SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT 1 to
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended September 30, 2011
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission File Number 0-4006
Preventia, Inc.
(Exact name of Registrant
in its charter)
Nevada |
| 27-2438013 |
(State or Other Jurisdiction of Incorporation or Organization) |
| (I.R.S. Employer Identification Number) |
8900 W. Olympic Blvd., Beverly Hills, CA |
| 90211 |
(Address of Principal Executive Offices) |
| (Zip Code) |
Preventia's Telephone Number, Including Area Code: (877) 660-6463
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 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-accelerate filer, or a small reporting company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] |
| Non-accelerated filer [ ] |
Accelerated filer [ ] |
| Smaller reporting company [x] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]
The number of outstanding shares of the registrant's common stock, November 10, 2011: Common Stock – 9,253,000
This amendment is being filed to accurately represent the financials for the quarterly period ended September 30, 2011.
2
PREVENTIA, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) |
| Page |
|
|
|
Balance Sheets at September 30, 2011 and December 31, 2010 |
| 4 |
Statements of Operations for the three and nine months ended September 30, 2011, the three months ended September 30, 2010 and the period April 9, 2010 (inception) to September 30, 2010 |
| 5 |
Statements of Cash Flows for the nine months ended September 30, 2011 and the period April 9, 2010 (inception) through September 30, 2010 |
| 6 |
Notes to Financial Statements |
| 7 |
|
|
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
| 12 |
Item 3. Quantitative and Qualitative Disclosure About Market Risk |
| 15 |
Item 4. Controls and Procedures |
| 15 |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings |
| 16 |
Item 1A. Risk Factors |
| 16 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
| 16 |
Item 3. Defaults Upon Senior Securities |
| 16 |
Item 4. (Removed and Reserved) |
| 16 |
Item 5. Other Information |
| 16 |
Item 6. Exhibits |
| 16 |
|
|
|
SIGNATURES |
| 17 |
3
Preventia, Inc.
Balance Sheets
September 30, 2011 and December 31, 2010
|
| (unaudited) |
|
|
|
| September |
| December |
|
| 30, 2011 |
| 31, 2010 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash |
| $ 5,235 |
| $ 509 |
Accounts receivable |
| 100,000 |
| - |
Total current assets |
| 105,235 |
| 509 |
Other assets: |
|
|
|
|
Software development costs, net of accum. amortization of $8,333 |
| 141,667 |
| - |
Deposit |
| - |
| 2,500 |
|
| 141,667 |
| 2,500 |
Total assets |
| $246,902 |
| $ 3,009 |
|
| ======= |
| ====== |
Liabilities and Stockholders' Equity (Deficit) |
|
|
|
|
Current liabilities: |
|
|
|
|
Accrued expenses |
| $ 6,000 |
| $ 3,500 |
Advances from officer, including accrued interest |
| 21,643 |
| 9,570 |
Total current liabilities |
| 27,643 |
| 13,070 |
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
Deferred income tax |
| 29,878 |
| - |
Total liabilities |
| 57,521 |
| 13,070 |
|
|
|
|
|
Stockholders' equity (deficit): |
|
|
|
|
Common stock, $.0001 par value, authorized: 25,000,000 shares; 9,253,000 and 8,000,000 shares issued and outstanding |
| 925 |
| 800 |
Additional paid-in capital |
| 161,700 |
| 7,200 |
Retained earnings (Accumulated deficit) |
| 26,756 |
| (18,061) |
Total stockholders' equity (deficit) |
| 189,381 |
| (10,061) |
|
|
|
|
|
Total liabilities and stockholders' equity (deficit) |
| $246,902 ======= |
| $ 3,009 ====== |
The accompanying notes are an integral part of these financial statements.
4
Preventia, Inc.
Statements of Operations
For the Three and Nine Months Ended September 30, 2011,
The three months ended September 30, 2010
And for the Period from Inception (April 9, 2010) through September 30, 2010
(unaudited)
The accompanying notes are an integral part of these financial statements.
5
Preventia Inc.
