Pro Travel Network 10QSB Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C., 20549

FORM 10-QSB

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2007

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 333-132127

PRO TRAVEL NETWORK, INC.

(Exact name of small business issuer as specified in its charter)

Nevada		68-0571584
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

516 W. Shaw Avenue # 103, Fresno, CA 93704
(Address of principal executive offices)


(559) 224-6000
(Issuer’s telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes x No o

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

As of May 15, 2007 there were 24,440,340 outstanding shares of the registrant’s common stock $.001 par value per share.

Transitional Small Business Disclosure Format (Check one): Yes o No x

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION		1
Item 1.	Financial Statements.	1
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4
Item 3.	Controls and Procedures.	13

PART II—OTHER INFORMATION		14
Item 1.	Legal Proceedings.	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	15
Item 3.	Defaults Upon Senior Securities.	15
Item 4.	Submission of Matters to a Vote of Security Holders.	15
Item 5.	Other Information.	15
Item 6.	Exhibits.	15

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PRO TRAVEL NETWORK, INC.

BALANCE SHEET

(Unaudited)


	March 31,			June 30,
	2007			2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	231,511		$	366,881
Accounts receivable		46,952			56,175
Inventory		16,524			18,735
Investments		250,181			137,041
Prepaid expenses		57,182			19,922
Total current assets		602,350			598,754

PROPERTY and EQUIPMENT, net of $47,400 and $31,479
accumulated depreciation, respectively		66,069			40,531

OTHER ASSETS
Security deposits, net of allowance of $35,353		116,786			115,286
TOTAL ASSETS	$	785,205		$	754,571

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	1,215		$	45,355
Accrued expenses		230,860			206,770
Deferred national event revenue		21,985			180,556
Total current liabilities		254,060			432,681

SHAREHOLDERS’ EQUITY
Common stock, $.001 par value; 50,000,000 shares authorized,
24,440,340 and 23,900,340 shares issued and outstanding		24,440			23,900
Additional paid-in-capital		2,320,717			654,775
Retained deficit		(1,800,394	)		(346,553	)
Accumulated other comprehensive loss		(13,618	)		(10,232	)
Total shareholders’ equity		531,145			321,890
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	785,205		$	754,571

The accompanying notes are an integral part of the financial statements.

PRO TRAVEL NETWORK, INC.

STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	March 31,						March 31,
	2007			2006			2007			2006
REVENUE
Travel agent products	$	684,324		$	637,014		$	1,720,277		$	1,464,162
National events		206,579			418			437,909			252,729
Commissions		76,096			47,576			240,517			101,785
Total revenues		966,999			685,008			2,398,703			1,818,676

Travel agent products		331,852			377,045			756,754			760,186
National events		190,158			-			385,254			224,238
COST OF SALES		522,010			377,045			1,142,008			984,424
Gross profit		444,989			307,963			1,256,695			834,252
OPERATING EXPENSES
Compensation expense		822,990			160,536			1,152,904			425,393
Professional and consulting fees		1,146,119			35,546			1,230,278			58,411
General and administrative expenses		120,045			96,716			327,450			239,061
Depreciation expense		5,931			4,299			15,921			12,241
Total operating expenses		2,095,085			297,097			2,726,553			735,106
Income (loss) from operations		(1,650,096	)		10,866			(1,469,858	)		99,146
OTHER INCOME (EXPENSE)
Interest income, net		4,312			1,669			13,151			2,363
Gain on sale of investment		-			1,353			3,722			1,353
Gain (loss) on foreign currency		796			-			(856	)		-
Net income (loss) applicable to common stock		(1,644,988	)		13,888			(1,453,841	)		102,862
OTHER COMPREHENSIVE INCOME (EXPENSE)
Unrealized gain (loss) on investment		(4,864	)		(1,488	)		(3,386	)		(5,781	)
Comprehensive income (loss)	$	(1,649,852	)	$	12,400		$	(1,457,227	)	$	97,081


Basic and Diluted Per Common Share Data
Basic and diluted net income per share	$	(0.07	)	$	0.00		$	(0.06	)	$	0.00

Weighted average shares outstanding		24,383,118			23,789,921			24,058,917			23,746,748

The accompanying notes are an integral part of the financial statements.

PRO TRAVEL NETWORK, INC.

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

For the Nine Months Ended March 31, 2007
	Common Shares		Common Stock		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total

Balances, June 30, 2006		23,900,340		23,900		654,775		(346,553	)		(10,232	)		321,890

Stock issued for:
Cash		-		-		-		-			-			-
Services		540,000		540		539,460		-			-			540,000

Warrants issued for services		-		-		1,126,482		-			-			1,126,482

Unrealized loss on investment		-		-		-		-			(3,386	)		(3,386	)

Net income		-		-		-		(1,453,841	)		-			(1,453,841	)

Balances, March 31, 2007		24,440,340	$	24,440	$	2,320,717	$	(1,800,394	)	$	(13,618	)	$	531,145

The accompanying notes are an integral part of the financial statements.

