Apple iSports Group, Inc. - Quarter Report: 2015 October (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2015

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)

 +60 3 6258 5887

(Registrant’s telephone number, including area code)

 (Former Name, former address and former fiscal year, if changed since last report)

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 ☒    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 ☐

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):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒   No ☐

As of January 12, 2016, there were 22,340,081 shares of common stock, $0.0001 par value per share, outstanding.

TABLE OF CONTENTS

Part I

Item 1. Financial Statements.

PREVENTION INSURANCE.COM

BALANCE SHEETS

(Unaudited)

See accompanying notes to unaudited financial statements.

PREVENTION INSURANCE.COM

STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes to unaudited financial statements.

PREVENTION INSURANCE.COM

STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying notes to unaudited financial statements.

PREVENTION INSURANCE.COM

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2015

(Unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING 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.

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.

As discussed in Note 7 Subsequent Events below, effective December 8, 2015, a change of control occurred with respect to the Company. Pursuant to a Securities Purchase Agreement entered into by and among the Company, Paragon Capital LP (“Seller”), and Yik Kei Ong (“Buyer”, as nominee for certain third parties), Seller assigned, transferred and conveyed to Buyer, as nominee (i) 2,109,286 shares of common stock of Company and convertible notes of the Company totaling $199,500. The convertible notes were convertible into common stock of the Company at $0.01 per share for a total of 19,950,000 shares of common stock. On the closing of the above transaction, Mr. Alan Donenfeld, the sole officer of Seller, resigned in all officer capacities from the Company and Yik Kei Ong was appointed Chief Executive Officer and Chief Financial Officer of the Company. Immediately following the closing of the transaction, the convertible notes ($199,500 in principal amount) were converted into 19,950,000 shares of common stock of the Company.

Basis of Presentation

The summary of significant accounting policies is presented to assist in the understanding of the financial statements. These policies conform to accounting principles generally accepted in the United States of America and have been consistently applied.

Interim Financial Statements

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. While we believe that the disclosures presented herein are adequate and not misleading, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the footnotes thereto contained for the year ended April 30, 2015 included our Form 10K filed on October 23, 2015. Operating results for the interim periods presented are not necessarily indicative of the results for the full year.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ 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.

Fair Value of Financial Instruments

The fair value of cash and cash equivalents and accounts payable approximates the carrying amount of these financial instruments due to their short maturity.

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount. In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and the Company amortizes the discount to interest expense, over the life of the debt using the effective interest method.

Net Loss per Share Calculation

Basic net loss per common share ("EPS") is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

Revenue Recognition

Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on our management's judgments regarding the fixed nature of the selling prices of the products and services delivered and the collectability of those amounts.

During the three and six months ended October 31, 2015 and 2014, the Company did not recognize any revenue.

Stock-Based Compensation

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 three and six months ended October 31, 2015 and 2014, 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

The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Uncertain Tax Positions

The Company evaluates tax positions in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination, based on the technical merits of the position. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as long term liabilities in the financial statements.

Subsequent Events

The Company has evaluated all transactions from October 31, 2015 through the financial statement issuance date for subsequent event disclosure consideration.

Recently Accounting Pronouncements

The Company has reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company.

NOTE 2. GOING CONCERN

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. For the six months ended October 31, 2015, the Company reported a net loss of $25,261 and has reported an accumulated deficit of $4,359,315 as of October 31, 2015. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties. 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.

NOTE 3. ADVANCES DUE TO RELATED PARTY

As of April 30, 2015, the Company had an aggregate of $127,000 non-interest bearing demand notes payable to Paragon Capital LP, at that time, the Company’s controlling shareholder.

On August 31, 2015, the Company exchanged the aggregate $127,000 non-interest bearing demand notes payable to Paragon Capital LP for a new promissory note in the aggregate amount of $127,000.The note is due on August 31, 2017 and bears an interest rate of 6% per annum. While the note is outstanding, the outstanding principal amount of and all unpaid accrued interest under the note are convertible into shares of Common Stock of the Company at $0.01 per share.

