 74,381 | $ | 4,253 | ||||
|
Supplemental cash flow
disclosures:
|
||||||||
|
Interest
paid
|
$ | - | $ | - | ||||
|
Income
taxes paid
|
$ | - | $ | - | ||||
|
Supplemental non-cash investing and financing
activities:
|
||||||||
|
Conversion
of $400,000 note payable for 1,600,000 shares of restricted common stock -
September 2009
|
||||||||
|
The
financial information presented herein has been prepared by
management
|
||||||||
|
without
audit by independent certified public accountants
|
||||||||
|
The
accompanying notes are an integral part of these condensed financial
statements.
|
||||||||
-3-
PREVENTION
INSURANCE.COM
NOTES
TO UNAUDITED
INTERIM
FINANCIAL STATEMENTS
January
31, 2010
NOTE
1. SUMMARY OF
SIGNIFICANTACCOUNTING POLICIES AND BASIS OF PRESENTATION
Nature of
Business
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. In 2005,
the Company added a second line of business and had been focused on its
development of its ATM machine sale operations. On December 28, 2007,
the Company entered into an agreement wherein 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
January 31, 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.
Basis of
Presentation
The
accompanying unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles and pursuant to the
rules and regulations of the Securities and Exchange Commission (the “SEC”) and
reflect all adjustments, consisting of normal recurring adjustments, which
management believes are necessary to fairly present the financial position,
results of operations and cash flows of the Company for the respective periods
presented. The results of operations for an interim period are not
necessarily indicative of the results that may be expected for any other interim
period or the year as a whole. The accompanying unaudited interim financial
statements should be read in conjunction with the audited financial statements
and notes thereto in the Company’s Annual Report on Form 10-K for the fiscal
year ended April 30, 2009 as filed with the SEC on August 13, 2009.
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
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.
Cash and Cash
Equivalents
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
January 31, 2010.
Fair Value of Financial
Instruments
The fair
value of cash and cash equivalents and accounts payables approximates the
carrying amount of these financial instruments due to their short
maturity.
Net Loss Per Share
Calculation
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.
The
weighted-average number of common shares outstanding for computing basic EPS for
the nine months ended January 31, 2010 and January 31, 2009 were 98,240,348 and
97,872,933, respectively.
-4-
Revenue
Recognition
For the
nine months ended January 31, 2010 and 2009, the Company did not realize any
revenue. 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.
Stock Based
Compensation
As of
January 31, 2010, 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 nine months ended January 31, 2010 and 2009, 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.
Income
Taxes
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.
Recently Issued Accounting
Pronouncements
In June
2009, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 168,
“The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles – a replacement of FASB Statement No. 162,” (“SFAS 168”). SFAS 168
establishes the FASB Standards Accounting
Codification (“Codification”) as the source of authoritative U.S. generally
accepted accounting principles (“GAAP”) recognized by the FASB to be applied to
nongovernmental entities as authoritative GAAP. The
Codification will supersede all the existing accounting and reporting standards
upon its effective date and subsequently, the FASB will not issue new standards
in the form of Statements, FASB Staff Positions or Emerging Issues Task Force
Abstracts. SFAS 168 also replaces FASB Statement No. 162, “the Hierarchy of Generally Accepted
Accounting Principles” given that once in effect, the Codification will
carry the same level of authority. This statement shall be effective
for financial statements issued for periods ending after September 15,
2009. The Chapter does not anticipate that the adoption of the
statement will have a material impact on its financial statements.
|
The
Company does not expect any of the recently issued accounting
pronouncements to have a material impact on its financial condition or
results of operations.
|
NOTE
2. STOCKHOLDERS’
EQUITY
As of
January 31, 2010 and 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.
For the nine months ended
January 31, 2010
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 January
31, 2010, this transaction is being reflected on the Company’s balance sheet as
a reclassification from a current liability to equity.
During
the nine months ended January 31, 2010, the Company did not issue any shares of
preferred stock.
For the nine months ended
January 31, 2009
During
the nine months ended January 31, 2009, the Company did not issue any shares of
common or preferred stock.
Warrants
As of
January 31, 2010, 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 145,000,000 common shares of the Company. The $145,000 paid
by Paragon Capital LP for the right to exercise these warrants is reflected in
the additional paid in capital on the Company’s balance sheet.
-5-
As of
January 31, 2010, if Mr. Donenfeld and Paragon Capital, LP exercised the
warrants that have been granted, they would be required to pay $875,000, except
for a cashless exercise right.