PRO TRAVEL NETWORK, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	March 31,
	2007			2006

Cash flows from operating activities
Net income (loss)	$	(1,453,841	)	$	102,862

Adjustments to reconcile net income to net
cash provided by operating activities:
Share based compensation		1,666,482			10,000
Depreciation and amortization		15,921			12,241
Loss (gain) on sale of investments		(3,722	)		(1,353	)
Changes in assets and liabilities:
Accounts receivable		9,223			(24,028	)
Inventory		2,211			(9,543	)
Prepaid expenses and other		(37,260	)		21,068
Accounts payable and accrued expenses		(20,050	)		104,957
Deferred revenue		(158,571	)		(35,624	)
Net cash provided by operating activities		20,393			180,580


Cash flows from investing activities
Purchase of property and equipment		(41,459	)		(11,838	)
Purchase of investments		(122,097	)		(32,696	)
Sale of investments		9,293			15,584
Deposits		(1,500	)		590
Net cash flows used in investing activities:		(155,763	)		(28,360	)

Cash flows from financing activities
Proceeds from private placement		-			214,175

Net increase (decrease) in cash and cash equivalents		(135,370	)		366,395

Cash and cash equivalents
Beginning of year		366,881			84,338
End of year	$	231,511		$	450,733
Supplemental Disclosures
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

The accompanying notes are an integral part of the financial statements.

PRO TRAVEL NETWORK, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2006

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Pro Travel Network, Inc., have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in Pro Travel’s Annual Report filed with the SEC on Form 10-KSB. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2006 as reported elsewhere in this Form 10-QSB have been omitted.

NOTE B - Stock-Based Compensation

Pro Travel Network measures all share−based payments, including grants of employee stock options, using a fair−value based method in accordance with Statement of Financial Accounting Standards No. 1238, “Share−Based. Payments.” The cost of services received in exchange for awards of equity instruments is recognized in the statement of operations based on the grant date fair value of those awards amortized over the requisite service period. Pro Travel Network utilizes a standard option pricing model, the Black−Scholes model, to measure the fair value of stock options granted. Variables used in the Black Scholes warrant pricing model includes (i) risk-free interest rate (ii) expected option life (iii) expected volatility and (iv) expected dividends.

NOTE C - Common Stock

On January 5, 2007, Pro Travel Network, Inc. issued 190,000 shares of common stock to eleven (11) employees, these shares vest over a two year period. The market value of the 190,000 shares was $190,000 as of January 12, 2007 based upon the closing price of the Pro Travel Stock on the date of grant.

On January 12, 2007, Pro Travel Network, Inc. issued 350,000 shares of common stock to its President and CEO, as a bonus for services rendered. The market value of the 350,000 shares was $350,000 as of January 5, 2007 based upon the closing price of the Pro Travel Stock on the date of grant..

NOTE D- Stock Warrants

On January 19, 2007, we entered into a consulting agreement with Donald W. Sapaugh. In accordance with the terms and provisions of the consulting agreement: (i) we issued to Mr. Sapaugh 500,000 warrants to purchase up to 500,000 of our restricted common stock (250,000 shares at $0.30 per share, 100,000 shares at $0.40 per share, 100,000 shares at $0.50 per share, 25,000 shares at $1.00 per share and 25,000 shares at $1.50 per share) ; and (ii) Mr. Sapaugh shall perform such consulting services involving general business matters and other business consulting as mutually agreed upon. The weighted average share price of these warrants is $0.46 per share. Compensation cost has been recognized in the financial statements for warrants issued to Mr. Sapaugh for consulting services in the amount of $563,241.

On January 19, 2007, we entered into a consulting agreement with Hunter M. A. Carr. In accordance with the terms and provisions of the consulting agreement: (i) we shall issue to Mr. Carr 500,000 warrants to purchase up to 500,000 of our restricted common stock (250,000 shares at $0.30 per share, 100,000 shares at $0.40 per share, 100,000 shares at $0.50 per share, 25,000 shares at $1.00 per share and 25,000 shares at $1.50 per share) ; and (ii) Mr. Carr shall perform such consulting services involving general business matters and other business consulting as mutually agreed upon. The weighted average share price of these warrants is $0.46 per share. Compensation cost has been recognized in the financial statements for warrants issued to Mr. Carr for consulting services in the amount of $563,241

The fair value of the stock options and warrants granted during the period was computed using the Black−Sholes option−pricing model.

Summary information regarding warrants is as follows:

			Weighted
			Average
	Warrants		Exercise Price
Outstanding at June 30, 2006		-	$	-
Issued		1,000,000		0.46
Exercised		-		-
Forfeited		-		-
Outstanding at March 31. 2007		1,000,000	$	0.46

The weighted average fair value of the warrants issued was $1.13. Variables used in the Black Scholes warrant pricing model includes (i) 5.1% risk-free interest rate (ii) expected option life is the actual life of the warrants (iii) expected volatility of 107% and (iv) zero expected dividends.

Warrants outstanding and exercisable as of March 31, 2007:

			Outstanding				Exercisable
			Number		Remaining		Number
	Exercise Price		of Warrants		Life		of Shares

	$	0.30		500,000		1 year		500,000
	$	0.40		200,000		1 year		200,000
	$	0.50		200,000		1 year		200,000
	$	1.00		50,000		1 year		50,000
	$	1.50		50,000		1 year		50,000
				1,000,000				1,000,000

NOTE E - Concentrations

From time to time, Pro Travel Network maintains cash balances at certain financial institutions in excess of the Federal Deposit Insurance Corporation (“FDIC”) limit of $100,000. At March 31, 2007, Pro Travel Network had cash balances in excess of this limit of approximately $106,000.