NOTE 4. CONVERTIBLE NOTES PAYABLE

On April 22, 2015, the Company entered into a Convertible Note Agreement with Paragon Capital, LP, at that time, the Company’s controlling shareholder, in the amount of $17,500. The note is due on August 31, 2017, bears an interest rate of 6% per annum, compounded and to be paid at August 31, 2017. While the note is outstanding, the outstanding principal amount and all unpaid accrued interest under the note are convertible into shares of Common Stock of the Company at $0.01 per share. The Company assessed the embedded conversion feature and determined that the intrinsic value of the beneficial conversion feature at inception exceeded the face value of this note and accordingly recorded at beneficial conversion feature (capped at the face value of the of the note) of $17,500. Such beneficial conversion feature is accounted for as a debt discount, which is amortized to interest expense using the effective interest rate method over the life of the note. As discussed in Note 7 Subsequent Events below, effective December 8, 2015, the principal balance of this loan was converted into 1,750,000 shares of common stock.

On August 31, 2015, the Company exchanged the aggregate $127,000 non-interest bearing demand notes payable to Paragon Capital LP, at that time, the Company’s controlling shareholder, for a new promissory note in the aggregate amount of $127,000.The note is due on August 31, 2017 and bears an interest rate of 6% per annum. While the note is outstanding, the outstanding principal amount and all unpaid accrued interest under the note are convertible into shares of Common Stock of the Company at $0.01 per share. The Company assessed the embedded conversion feature and determined that the intrinsic value of the beneficial conversion feature at inception exceeded the face value of this note and accordingly recorded at beneficial conversion feature (capped at the face value of the of the note) of $127,000. Such beneficial conversion feature is accounted for as a debt discount, which is amortized to interest expense using the effective interest rate method over the life of the note. As discussed in Note 7 Subsequent Events below, effective December 8, 2015, the principal balance of this loan was converted into 12,700,000 shares of common stock.

On August 31, 2015, the Company entered into a Convertible Note Agreement with Paragon Capital, LP, at that time, the Company’s controlling shareholder, in the amount of $35,000. The note is due on August 31, 2017, and bears interest at 6% per annum. While the note is outstanding, the outstanding principal amount and all unpaid accrued interest under the note are convertible into shares of Common Stock of the Company at $0.01 per share. The Company assessed the embedded conversion feature and determined that the intrinsic value of the beneficial conversion feature at inception exceeded the face value of this note and accordingly recorded at beneficial conversion feature (capped at the face value of the of the note) of $35,000. Such beneficial conversion feature is accounted for as a debt discount, which is amortized to interest expense using the effective interest rate method over the life of the note. As discussed in Note 7 Subsequent Events below, effective December  8, 2015, the principal balance of this loan was converted into 3,500,000 shares of common stock. 

NOTE 5. COMMITMENTS & CONTINGENCIES

Corporate Office Space

As of October 31, 2015, the Company maintains office space in New York, New York with the Company’s then majority shareholder at no cost to the Company. Accordingly, for the six and three months ended October 31, 2015 and 2014, the rent expense was zero.

NOTE 6. STOCKHOLDERS’ DEFICIT

Stock

As of October 31, 2015, the authorized common stock of the Company consisted of 100,000,000 shares of common stock with a par value of $0.0001 and 10,000,000 shares of preferred stock with a par value of $0.0001.

During the three and six months ended October 31, 2015 and 2014, the Company did not issue any shares of common or preferred stock.

As discussed in Note 7 Subsequent Events below, effective December  8, 2015, Convertible Loans with principal balances totaling $199,500 were converted into 19,950,000 shares of common stock.

NOTE 7. SUBSEQUENT EVENTS

On November 3, 2015, the Company entered into a Convertible Note Agreement with Paragon Capital, LP, at that time, the Company’s controlling shareholder, in the amount of $20,000. The note is due on August 31, 2017, and bears interest at 6% per annum. While the note is outstanding, the outstanding principal amount and all unpaid accrued interest under the note are convertible into shares of Common Stock of the Company at $0.01 per share. 

Effective December 8, 2015, a change of control occurred with respect to the Company. Pursuant to a Securities Purchase Agreement entered into by and among the Company, Paragon Capital LP (“Seller”), and Yik Kei Ong (“Buyer”, as nominee for certain third parties), Seller assigned, transferred and conveyed to Buyer, as nominee; (i) 2,109,286 shares of common stock of Company, and (ii) the following convertible notes of the Company totaling $199,500: (a) a convertible note from the Company dated August 31, 2015 in the amount of $127,000, (b) a convertible note from the Company dated August 31, 2015 in the amount of $35,000, (c) a convertible note from the Company dated April 30, 2015 in the amount of $17,500, and (d) a convertible note from the Company dated November 3, 2015 in the amount of $20,000. The convertible notes were convertible into common stock of the Company at $0.01 per share for a total of 19,950,000 shares of common stock. On the closing of the above transaction, Mr. Alan Donenfeld, the sole officer of Seller, resigned in all officer capacities from the Company and Yik Kei Ong was appointed Chief Executive Officer and Chief Financial Officer of the Company. Immediately following the closing of the transaction, the convertible notes ($199,500 in principal amount) were converted into 19,950,000 shares of common stock of the Company.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

Certain statements made in this quarterly report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) in regard to the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the registrant to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this quarterly report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the registrant or any other person that the objectives and plans of the registrant will be achieved.