Statements of Cash Flows
For the Nine Months Ended September 30, 2011
And for the Period from Inception (April 9, 2010) through September 30, 2010
(unaudited)
|
| Nine Months Ended September 30, 2011 |
| April 9, 2010 (Inception) Through September 30, 2010 |
Cash flows from operating activities: |
|
|
|
|
Net income (loss) |
| $44,817 |
| $(14,334) |
|
|
|
|
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
Deferred income tax |
| 29,878 |
| - |
Amortization of software development costs |
| 8,333 |
| - |
Interest accrued on officer advances |
| 573 |
| 480 |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
| (100,000) |
| - |
Advances from officer |
| - |
| 13,854 |
Deposit |
| 2,500 |
| - |
Accrued Expenses |
| 2,500 |
| - |
Net cash used in operating activities |
| (11,399) |
| - |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Software development costs |
| (150,000) |
| - |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Proceeds from officer advances |
| 11,500 |
| - |
Proceeds from issuance of common stock, net of $2,000 of offering costs |
| 154,625 |
| - |
Net cash provided by financing activities |
| 166,125 |
| - |
|
|
|
|
|
Net increase in cash |
| 4,726 |
| - |
|
|
|
|
|
Cash at beginning of period |
| 509 |
| - |
Cash at end of period |
| $ 5,235 ======= |
| $ - ======= |
The accompanying notes are an integral part of these financial statements.
6
Preventia Inc.
Notes to the Financial Statements
1. Summary of significant accounting policies
This summary of significant accounting policies of Preventia Inc. (the Company) is presented to assist in understanding the Company’s financial statements.
Nature of the Company
Preventia Inc. was incorporated under the laws of the state of Nevada on April 9, 2010.
The Company was formed to be an educational software provider and build software tools for improving occupational and brain health and performance.
Basis of presentation
The accompanying unaudited interim financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States of America and in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results for the three and nine month periods ended September 30, 2011 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Company’s audited financial statements for the period from April 9, 2010 (inception) to December 31, 2010, which are included in Amendment 6 to Form S-1/A filed by the Company on April 20, 2011 that became effective on April 22, 2011.
Revenue recognition
Operating revenue consists of sales of internally developed computer software that is recognized during the period in which the software is provided to customers.
7
Preventia Inc.
Notes to the Financial Statements
1. Summary of significant accounting policies (continued)
Software development costs
The Company capitalizes computer software and software development costs incurred in connection with developing or obtaining computer software for sale when both the preliminary project stage is completed and it is probable that the software will be used as intended. Capitalized software costs include only (i) external direct costs of materials and services utilized in developing or obtaining computer software, (ii) compensation and related benefits for employees who are directly associated with the software project and (iii) interest costs incurred while developing internal-use computer software. Capitalized software costs are amortized on a straight-line basis when placed into service over the estimated useful lives of the software. On August 1, 2011, the software was placed in service for use in operations, and is being amortized over three years.
Fair value of financial instruments
All financial instruments are carried at costs which approximates fair value.
Income taxes
Income tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Financial Accounting Standards Board Accounting Standards Codification ASC 740, “Income Tax,” requires the recognition of the impact of a tax position in the financial statements only if that position is more likely than not of being sustained on a tax return upon examination by the relevant taxing authority, based on the technical merits of the position. The Company recognizes interest and penalties related to income tax matters in interest expense and operating expenses, respectively. As of September 30, 2011, the Company had no accrued interest or penalties related to uncertain tax positions.
Net income (loss) per share
Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per
8
Preventia Inc.
Notes to the Financial Statements
1. Summary of significant accounting policies (continued)
share does not differ from basic net income (loss) per share as the Company did not have dilutive items during the reporting period.
Credit risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and trade receivables.
The Company places its cash with high credit quality institutions. The cash balance of the Company did not exceed the Federal Deposit Insurance Company (FDIC) limit of $250,000 during the nine months ended September 30, 2011 and the year ended December 31, 2010.
Credit risk, with respect to trade receivables, is limited as such receivables consist of only two customers deemed to be credit-worthy by management.
Estimates
The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that directly affect the results of reported assets, liabilities, revenue, and expenses. Actual results may differ from these estimates.
New accounting pronouncements
The Company does not believe newly issued accounting pronouncements will have any material impact on these financial statements.