Unless
and until there is
enough authorized
common stock available to cover all common stock equivalents, Mr. Donenfeld and
Paragon Capital LP will not exercise any of their warrants.
NOTE
3. RELATED PARTY TRANSACTIONS
For the nine months ended
January 31, 2010
During
the nine months ended January 31, 2010, the Company issued warrants to purchase
145,000,000 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.
For the nine months ended
January 31, 2009
During
the nine months ended January 31, 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.
NOTE
4. COMMITMENTS & CONTINGENCIES
Corporate Office
Space
As of
January 31, 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 nine months ended January 31, 2010, the rent
expense was zero.
ATM
Division
For the
nine months ended January 31, 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 nine months ended January 31, 2009, the rent expense
was $1,683. This lease obligation was part of the divestiture of the Company’s
assets on October 31, 2008.
Goldsmith
Agreement
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.
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. In September 2009, the Company issued 1,600,000 shares of
restricted common stock as payment for the $400,000 note payable to Mr.
Goldsmith.
-6-
NOTE
5. INCOME TAXES
As of
January 31, 2010, the Company had a federal net operating loss carryforward of
approximately $170,027, which expires through 2029. This carryforward may be
limited in the future upon change in control of the Company and in accordance
with the provisions under Internal Revenue Code Section 381.
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 January
31, 2010, and recorded a full valuation allowance.
As of
January 31, 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. 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.
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 January 31, 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 2021.
The
Company files income tax returns in the United States. The 2006, 2007, 2008 and
2009 U.S. federal returns are considered open tax years as of the date of these
interim financial statements. No tax returns are currently under examination by
any tax authorities.
NOTE
6. WARRANTS
The
Company accounts for stock issued for services, stock options, and warrants for
compensation under the fair value method.
For the nine months ended
January 31, 2010
During
the nine months ended January 31, 2010, the Company issued warrants to purchase
145,000,000 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.
For the nine months ended
January 31, 2009
During
the nine months ended January 31, 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.
There
were no other options granted or exercised by the directors and executive
officers outstanding as of January 31, 2010.
-7-
|
Nine
Months Ended
|
||||||||
|
January
31, 2010
|
||||||||
|
Exercise
|
||||||||
|
Shares
|
Price
|
|||||||
|
Warrants
outstanding and exercisable -
|
||||||||
|
beginning
of the period - May 01, 2009
|
55,000,000 | $ | 0.008 | |||||
|
Warrants
granted:
|
||||||||
|
December
31, 2009
|
75,000,000 | $ | 0.005 | |||||
|
May
29, 2009
|
15,000,000 | $ | 0.005 | |||||
|
Warrants
outstanding and exercisable -
|
||||||||
|
end
of period - January 31, 2010
|
145,000,000 | $ | 0.006 | |||||
|
Weighted
average fair value of warrants
|
||||||||
|
granted
end of period
|
$ | 875,000 | ||||||
The
following table summarizes information about the Company's common stock warrants
outstanding as of October 31, 2009.
|
Weighted
|
Average
|
|||||||||||||||||
|
Range
of
|
Number
|
Remaining
|
Weighted
Average
|
Life
Exercise
|
||||||||||||||
|
Exercise
|
Prices
|
Outstanding
|
Contractual
|
Price
|
||||||||||||||
| $ | 0.005 - 0.01 | $ | 0.006 | 145,000,000 | 3 years | $ | 0.006 | |||||||||||
As of
January 31, 2010, the common stock equivalents of the Company exceeded the total
common stock available for issuance by approximately 144,472,933 common
shares.
As of
January 31, 2010, 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 145,000,000 common shares of the Company.
As of
January 31, 2010, if Mr. Donenfeld and Paragon Capital, LP exercise the warrants
that have been granted, they would be required to pay $875,000, except for a
cashless exercise provision. At the sole discretion of the warrant
holder, there is a cashless exercise provision within the warrant agreements as
filed as attachments to Form 8-K with the SEC.
Unless
and until there is enough authorized common stock available to cover all common
stock equivalents, Mr. Donenfeld and Paragon Capital LP will not exercise any of
their warrants.