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

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, among other things, statements concerning our expectations regarding our future financial performance, business strategy, milestones, projected plans and objectives. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "may fluctuate" and similar expressions or future or conditional verbs such as "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. These forward-looking statements were based on various factors and were derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this report, and in particular, the risks discussed in this section under the heading "Risk Factors." Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements including milestones. Most of these factors are difficult to predict accurately and are generally beyond our control. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Overview

We were originally incorporated in Nevada as PTN Investment Group, Inc. on October 23, 2003. In May 2005, we amended our Articles of Incorporation to change our name to Pro Travel Network, Inc. from PTN Investment Group, Inc. and reduce the aggregate number of our authorized shares to 50,000,000 from 75,000,000. Prior to the amendment, two non-employee shareholders returned an aggregate of 6,000,000 shares to us which we cancelled. Following this cancellation, we had 69,000,000 shares issued and outstanding. We wanted to restructure our capital structure in anticipation of going public. As our original employee stockholders had spent substantial time and effort on the development of our business and the original non-employee stockholders were passive investors, the two passive investors decided it would be more equitable for them to give up a portion of their share ownership to affect the proposed capital restructure. Contemporaneous with the reduction of the number of authorized shares, we issued new certificates for a total of 23,000,000 shares to replace the certificates for the then outstanding 69,000,000 shares that were previously issued in the name of PTN Investment Group, Inc.

Pro Travel Network, Inc. is an Internet provider of online travel stores for travel agencies and home-based representatives using our services and technology.

We currently offer the following products:

Independent Travel Agent Program or ITAP - $399.99 initial fee; $99 annual fee after first year - sold by our Independent Representatives.

Marketing Opportunity - $39.99 monthly license fee.

We currently support over 8,100 independent travel agents and over 2,500 Independent Representatives throughout North America.

Critical Accounting Estimates

The financial statements include estimates made by management that impact the amounts reflected for property and equipment as well as security deposits, as detailed below:

Property & Equipment

Management has estimated the useful lives as the basis for depreciating its property and equipment. Estimated useful lives utilized for depreciating property and equipment is three years for all computer equipment and software and seven years for furniture and fixtures. Management believes these estimates are very conservative.

Security Deposits

Security deposits represent operating lease deposits and amounts on deposit with credit card payment processing services that serve as collateral in case we were to cease operations or experience significant chargebacks from customers. Management has provided an allowance for unrecoverable deposits based on its estimate of collectibility in the amount of $35,353 as of March 31, 2007 (See the section entitled “Legal Proceedings,” below)

Warrant Pricing

Stock-Based Compensation

Pro Travel Network measures all share−based payments, including grants of employee stock options, using a fair−value based method in accordance with Statement of Financial Accounting Standards No. 123R, “Share−Based Payments.” The cost of services received in exchange for awards of equity instruments is recognized in the statement of operations based on the grant date fair value of those awards amortized over the requisite service period. Pro Travel Network utilizes a standard option pricing model, the Black−Scholes model, to measure the fair value of stock options granted. Variables used in the Black Scholes warrant pricing model includes (i) risk-free interest rate (ii) expected option life (iii) expected volatility and (iv) expected dividends.

Results of Operations

Nine Months Ended March 31, 2007 Compared to the Nine Months Ended March 31, 2006

For the nine months ended March 31, 2007, total revenues broke down as follows: Independent Travel Agent Program or ITAP sales - 72%, National Training Events - 18%, Travel Commissions - 10%. For the nine months ended March 31, 2006, total revenues broke down as follows: Independent Travel Agent Program or ITAP sales - 81%, National Training Events - 14%, and Travel Commissions- 6%. We had total revenues of $2,398,703 for the nine months ended March 31, 2007, which is an increase of $580,027, or 32%, over our total revenues for the nine months ended March 31, 2006, which was $1,818,676. Total revenues increased as a result of increased sales across the board, due to increased awareness in the marketplace and the increase in the number of Independent Representatives marketing our products, with travel commission revenue showing the largest percentage increase. We expect that as ITAP sales and the number of active agents increase, the resulting travel commissions will continue to increase as a percentage of our overall revenue.

Our cost of sales increased $157,584, or 16%, to $1,142,008 for the nine months ended March 31, 2007, as compared to cost of sales of $984,424 for the nine months ended March 31, 2006. Our cost of sales increased as a direct result of National Training Events.

We had gross profit of $1,256,695 for the nine months ended March 31, 2007, which was an increase of $422,443, or 51%, when compared to our gross profit for the nine months ended March 31, 2006, which was $834,252. Our increase in gross profit was primarily attributable to the increase in our sales which was slightly offset by our increase in cost of sales.