Description of Business

Prevention Insurance.com (“we,” “us,” “our,” or the “Company”) was incorporated in the State of Nevada on May 7, 1975, under the name Vita Plus, Inc. The name was later changed to Vita Plus Industries, Inc. and in 2000 the Company’s name was changed to its current name Prevention Insurance.com.

The Company is a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”). Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

The Company currently does not engage in any business activities that provide cash flow.  During the next twelve months we anticipate incurring costs related to:

(i)       filing Exchange Act reports, and

(ii)      investigating, analyzing and consummating an acquisition.

We believe we will be able to meet these costs through deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors. As of the date of the period covered by this report, the Company has $1,654 in cash. There are no assurances that the Company will be able to secure any additional funding as needed.  Currently, however our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due.  Our ability to continue as a going concern is also dependent on our ability to find a suitable target company and enter into a possible reverse merger with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances; however there is no assurance of additional funding being available.

The Company may consider acquiring a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.

Our management has not entered into any agreements with any party regarding a business combination. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.

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 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.

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 Company anticipates that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

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.

Liquidity and Capital Resources

As of October 31, 2015, the Company had assets of $1,654, comprised exclusively of cash.  This compares with assets of $516, comprised exclusively of cash, as of April 30, 2015.  The Company’s current liabilities as of October 31, 2015 totaled $829 comprised exclusively of accounts payable. This compares with current liabilities of $141,068, comprised of $14,068 of accounts payable and $127,000 due to a related party, as of April 30, 2014.  Effective August 31, 2015, the short term balance of $127,000 due to related party was converted into a long-term convertible loan, related party. 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 six months ended October 31, 2015 and 2014.

Operating Activities

During the six months ended October 31, 2015, the Company incurred a net loss of $25,261 which, after adjusting for non-cash amortization of debt discount of $2,461, an increase in accrued interest of $2,177 and repayment of accounts payable of $13,239 resulted in net cash of $33,862 used in the period. By comparison, during the six months ended October 31, 2014, the Company incurred a net loss of $19,602 and repaid accounts payable of $2,959 resulting in net cash of $22,561 used in the period.

Financing Activities

During the six months ended October 31, 2015, the Company received $35,000 by way of long-term convertible loan from the Company’s then principal shareholder. By comparison during the six months ended October 31. 2014, the Company received $25,000 by way of short-term advances from the Company’s then principal shareholder.

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.

Results 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 during the three or six months ended October 31, 2015 and 2014. 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 three months ended October 31, 2015 and 2014

During the three months ended October 31, 2015, the Company incurred a net loss of $7,601, comprised $3,758 of general and administrative expenses, including legal, accounting, and other professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports and the balance of $3,843 related to the amortization of debt discount and interest accrued in respect of the convertible loans, related party outstanding during the period.

During the three months ended October 31, 2014, the Company incurred a net loss of $12,906, comprised of general and administrative expenses, including legal, accounting, audit, and other professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports. No convertible or interest bearing debt was issued or outstanding during the period and consequently no amortization of debt discount or interest accrual was required in the period.

General and administrative expenses were $9.148 higher in the three months ended October 31, 2014 as compared to the three months ended October 31, 2015 principally due to the OTC market fee, audit and accounting fees incurred in the three months ended October 31, 2014 that were not incurred in the three months ended October 31, 2015.

For the six months ended October 31, 2015 and 2014

For the six months ended October 31, 2015, the Company incurred a net loss of $25,261, comprised of general and administrative expenses of $20,623, including legal, accounting, and other professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports and $4,638 related to the amortization of debt discount and interest accrued in respect of the convertible loans, related party outstanding during the period.

For the six months ended October 31, 2014, the Company had a net loss of $19,602, comprised of general and administrative expenses, including legal, accounting, audit, and other professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports. No convertible or interest bearing debt was issued or outstanding during the period and consequently no amortization of debt discount or interest accrual was required. In the period.