NOTE
7. SUBSEQUENT EVENTS
On March
8, 2010, the Company, Paragon Capital LP and Scott Goldsmith entered into an
agreement whereby the Company paid Scott Goldsmith $65,000. Paragon Capital LP
transferred to Scott Goldsmith its warrant issued April 30, 2008 which was due
April 30, 2010 to buy 10,000,000 shares of common stock with an exercise price
of $.01. This new agreement relinquishes Paragon Capital LP’s requirement to
issue 4,000,000 warrants to Scott Goldsmith. The Company extended the warrant
maturity date by two years from April 30, 2010 to April 30, 2012. In September
2009, the Company issued 1,600,000 shares of restricted common stock to Scott
Goldsmith as payment for the $400,000 note payable. Scott Goldsmith’s 1,600,000
shares of restricted common stock are subject to adjustment from stock
splits.
As of
March 12, 2010, the date the interim financial statements were available to be
issued, there are no other subsequent events that are required to be recorded or
disclosed in the accompanying financial statements as of and for the period
ended January 31, 2010.
-8-
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Forward-Looking
Statements
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 Quarterly 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.
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:
|
•
|
discuss
our future expectations;
|
|
•
|
contain
projections of our future results of operations or of our financial
condition; and
|
|
•
|
state
other "forward-looking"
information.
|
Unless
stated otherwise, the words “we,” “us,” “our,” “the Company” or “Prevention
Insurance” in this Quarterly Report collectively refers to the
Company.
Plan
of Operations.
As of
January 31, 2010, the Company is a shell company as defined in Rule 12b-2 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). The
Company’s current business is to pursue a business combination through an
acquisition of, 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 business combination 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
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.
We will
not acquire or merge with any entity which cannot provide audited financial
statements at or within a reasonable period of time after closing of the
proposed transaction. We are subject to all the reporting requirements included
in the Exchange Act. Included in these requirements is our duty to file audited
financial statements as part of our Form 8-K to be filed with the Securities and
Exchange Commission within four business days upon consummation of a merger or
acquisition, as well as our audited financial statements included in our annual
report on Form 10-K. If such audited financial statements are not available at
closing, or within time parameters necessary to insure our compliance with the
requirements of the Exchange Act, or if the audited financial statements
provided do not conform to the representations made by the target business, the
closing documents may provide that the proposed transaction will be voidable at
the discretion of our present management.
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.
A
business combination with a target business will normally involve the transfer
to the target business of the majority of our common stock, and the substitution
by the target business of its own management and board of
directors.
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.
Discussion
of Financial Condition and Results of Operations.
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 sole officer/
director has not conducted market research and is 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.
-9-
Our
audited financial statements for the year ended April 30, 2009 and unaudited
financial statements included herein for the quarter ended January 31, 2010
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 in exchange for
warrants to purchase our common stock. Paragon Capital LP is controlled by Alan
P. Donenfeld, our sole officer/director. We intend to issue additional warrants
to fund our operations going forward until we are able to raise larger amounts
of capital and complete a business combination.
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
October 31, 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.
Since we
divested our only operating division, historical results provide no meaningful
trend analysis for future financial results.
Cash On Hand. At January 31,
2010, we had $74,381 cash on hand. At April 30, 2009, we had $4,253
cash on hand. The increase in cash was due to the Company’s issuance of
warrants during this period. During the nine months ended January 31, 2010, the
Company issued warrants to purchase 145,000,000 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.
Total Assets. At January 31,
2010, we had $74,381 in total assets. At April 30, 2009, we had
$4,253 in total assets. The increase was due to the Company’s issuance of
warrants during this period. During the nine months ended January 31, 2010, the
Company issued warrants to purchase 145,000,000 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.
Total Liabilities. At January
31, 2010, we had $3,425 in total liabilities. At April 30, 2009, we had
$408,754 in total liabilities. The decrease was due to a decrease in accounts
payable due to the discontinuance of Quick Pay in October 2008 and the payment
in the form of 1,600,000 shares of restricted common stock of the Company in
exchange for the $400,000 note payable to Mr. Goldsmith for the transaction in
February 2008.
Three
months ended January 31, 2010 compared to January 31, 2009
Revenues. For the three
months ended January 31, 2010 and 2009, the Company has had no activities that
produced revenues from operations.
General and Administrative Expenses
(G&A). G&A for the three months ended January 31, 2010
decreased to $3,599 from $10,361 for the three months ended January 31,
2009. This decrease was due to a decrease in professional fees incurred in
connection with our filings of SEC reports. .
Net Income (Loss). Net
loss of $3,599 for the three months ended January 31, 2010 was a result of the
accounting, legal and SEC filing fees related to the Company’s SEC reporting
requirements. For the three months ended January 31, 2009, we experienced net
income of $25,116. The resulting net loss for the three months ended January 31,
2010 occurred primarily by reason of the discontinuance of our business
operations.