Our 2007 operating expenses increased $1,991,447, or 271%, to $2,726,553 for the nine months ended March 31, 2007, as compared to total operating expenses of $735,106 for the nine months ended March 31, 2006. The increase in total operating expenses was mainly due to an increase in professional and consulting fees, general and administrative expenses and compensation expense. Professional and consulting fees increased $1,171,867 to $1,230,278 for the nine months ended March 31, 2007, as compared to professional and consulting fees of $58,411 for the nine months ended March 31, 2006. The increase in professional and consulting fees was primarily due to the issuance of 1,000,000 warrants to two consultants resulting in an expense to the company of $1,126,482. General and administrative expenses increased $88,389 to $327,450 for the nine months ended March 31, 2007, as compared to general and administrative expenses of $239,061 for the nine months ended March 31, 2006. The increase in general and administrative expenses was primarily attributable to the start-up of our Canadian office along with an increase in merchant fees. Compensation expense increased $727,511 to $1,152,904 for the nine months ended March 31, 2007, as compared to compensation expense of $425,393 for the nine months ended March 31, 2006. The increase in compensation expense was primarily due to an increase in staff along with an increase in quarterly performance bonus and annual salary to Paul Henderson our President and CEO. Mr. Henderson provides management and other services to us under an employment agreement pursuant to which we pay Mr. Henderson salary of $180,000 per year and a commission of 12% of the net Travel Agent Product revenue, less all costs of sales expenses. Mr. Henderson’s employment agreement was amended January 1, 2007 to increase his annual salary from $108,000 to $180,000 per year.

Other income and expenses included an increase in net interest income of $10,788, to $13,151 for the nine months ended March 31, 2007, as compared to net interest income of $2,363 for the nine months ended March 31, 2006, along with a gain on sale of investments of $3,722 for the nine months ended March 31, 2007, compared to gain on sale of investments of $1,353 for the nine months ended March 31, 2006, and a loss on foreign currency of $856, compared to a loss on foreign currency of $0 for the nine months ended March 31, 2006.

We had a net loss applicable to common stock of $1,453,841 for the nine months ended March 31, 2007, as compared to net income applicable to common stock of $102,862 for the nine months ended March 31, 2006. The increase in net loss applicable to common stock was primarily attributable to the issuance of 540,000 shares of common stock to Paul Henderson and various employees along with the issuance of 1,000,000 warrants to two consultants.

We had other comprehensive loss for the nine months ended March 31, 2007 consisting of unrealized loss on investments of $3,386 compared to an unrealized loss on investment of $5,781 for the nine months ended March 31, 2006.

Our comprehensive loss was $1,457,227 for the nine months ended March 31, 2007, as compared to comprehensive income of $97,081 for the nine months ended March 31, 2006.

Commitments and Contingencies

Details regarding the lease for our principal place of business are as follows:

Address: City/State/Zip 516 W. Shaw Avenue #103, Fresno, CA 93704

Number of Square Feet: 3,397

Name of Landlord: J&D Properties

Term of Lease: 7 years, commencing March 2005

Monthly Rental: Escalating from $4,397 at commencement to $5,374 in the final year of the lease.

Our lease was amended in July, 2005, and monthly rent was reduced. The amount of reduction was due to an agreement to allow in the future an adjacent tenant to have access to 140 square feet of our current 3,397 square feet. All other terms remain the same. The lease is non-cancelable. On June 27, 2006, we leased 1,000 square feet of office space in London, Ontario Canada under a one year non-cancelable operating lease beginning in July 2006. On March 1, 2007, we leased 1,000 square feet of office space in Mississauga, Ontario Canada under a one year non-cancelable operating lease beginning in March 2007. Future minimum rental payments for the fiscal year ending June 30, 2007 are $22,392 under these leases.

Milestones

We are in the process of launching full Canadian operations. We opened a Canadian office in Ontario in July 2006. The most major goal towards achieving our business objectives over the next year is our goal of having 100% of our agents booking travel. Continuing operations will always focus on ways to increase our marketing sales force. As described below in “Liquidity and Capital Resources,” we will need $250,000 of capital to expand our operations as outlined in the Milestone table below.

Milestone or Step	Expected Manner of Occurrence or Method of Achievement	Date When Step Should be Accomplished	Estimated Cost of Completion

Develop Canadian infrastructure	Secure office space in Toronto, office equipment and develop “specific” marketing materials and hiring additional employees	3 months	$50,000
Launch Canadian Marketing Phase	PTN Canadian marketing tour and seminars designed to develop sales force	4 - 12 months	$50,000
Creation of Travel Marketing staff	Marketing head and staff to drive bookings up	2 - 4 months	$50,000
Achieve average ITAP sales of 1,000 per month	Aggressively Recruit top leadership in the multi-level marketing Industry	3 - 12 months	$100,000

All steps will be undertaken contemporaneously.

Our marketing effort will be directed at expanding our representative network through personal contact or seminars.

Liquidity and Capital Resources

As of March 31, 2007, we had total current assets of $602,350 consisting of cash and cash equivalents of $231,511, accounts receivable of $46,952, inventory of $16,524, investments of $250,181 and prepaid expenses of $57,182. Our cash balances exceeded FDIC insurance protection levels by approximately $106,000 at March 31, 2007 and at certain points throughout the year subjecting us to risk related to the un-protected balance. We have determined that the risk of loss associated with these un-protected balances is remote and therefore no adjustment for the risk has been provided for the nine months ended March 31, 2007.

We had total current liabilities of $254,060 consisting of accounts payable of $1,215, accrued expenses of $230,860 and deferred revenue of $21,985. We have no long-term debt. Accrued expenses consisted of accrued employees salaries and benefits of $50,292, lease obligation of $4,174 and commissions and rewards owed our representatives in the amount of $176,394, of which approximately $85,012 was the estimated full potential value of PTN Reward Points owed Agents and Managers and the reminder was primarily commissions held for payment at the end of every two weeks.

We had working capital of $348,290 as of March 31, 2007.