The amount of general and administrative expenses incurred in the two periods was broadly comparable.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.  

Contractual Obligations

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this quarterly report, an evaluation was carried out by the Company’s management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of October 31, 2015. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was not accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.

A material weakness is a deficiency, or combination of deficiencies, in disclosure controls and procedures, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.  Based on management’s assessment over financial reporting, management believes as of October 31, 2015, the Company’s disclosure controls and procedures were not effective due to the following deficiency:

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 over Financial Reporting

There have been no changes in our internal controls over financial reporting during the quarter ended October 31, 2015 that have materially affected or are reasonably likely to materially affect our internal controls.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

There are presently no material pending legal proceedings to which the Company, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

Item 1A. Risk Factors.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.

On August 31, 2015, the Company exchanged the aggregate $127,000 non-interest bearing demand notes payable to Paragon Capital LP, at that time, the Company’s controlling shareholder, for a new promissory note in the aggregate amount of $127,000.The note is due on August 31, 2017 and bears an interest rate of 6% per annum. While the note is outstanding, the outstanding principal amount and all unpaid accrued interest under the note are convertible into shares of Common Stock of the Company at $0.01 per share. Effective December 8, 2015, the principal balance of this loan was converted into 12,700,000 shares of common stock.

On August 31, 2015, the Company entered into a Convertible Note Agreement with Paragon Capital, LP, at that time, the Company’s controlling shareholder, in the amount of $35,000. The note is due on August 31, 2017, and bears interest at 6% per annum. While the note is outstanding, the outstanding principal amount and all unpaid accrued interest under the note are convertible into shares of Common Stock of the Company at $0.01 per share. Effective December  8, 2015, the principal balance of this loan was converted into 3,500,000 shares of common stock.

On November 3, 2015, the Company entered into a Convertible Note Agreement with Paragon Capital, LP, at that time, the Company’s controlling shareholder, in the amount of $20,000. The note is due on August 31, 2017, and bears interest at 6% per annum. While the note is outstanding, the outstanding principal amount and all unpaid accrued interest under the note are convertible into shares of Common Stock of the Company at $0.01 per share. Effective December  8, 2015, the principal balance of this loan was converted into 2,000,000 shares of common stock.

All these transaction was exempt under Section 4(2) and 3(b) of the Securities Act of 1933, as amended, and the rules and regulations promulgated there under, including Regulations D, due to the facts that the investor was an accredited investor, had acquired the shares for investment purposes and not with a view for re-distribution and had access to sufficient information concerning the Company.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Mine Safety Disclosures.

Not applicable to our Company.

Item 5.  Other Information.

Effective December 8, 2015, a change of control occurred with respect to the Company. Pursuant to a Securities Purchase Agreement entered into by and among the Company, Paragon Capital LP (“Seller”), and Yik Kei Ong (“Buyer”, as nominee for certain third parties) (the “Purchase Agreement”), Seller assigned, transferred and conveyed to Buyer, as nominee; (i) 2,109,286 shares of common stock of Company (“Common Stock”), and (ii) the following convertible notes of the Company totaling $199,500 (“Convertible Notes”); (a) a Convertible Note from the Company dated August 31, 2015 in the amount of $127,000, (b) a Convertible Note from the Company dated August 31, 2015 in the amount of $35,000, (c) a Convertible Note from the Company dated April 30, 2015 in the amount of $17,500, and (d) a Convertible Note from the Company dated November 3, 2015 in the amount of $20,000. The Convertible Notes are convertible into common stock of the Company at $0.01 per share for a total of 19,950,000 shares of common stock.

On the closing of the above transaction, Mr. Alan Donenfeld, the sole officer of Seller, resigned in all officer capacities from the Company and Yik Kei Ong was appointed Chief Executive Officer and Chief Financial Officer of the Company.

Effective upon the 10th day after the mailing of the Company’s information statement on Schedule 14f-1 (the “Schedule 14f-1”) to the Company’s stockholders (the “Appointment Date”), Mr. Donenfeld will resign as a director and on that same date, Mr. Ong will be appointed as the Company’s Chairman of the Board at that time. The Schedule 14f-1 was mailed to the Company’s shareholders on December 21, 2015.

Immediately following the closing of the transaction, the Convertible Notes ($199,500 in principal amount) were converted into 19,950,000 shares of common stock of the Company.

Item 6. Exhibits.

+ In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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