Nine
months ended January 31, 2010 compared to January 31, 2009
Revenues. For the nine months
ended January 31, 2010 and 2009, the Company has had no activities that produced
revenues from operations.
General and Administrative Expenses
(G&A). G&A for the nine months ended January 31, 2010
decreased to $14,543 from $26,866 for the nine months ended January 31,
2009. This decrease was due to a reduction in professional fees incurred in
connection with our filings of SEC reports and securities issuances described
herein.
Net Income (Loss). Net
loss of $14,543 for the nine months ended January 31, 2010 was a result of the
accounting, legal and SEC filing fees related to the Company’s SEC reporting
requirements. For
the nine months ended January 31, 2009 we experienced net income of $20,298. The
resulting net loss for the nine months ended January 31, 2010 occurred primarily
by reason of the discontinuance of our business operations.
-10-
Liquidity
and Capital Resources; Going Concern
At
January 31, 2010, we had $74,381 cash on hand, an accumulated deficit of
$4,065,046 and a stockholders’ deficit of $74,381. At April 30, 2009, we
had $4,253 in cash on hand, an accumulated deficit of $4,050,503, and a
stockholders’ deficit of $4,253.
Due to
our insufficient cash on hand and lack of viable business operations, our
auditors expressed their doubt as to our ability to continue as a going concern
in their audit report for our last fiscal year ended April 30,
2009.
From
January 2009 through January 2010, we have not generated any
revenues.
As of
January 31, 2010, the Company does have enough capital resources to fund its
operations for the next 12 months. Company will continue to rely upon the
issuance of common stock and warrants and additional capital contributions from
shareholders to fund administrative expenses pending acquisition of an operating
company. It is anticipated that at least for the near term our controlling
shareholder, Paragon Capital LP, will continue to invest in the Company in
exchange for warrants to purchase our common stock. There can be no
assurances that we will be able to obtain additional financing.
Management
anticipates seeking out a target company through solicitation. Such solicitation
may include newspaper or magazine advertisements, mailings and other
distributions to law firms, accounting firms, investment bankers, financial
advisors and similar persons, the use of one or more Internet websites and
similar methods. No estimate can be made as to the number of persons who will be
contacted or solicited. Management may engage in such solicitation directly or
may employ one or more other entities to conduct or assist in such solicitation.
Management and its affiliates will pay referral fees to consultants and others
who refer target businesses for mergers into public companies in which
management and its affiliates have an interest. Payments are made if a business
combination occurs, and may consist of cash or a portion of the stock in the
Company retained by management and its affiliates, or both.
The
Company will supervise the search for target companies as potential candidates
for a business combination. The Company will pay its own expenses and costs
incurred in supervising the search for a target company. The Company may enter
into agreements with other consultants to assist in locating a target company
and may share stock received by it or cash resulting from the sale of its
securities with such other consultants.
Off
Balance Sheet Arrangements
We do not
have any off balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity or capital
expenditures or capital resources that is material to an investor in our
securities.
Seasonality
Our
operating results are not affected by seasonality.
Inflation
Our
business and operating results are not affected in any material way by
inflation.
Critical
Accounting Policies
The
Securities and Exchange Commission issued Financial Reporting Release No. 60,
"Cautionary Advice Regarding Disclosure about Critical Accounting Policies"
suggesting that companies provide additional disclosure and commentary on their
most critical accounting policies. In Financial Reporting Release No. 60, the
Securities and Exchange Commission has defined the most critical accounting
policies as the ones that are most important to the portrayal of a company's
financial condition and operating results, and require management to make its
most difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. Due to the fact that the
Company does not have any operating business, we do not believe that we have any
such critical accounting policies.
N/A.
-11-
Item
4T. Controls and Procedures.
Evaluation
of Controls and Procedures.
In
accordance with Exchange Act Rules 13a-15 and 15d-15, our management is required
to perform an evaluation under the supervision and with the participation of the
Company’s management, including the Company’s principal executive officer and
principal financial officer (Mr. Donenfeld), of the effectiveness of the design
and operation of the Company’s disclosure controls and procedures as of the end
of the period.
Evaluation
of Disclosure Controls and Procedures
Based on
their evaluation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) as of January 31, 2010, our
Principal Executive Officer and Principal Financial Officer (Mr. Donenfeld) has
concluded that our disclosure controls and procedures were not effective to
ensure that the information required to be disclosed by us in this Report was
(i) recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and instructions for Form 10-Q.