During the nine months ended March 31, 2007, net cash decreased by $135,370 consisting of $20,393 provided by operating activities and $155,763 used in investing activities.

Net cash provided by operating activities during the nine months ended March 31, 2007, consisted of a net loss from operations of $1,453,841, adjustments for depreciation and amortization of $15,921 along with share base compensation of $1,666,482, and a decrease in inventory of $2,211 and a decrease in accounts receivable of $9,223 which were offset by, a increase in prepaid expenses and other of $37,260, an adjustment for gain on sale of investments of $3,722, a decrease in deferred revenue of $158,571 and a decrease in accounts payable and accrued expenses of $20,050.

Net cash used in investing activities during the nine months ended March 31, 2007, consisted of property and equipment purchases of $41,459, investments purchases of $122,097 and an increase in deposits of $1,500 which were offset by sale of investments of $9,293.

We believe our cash resources of $231,511 along with the $235,401 in certificate of deposits as of March 31, 2007, are sufficient to satisfy our current cash requirements over the next 12 months. In addition, based upon our prior experience, we believe we will generate sufficient cash flow from operations to also satisfy these requirements. We have expanded our business operations in Canada as outlined in the Milestone table, above. We estimate that we need $250,000 of capital to expand our operations in Canada.. Currently, we have generated sufficient cash flow from operations to satisfy the initial expansion. Should we need additional capital over the amount generated from cash flow, we hope to be able to raise additional capital from an offering of our stock in the future. However, this offering may not occur, or if it occurs, we may not raise the required funding. At this time, we have not secured or identified any additional financing. We do not have any firm commitments or other identified sources of additional capital from third parties or from our officers or directors or from shareholders. There can be no assurance that additional capital will be available to us, or that, if available, it will be on terms satisfactory to us. Any additional financing may involve dilution to our shareholders. In the alternative, additional funds may be provided from cash flow in excess of that needed to finance our day-to-day operations, although we may never generate this excess cash flow. If we raise additional capital or generate additional funds, we plan to use the funds to finance the minimum steps in the Milestone table that we would like to take to implement our business plan in the next 12 months; however, the amounts actually expended may vary significantly. Accordingly, we will retain broad discretion in the allocation of any additional capital that we may receive or funds that we may generate. If we do not raise additional capital or generate additional funds, implementation of our business plans as set forth in the Milestone table will be delayed.

Risk Factors

Risk Related To Our Business

Because our Internet-based hosted home base travel agent and travel services company is a relatively new method to market travel services and to make travel arrangements, we face significant barriers to acceptance of our services.

Our sales and revenues will not grow as we plan if people who want to become independent travel agents do not purchase our Independent Travel Agent Program product or become independent representatives selling this program, if consumers and businesses do not purchase significantly more travel products online than they currently do, or if the use of the Internet as a medium of commerce for travel products does not continue to grow or grows more slowly than expected. Consumers and businesses have traditionally relied on personal contact with travel agents and travel suppliers and are accustomed to a high degree of human interaction in purchasing travel products. The success of our business is dependent on a significant increase in the number of people who want to become independent travel agents who purchase our Independent Travel Agent Program product or become independent representatives selling this program and consumers and businesses who use the Internet to purchase travel products from our agents.

Adverse changes or interruptions in our relationships with travel suppliers could affect our access to travel offerings and reduce our revenues.

We rely on various arrangements with our airline, hotel and auto suppliers, and these arrangements contain terms that could affect our access to inventory and reduce our revenues. All of the relationships we have are freely terminable by the supplier upon notice. None of these arrangements are exclusive and any of our suppliers could enter into, and in some cases may have entered into, similar arrangements with our competitors.

We cannot assure you that our arrangements with travel suppliers will remain in effect or that any of these suppliers will continue to supply us and our agents with the same level of access to inventory of travel offerings in the future. If access to inventory is affected, or our ability to obtain inventory on favorable economic terms is diminished, it could reduce our revenues.

Our failure to establish and maintain representative relationships for any reason could negatively impact sales of our products and reduce our revenues.

We distribute our products through independent representatives, and we depend upon them for sales revenue. For the six months ended December 31, 2006, 12% of our revenues were comprised of commissions. To increase our revenue, we must increase the number of, or the productivity of, our representatives. Accordingly, our success depends in significant part upon our ability to attract, retain and motivate a large base of representatives. There may be a high rate of turn-over among our representatives. Since our inception, we have had approximately 1,900 independent travel agents that have become inactive for non-payment of the annual fee after their first year as an agent. The loss of a significant number of representatives without replacements being secured for any reason could reduce sales of our products and could impair our ability to attract new representatives.

If we fail to attract and retain representatives in a cost-effective manner, our ability to grow and become profitable may be impaired.

Our business strategy depends on increasing our overall number of customer transactions in a cost-effective manner. In order to increase our number of transactions, we must attract new representatives. Although we have spent significant financial resources on sales and marketing and plan to continue to do so, these efforts may not be cost effective in attracting new representatives or increasing transaction volume. If we do not achieve our marketing objectives, our ability to grow and increase revenues may be impaired.

Our success depends on maintaining the integrity of our systems and infrastructure, which if not maintained could reduce our revenues.