9
Preventia Inc.
Notes to the Financial Statements
2. Accrued expenses
Following is a summary of accrued and other current liabilities:
|
| September |
| December |
|
| 30, 2011 |
| 31, 2010 |
Accrued professional fees |
| $ - |
| $2,000 |
Accrued rent |
| 6,000 |
| 1,500 |
|
| $6,000 ===== |
| $3,500 ===== |
3. Net income (loss) per share
The following table sets forth the computation of basic and diluted net income (loss) per share:
|
|
|
|
|
|
|
| April 9, |
|
| Three Months |
| Three Months |
| Nine Months |
| (Inception) |
|
| Ended |
| Ended |
| Ended |
| Through |
|
| September |
| September |
| September |
| September |
|
| 30, 2011 |
| 30, 2010 |
| 30, 2011 |
| 30, 2010 |
Net income (loss) (numerator) |
| $ 56,688 |
| $ (6,758) |
| $ 44,817 |
| $(14,334) |
Weighted average of common shares (denominator) |
| 9,253,000 |
| 8,000,000 |
| 8,491,103 |
| 6,994,286 |
Net income (loss) per share - basic and diluted |
| $ 0.01 |
| $ (0.00) |
| $ 0.01 |
| $ (0.00) |
4. Related party transactions
Advances from officer
As of September 30, 2011 and December 31, 2010, the Company owed $21,643 and $9,570, respectively, to an officer of the Company. These advances are unsecured, due on demand, and bear interest at 8% per annum.
Lease
The Company leases its office premise from an officer of the Company on a month-to-month basis. Total rent expense charged by the officer amounted to $4,500 for the period January 1, 2011 through September 30, 2011, all of which was unpaid, and included in accrued expenses.
10
Preventia Inc.
Notes to the Financial Statements
5. Private placement
On June 16, 2011, the Company issued 1,253,000 common shares (post split) at a price of $.25 per share, for gross proceeds of $156,625, through a private placement. The Company paid $2,000 in offering costs in connection with this private placement.
6. Forward stock split
On June 17, 2011, the Company completed a two-for-one forward stock split for common shareholders of the private placement. The holder of the 8,000,000 shares issued at inception, declined to receive any additional shares as a result of the stock split.
The Company’s financial statements and footnotes give retroactive effect to this stock split.
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. These statements include those concerning the following: Our intentions, beliefs and expectations regarding the fair value of all assets and liabilities recorded; our strategies; growth opportunities; product development and introduction relating to new and existing products; the enterprise market and related opportunities; competition and competitive advantages and disadvantages; industry standards and compatibility of our products; relationships with our employees; our facilities, operating lease and our ability to secure additional space; cash dividends; excess inventory, our expenses; interest and other income; our beliefs and expectations about our future success and results; our operating results; our belief that our cash and cash equivalents will be sufficient to satisfy our anticipated cash requirements, our expectations regarding our revenues and customers; investments and interest rates. These statements are subject to risk and uncertainties that could cause actual results and events to differ materially.
The registrant is a cognitive learning and development company that intends to build software tools for improving occupational and brain health and performance. Our performance will be significantly affected by changes in general economic conditions and, specifically, shifts in consumer confidence and spending. Additionally, our performance will be affected by competition. Management believes that as the industry continues to consolidate, competition with respect to price will intensify. Such a heightened competitive pricing environment will make it increasingly important for us to successfully distinguish us from competitors based on quality and superior service and operating efficiency.
We are currently not aware of any other known material trends, demands, commitments, events or uncertainties that will have, or are reasonable likely to have, a material impact on our financial condition, operating performance, revenues and/or income, or results in our liquidity decreasing or increasing in any material way.
Results of Operations
For the three months ended September 30, 2011, we generated revenue of $100,000 and had operating expenses of $13,243 resulting in operating income of $86,757. Operating expenses consisted of rent expense of $1,500, amortization of $8,333 and accounting fees of $3,410.
12
For the three months ended September 30, 2010, we did not generate any revenue and had operating expenses of $6,429 resulting in operating loss of $6,429. Operating expenses consisted of bank service charges of $54, legal and professional fees of $5,375 and accounting fees of $1,000. Management expects operating expenses will increase as we implement sales and marketing initiatives.