Our
Principal Executive Officer and Principal Financial Officer (Mr. Donenfeld) has
concluded that our disclosure controls and procedures had the following
deficiency:
|
●
|
We
were unable to maintain any segregation of duties within our business
operations due to our reliance on a single individual fulfilling the role
of sole officer and director. While this control deficiency did not result
in any audit adjustments to our 2008 through 2010 interim or annual
financial statements, it could have resulted in a material misstatement
that might have been prevented or detected by a segregation of duties.
Accordingly we have determined that this control deficiency constitutes a
material weakness.
|
To the
extent reasonably possible, given our limited resources, our goal is, upon
consummation of a merger with a private operating company, to separate the
responsibilities of principal executive officer and principal financial officer,
intending to rely on two or more individuals. We will also seek to expand our
current board of directors to include additional individuals willing to perform
directorial functions. Since the recited remedial actions will require that we
hire or engage additional personnel, this material weakness may not be overcome
in the near term due to our limited financial resources. Until such remedial
actions can be realized, we will continue to rely on the advice of outside
professionals and consultants.
Changes
in Internal Controls.
No change
in our internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended
January 31, 2010 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
PART
II
OTHER
INFORMATION
Item
1. Legal Proceedings.
The
Company is currently not a party to any pending legal proceedings and no such
action by or to the best of its knowledge, against the Company has been
threatened.
Item
1A. Risk Factors.
N/A.
Item
2. Unregistered Sale of Equity Securities and Use of Proceeds.
For the nine months ended
January 31, 2010
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 January
31, 2010, this transaction is being reflected on the Company’s balance sheet as
a reclassification from a current liability to equity. The sale was made in
accordance with the exemption from registration pursuant to Section 4(2) under
the Securities Act, as it did not constitute a public offering of
securities.
During
the nine months ended January 31, 2010, the Company issued warrants to purchase
145,000,000 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. The sale was made in accordance with the exemption from
registration pursuant to Section 4(2) under the Securities Act, as it did not
constitute a public offering of securities.
-12-
For the nine months ended January 31, 2009
During
the nine months ended January 31, 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. The sale was made in accordance with the exemption from
registration pursuant to Section 4(2) under the Securities Act, as it did not
constitute a public offering of securities.
Item
3. Defaults Upon Senior Securities.
N/A.
Item
4. Submission of Matters to a Vote of Security Holders.
N/A.
Item
5. Other Information.
Subsequent
Events
On March
8, 2010, the Company, Paragon Capital LP (“Paragon”) and Scott Goldsmith
(“Goldsmith”) entered into an agreement (the “Agreement”) whereby the Company
paid Goldsmith $65,000 in consideration for the following: 1) Paragon
transferred ownership to Goldsmith, of a warrant issued to Paragon on April 30,
2008 (originally due April 30, 2010) (the “April 30, 2008 Warrant”) to buy
10,000,000 shares of Company common stock with an exercise price of $0.01; 2)
the Company extended the April 30, 2008 Warrant maturity date from April 30,
2010 to April 30, 2012; and 3) Goldsmith agreed to cancel Paragon’s requirement
to issue 4,000,000 warrants to Goldsmith pursuant to the parties’ Settlement and
Release Agreement dated February 5, 2008.
Copies of
the Agreement and the warrant extension agreement are attached hereto as
Exhibits 10.1 and 10.2, respectively.
Item
6. Exhibits.
|
Exhibit No.
|
|
Description
|
|
10.1
|
Agreement,
dated March 8, 2010 between Prevention Insurance.com, Paragon Capital LP,
and Mr. Scott Goldsmith
|
|
|
10.2
|
Warrant
Extension Agreement, dated March 8, 2010 between Prevention Insurance.com,
Paragon Capital LP, and Mr. Scott Goldsmith
|
|
|
31.1
|
|
Certification
by Alan P. Donenfeld, the Principal Executive Officer and Principal
Financial Officer of Prevention Insurance.com, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
|
|
32.1
|
|
Certification
by Alan P. Donenfeld, the Principal Executive Officer and Principal
Financial Officer of Prevention Insurance.com, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
|
-13-
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, there unto duly
authorized.
Dated:
March 12, 2010
| PREVENTION INSURANCE.COM | |||
|
|
/s/ Alan P. Donenfeld | ||
|
Alan
P. Donenfeld
Chief
Executive Officer, President and Chairman
(Principal
Executive Officer)
(Principal
Financial/Accounting Officer)
|
|||
-14-