In order to be successful, we must provide reliable, real-time access to our systems for our representatives, customers and suppliers. As our operations grow in both size and scope, we will need to improve and upgrade our systems and infrastructure to offer an increasing number of people and travel suppliers enhanced products, services, features and functionality. The expansion of our systems and infrastructure will require us to commit substantial financial, operational and technical resources before the volume of business increases, with no assurance that the volume of business will increase. Consumers and suppliers will not tolerate a service hampered by slow delivery times, unreliable service levels or insufficient capacity, any of which could reduce our revenues.

Our computer systems may suffer failures, capacity constraints and business interruptions that could increase our operating costs and cause us to lose customers and reduce our revenues.

Our operations face the risk of systems failures. Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, computer hacking break-ins, earthquake, terrorism and similar events. The occurrence of a natural disaster or unanticipated problems at our facilities or locations of key vendors could cause interruptions or delays in our business, loss of data or render us unable to process reservations. In addition, the failure of our computer and communications systems to provide the data communications capacity required by us, as a result of human error, natural disaster or other occurrence of any or all of these events could adversely affect our reputation, brand and business. In these circumstances, our redundant systems or disaster recovery plans may not be adequate. Similarly, although many of our contracts with our service providers require them to have disaster recovery plans, we cannot be certain that these will be adequate or implemented properly. In addition, our business interruption insurance may not adequately compensate us for losses that may occur.

Rapid technological changes may render our technology obsolete or decrease the attractiveness of our products to representatives and consumers.

To remain competitive in the online travel industry, we must continue to enhance and improve the functionality and features of our website. The Internet and the online commerce industry are rapidly changing. In particular, the online travel industry is characterized by increasingly complex systems and infrastructures and new business models. If competitors introduce new products embodying new technologies, or if new industry standards and practices emerge, our existing website, technology and systems may become obsolete.

Our future success will depend on our ability to do the following:

enhance our existing products;

develop and license new products and technologies that address the increasingly sophisticated and varied needs of our prospective customers and suppliers; and

respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis.

Developing our website and other technology entails significant technical and business risks which could reduce our revenues.

We may use new technologies ineffectively or we may fail to adapt our website, transaction processing systems and network infrastructure to consumer requirements or emerging industry standards. For example, our website functionality that allows searches and displays of ticket pricing and travel itineraries is a critical part of our service, and it may become out-of-date or insufficient from our customers' perspective and in relation to the search and display functionality of our competitors' websites. If we face material delays in introducing new services, products and enhancements, our representatives, customers and suppliers may forego the use of our products and use those of our competitors.

Declines or disruptions in the travel industry, such as those caused by general economic downturns, terrorism, health concerns, strikes or bankruptcies within the travel industry could reduce our revenues.

Our business is affected by the health of the travel industry. Travel expenditures are sensitive to business and personal discretionary spending levels and tend to decline during general economic downturns. Since 2001, the travel industry has experienced a protracted downturn, and there is a risk that a future downturn, or the continued weak demand for travel, could adversely affect the growth of our business. Additionally, travel is sensitive to safety concerns, and thus may decline after incidents of terrorism, during periods of geopolitical conflict in which travelers become concerned about safety issues, or when travel might involve health-related risks. For example, the terrorist attacks of September 11, 2001, which included attacks on the World Trade Center and the Pentagon using hijacked commercial aircraft, resulted in a decline in travel bookings throughout the industry. The long-term effects of events such as these could include, among other things, a protracted decrease in demand for air travel due to fears regarding terrorism, war or disease. These effects, depending on their scope and duration, which we cannot predict at this time, could significantly reduce our revenues.

Other adverse trends or events that tend to reduce travel and may reduce our revenues include:

higher fares and rates in the airline industry or other travel-related industries;

labor actions involving airline or other travel suppliers;

political instability and hostilities;

fuel price escalation;

travel-related accidents; and

bankruptcies or consolidations of travel suppliers and vendors.

Evolving government regulations could impose taxes or other burdens which increase the cost of travel or otherwise make travel less desirable, which could decrease demand for travel and have the potential to materially reduce our revenues.

We must comply with laws and regulations applicable to online commerce and the sale of travel services. Increased regulation of the Internet or travel services or different applications of existing laws might slow the growth in the use of the Internet and commercial online services, or could increase the cost of travel services, which could decrease travel and thus lead to reduced commission revenues.

In addition to federal regulation, state and local governments could impose additional taxes on Internet-based sales or on travel services such as air fares and hotel room and car rental rates. We would not have to pay these taxes; rather, they would be added to the room rates or other travel purchased and paid directly by the traveler. However, these taxes would increase travel costs. Increased travel costs could decrease the demand for travel and thus lead to reduced commission revenues. Any state and local governments in any jurisdiction in which we do business could, without us being aware, impose additional taxes on Internet-based sales or on travel services such as air fares and hotel room and car rental rates, including increased hotel occupancy taxes. If these types of taxes were imposed and travel and related hotel bookings materially decreased, the amount of commissions we receive and thus our revenues could be materially reduced. The statutes and case law governing online commerce are still evolving, and new laws, regulations or judicial decisions may impose on us additional risks which may lead to reduced revenues. In addition, new regulations, domestic or international, regarding the privacy of our users' personally identifiable information may impose on us additional costs and operational constraints.

Because our market is seasonal, our quarterly results could fluctuate.