Total revenue increased by $100,000 during the three months ended September 30, 2011 due to the Company experiencing its first sales to two customers of $50,000 each.
Total operating expenses increased by approximately $7,000 during the three months ended September 30, 2011, due primarily to the approximate $8,000 amortization of software development costs which was placed in service on August 1, 2011.
For the nine months ended September 30, 2011, we generated revenue of $100,000 and had operating expenses of $24,732 resulting in operating income of $75,268. Operating expenses consisted of rent expense of $4,500, bank service charges of $15, legal and professional fees of $6,884, and accounting fees of $4,500.
For the period April 9, 2010 (inception) through September 30, 2010, we did not generate any revenue and had operating expenses of $13,854 resulting in an operating loss of $13,854. Operating expenses consisted of bank service charges of 54, legal and professional fees of $12,800 and accounting fees of $1,000.
Total revenue increased by $100,000 during the nine months ended September 30, 2011 due to the Company experiencing its first sales to two customers of $50,000 each.
Total operating expenses increased by approximately $11,000 during the nine months ended September 30, 2011, due to the approximate $8,000 of amortization of software, which was placed in service on August 1, 2011, rent of $4,500 which began on October 1, 2011; offset by a decrease in professional fees of approximately $1,500.
Liquidity and Capital Resources
To date, we have generated revenue of $100,000.
For the nine months ended September 30, 2011, we invested $150,000 in software development.
13
For the nine months ended September 30, 2010, we did not pursue any investing activities.
For the nine months ended September 30, 2011, we received proceeds from officer advances of $11,500 and proceeds from issuance of common stock, net of $2,000 of offering costs, of $154,625. As a result, we had net cash provided by financing activities of $166,125.
For the nine months ended September 30, 2010, we did not pursue any financing activities.
As a public entity, subject to the reporting requirements of the Exchange Act of 1934, we incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these costs could range up to $35,000 per year for the next few years and will be higher if our business volume and activity increases but lower during the first year of being public because we have not yet completed development of our product line, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
We will need to
- continue to generate net sales and gross margin by designing, developing, manufacturing or sourcing quality products;
- continue to execute our marketing strategy to enhance customer awareness and appreciation of the Preventia brand;
- continue to provide a superior client experience through consistent outstanding customer service that will ensure customer satisfaction and promote the frequency and value of customer spending;
- continue to expand distribution channels.
Our current cash balance is estimated not to be sufficient to fund our current operations. Along with an estimated $100,000 per product line, the registrant estimates that an additional $100,000 would be required for working capital, reporting requirement fees, website and development fees. Dr. Friedman has verbally agreed to personally loan any amounts up to the $100,000 needed to run operations until the product lines are developed. Any loan provided by Dr. Friedman shall be binding, with an interest rate of five percent per annum and a term of one year. There are no written agreements with Dr. Friedman. However, we still need to raise sufficient funds to complete the development of our product line. No other financing plans are in place. We may never obtain the necessary financing to complete product development and begin operations.
14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
Item 4. Controls and Procedures.
During the three months ended September 30, 2011, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our chief executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of September 30, 2011. Based on this evaluation, our chief executive officer and principal financial officers were not able to conclude that the Company’s disclosure controls and procedures are effective to ensure that information required to be included in the Company’s periodic Securities and Exchange Commission filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms. Therefore, under Section 404 of the Sarbannes-Oxley Act of 2002, the Company must conclude that these controls and procedures are not effective.
15
Item 1. Legal Proceedings
Item 1A. Risk Factors
Not applicable for smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
Item 4. (Removed and Reserved)
Item 5. Other Information
Item 6. Exhibits
Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS** XBRL Instance Document
101.SCH** XBRL Taxonomy Extension Schema Document
101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF** XBRL Taxonomy Extension Definition Linkbase Document
101.LAB** XBRL Taxonomy Extension Label Linkbase Document
101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith
**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
16
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.
Dated: November 10, 2011
By: /s/Murray Friedman, DDS
Murray Friedman, DDS
CEO, Principal Financial Officer,
Controller and Director
17