Our market experiences seasonal fluctuations, reflecting seasonal trends for the products offered by our representatives, as well as Internet services generally. For example, traditional leisure travel bookings are higher in the first two calendar quarters of the year in anticipation of spring and summer vacations and holiday periods, but online travel reservations may decline with reduced Internet usage during the summer months. In the last two quarters of the calendar year, demand for travel products generally declines and the number of bookings flattens or decreases. These factors could cause our revenues to fluctuate from quarter to quarter. Our results may also be affected by seasonal fluctuations in the inventory made available to us by travel suppliers.

Our business is exposed to risks associated with online commerce security and credit card fraud which could reduce our revenues.

Consumer concerns over the security of transactions conducted on the Internet or the privacy of users may inhibit the growth of the Internet and online commerce. To transmit confidential information such as customer credit card numbers securely, we rely on encryption and authentication technology. Unanticipated events or developments could result in a compromise or breach of the systems we use to protect customer transaction data. Our servers and those of our service providers may be vulnerable to viruses or other harmful code or activity transmitted over the Internet. A virus or other harmful activity could cause a service disruption.

In addition, we bear financial risk from products or services purchased with fraudulent credit card data. Although we have implemented anti-fraud measures, a failure to adequately control fraudulent credit card transactions could adversely affect our business. Because of our limited operating history, we cannot assure you that our anti-fraud measures are sufficient to prevent material financial loss. Since we cannot exert the same level of influence or control over our representatives as we could were they our own employees, our representatives could fail to comply with our policies and procedures, which could result in claims against us that could harm our financial condition and operating results. We are not in a position to directly provide the same direction, motivation and oversight for our representatives as we would if such representatives were our own employees. As a result, there can be no assurance that our representatives will participate in our marketing strategies or plans, accept our introduction of new products and services, or comply with our policies and procedures.

Because it can be difficult to enforce policies and procedures designed to govern the conduct of our representatives and to protect the goodwill associated with our business because of the number of representatives and their independent status, our revenues could be reduced if we fail to enforce these policies and procedures.

Violations by our representatives of applicable laws or our policies and procedures in dealing with customers could reflect negatively on our products and operations and harm our business reputation. In addition, it is possible that a court could hold us civilly or criminally accountable based on vicarious liability because of the actions of our representatives.

Adverse publicity concerning any actual or purported failure of us or our representatives to comply with applicable laws and regulations, whether or not resulting in enforcement actions or the imposition of penalties, could harm the goodwill of our company and could reduce our ability to attract, motivate and retain representatives, which would reduce our revenues. We cannot ensure that all representatives will comply with applicable legal requirements.

Our marketing program could be found not to be in compliance with current or newly adopted laws or regulations in one or more markets, which could prevent us from conducting our business in these markets and reduce our revenues.

Our network marketing program is subject to a number of federal and state regulations administered by the Federal Trade Commission and various state agencies in the United States. We are subject to the risk that, in one or more markets, our network marketing program could be found not to be in compliance with applicable laws or regulations. Regulations applicable to network marketing organizations generally are directed at preventing fraudulent or deceptive schemes, often referred to as "pyramid" or "chain sales" schemes, by ensuring that product sales ultimately are made to consumers and that advancement within an organization is based on sales of the organization's products rather than investments in the organization or other non-retail sales-related criteria. The regulatory requirements concerning network marketing programs do not include "bright line" rules and are inherently fact-based and thus, even in jurisdictions where we believe that our network marketing program is in full compliance with applicable laws or regulations governing network marketing systems, we are subject to the risk that these laws or regulations or the enforcement or interpretation of these laws and regulations by governmental agencies or courts can change. The failure of our network marketing program to comply with current or newly adopted regulations could reduce our revenues.

We are also subject to the risk of private party challenges to the legality of our network marketing program. The multi-level marketing programs of other companies have been successfully challenged in the past. An adverse judicial determination with respect to our network marketing program, or in proceedings not involving us directly but which challenge the legality of multi-level marketing systems, in any market in which we operate, could reduce our revenues.

Because insiders control our activities, they may block or deter actions that you might otherwise desire that we take and may cause us to act in a manner that is most beneficial to such insiders and not to outside shareholders.

Our CEO, President and sole director, Mr. Paul Henderson, controls approximately 52.3% of our common stock, and we do not have any non-employee directors. As a result, he effectively controls all matters requiring director and stockholder approval, including the election of directors, the approval of significant corporate transactions, such as mergers and related party transaction. He also has the ability to block, by his ownership of our stock, an unsolicited tender offer. This concentration of ownership could have the effect of delaying, deterring or preventing a change in control of our company that you might view favorably.

Our management decisions are made by Paul Henderson, CEO and President; if we lose his services, our revenues may be reduced.

The success of our business is dependent upon the expertise of Paul Henderson, CEO and President. Because Paul Henderson is essential to our operations, you must rely on his management decisions. Paul Henderson, CEO and President will continue to control our business affairs after the filing. We have not obtained any key man life insurance relating to Paul Henderson. Paul is currently subject to an IRS lien. If we lose his services, we may not be able to hire and retain another CEO or President with comparable experience. As a result, the loss of the services of Paul Henderson could reduce our revenues.

Risk Related To Our Common Stock

Pro Travel Network, Inc. (Pink Sheets: PTVL) completed the necessary SEC filings and began trading as a publicly held company on November 27, 2006.

Because the offering price of our most recent sales of common stock of $1.25 per share was arbitrarily set by our Board of Directors and accordingly does not indicate the actual value of our business, investors may not be able to sell their stock for a price in excess of $1.25 per share and thus could suffer an investment loss.

The offering price of our most recent sales of common stock of $1.25 per share was not based upon earnings or operating history, does not reflect our actual value, and bears no relation to our earnings, assets, book value, net worth or any other recognized criteria of value. No independent investment banking firm was retained to assist in determining the offering price for the shares. Accordingly, the offering price should not be regarded as an indication of any future price of our stock. Any investors in our common stock, including those who invest in our common stock at a price less than $1.25 per share, could suffer an investment loss.

Because sales of our common stock under Rule 144 could reduce the price of our stock investors may not be able to sell their stock for a price in excess of the price they paid to acquire our stock and thus could suffer an investment loss.

As of November 13, 2006, there are 900,340 shares of our common stock held by non-affiliates and 23,000,000 shares of our common stock held by officers, directors and stockholders that currently own more than 5% of our securities that Rule 144 of the Securities Act of 1933 defines as restricted securities. We registered 400,340 of these shares with the SEC on a registration statement on Form SB-2, as amended, File No. 333-132127, which was declared effective on July 19, 2006. No Shares have been sold pursuant to Rule 144 of the Securities Act of 1933.

In addition to the registered shares that are available for resale, as a result of the provisions of Rule 144, restricted securities could be available for sale in a public market, if developed, generally beginning 90 days after the effective date of the registration statement, assuming the holding period, volume and method of sale limitations in Rule 144 can be satisfied to the extent required. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.

Because we do not have an audit or compensation committee, shareholders will have to rely on the entire Board of Directors, all of which are not independent, to perform these functions.

We do not have an audit or compensation committee comprised of independent directors. Indeed, we do not have any audit or compensation committee. These functions are performed by the Board of Directors as a whole. All members of the Board of Directors are not independent directors. Thus, there is a potential conflict in that board members who are management will participate in discussions concerning management compensation and audit issues that may affect management decisions.

Item 3. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”), has concluded that as of the Evaluation Date, our disclosure controls and procedures are in-effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, and (ii) is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

This conclusion is based upon the number and magnitude of the adjusting entries and additional financial reporting disclosures identified by our independent accountants.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

There are no pending or threatened lawsuits against us.

We are currently pursuing an operating credit card processing service that failed to return our deposit of approximately $35,000. The credit card processing service is currently pursing action against its bank to recover this sum and has orally agreed to pay us this amount if recovered. However, as the processor is not located in the U.S., if they do not pay us as orally agreed, we do not intend to institute litigation due to the cost of litigation and uncertainty of collection. Although as the company is still in business and we may be able to collect, recovery is uncertain, so we have provided an allowance on our financial statements for the entire balance in case it is not collected.

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

On January 5, 2007, Pro Travel Network, Inc. issued 190,000 shares of common stock to eleven (11) employees based on a two year plus vesting with the company. The market value of the 190,000 shares was $190,000 as of January 5, 2007 based upon a closing price of $1.00 on that date.

On January 12, 2007, Pro Travel Network, Inc. issued 350,000 shares of common stock to Paul Henderson, President and CEO, as a bonus for services rendered. The market value of the 350,000 shares was $350,000 as of January 5, 2007 based upon a closing price of $1.00 on that date.

On January 19, 2007, we entered into a consulting agreement with Donald W. Sapaugh. In accordance with the terms and provisions of the consulting agreement: (i) we shall issue to Mr. Sapaugh 500,000 warrants to purchase up to 500,000 of our restricted common stock (250,000 shares at $0.30 per share, 100,000 shares at $0.40 per share, 100,000 shares at $0.50 per share, 25,000 shares at $1.00 per share and 25,000 shares at $1.50 per share) ; and (ii) Mr. Sapaugh shall perform such consulting services involving general business matters and other business consulting as mutually agreed upon. Compensation cost has been recognized in the financial statements for warrants issued to Mr. Sapaugh for consulting services in the amount of $563,241.

On January 19, 2007, we entered into a consulting agreement with Hunter M. A. Carr. In accordance with the terms and provisions of the consulting agreement: (i) we shall issue to Mr. Carr 500,000 warrants to purchase up to 500,000 of our restricted common stock (250,000 shares at $0.30 per share, 100,000 shares at $0.40 per share, 100,000 shares at $0.50 per share, 25,000 shares at $1.00 per share and 25,000 shares at $1.50 per share) ; and (ii) Mr. Carr shall perform such consulting services involving general business matters and other business consulting as mutually agreed upon. Compensation cost has been recognized in the financial statements for warrants issued to Mr. Carr for consulting services in the amount of $563,241

Item 3. Defaults Upon Senior Securities.

None

Item 4. Submission of Matters to a Vote of Security Holders.

None

Item 5. Other Information.

None

Item 6. Exhibits.

Exhibit No.	Description of Exhibit

10.1	Consulting Agreement between Pro Travel Network, Inc. and Donald W. Sapaugh.
10.2	Consulting Agreement between Pro Travel Network, Inc. and Hunter M. A. Carr.
31*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

In accordance with requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PRO TRAVEL NETWORK, INC.

By: /s/ Paul Henderson

Name: Paul Henderson

Title: Chief Executive Officer and President

Date: May 21, 2007

Pro Travel Network 10QSBQuarterly report (small business)