UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: July 31, 2006
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[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from:
Commission file number: 000-32389
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PREVENTION INSURANCE.COM
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(Exact name of small business issuer as specified in its charter)
NEVADA 88-0126444
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2770 So. Maryland Pkwy., Las Vegas, NV 89109
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(Address of principal executive offices)
(702) 732-2758
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
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 requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act)
YES [ ] NO [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. [ ] YES [ ]NO
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
19,569,362 shares of common stock, $0.001 par value, as of September 13, 2006
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FORM 10-QSB
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.............................................1
Balance Sheet (Unaudited)........................................1
Statement of Operations (Unaudited)..............................2
Statement of Changes in Stockholders' (Deficit) (Unaudited)..... 3
Statement of Cash Flows (Unaudited)..............................4
Notes to Financial Statements (Unaudited)........................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................. 6
ITEM 3. CONTROLS AND PROCEDURES.........................................11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..............................................12
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS......................12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.....12
ITEM 5. OTHER INFORMATION..............................................12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...............................12
SIGNATURE...................................................................13
PREVENTION INSURANCE.COM
BALANCE SHEETS
(Unaudited) Audited
ASSETS July 31, April 30,
2006 2006
- ------ =========== ===========
Current assets:
Cash $ - $ -
----------- -----------
TOTAL CURRENT ASSETS $ - $ -
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
- ---------------------------------------
Current liabilities:
Accounts payable $ 9,674 $ 9,999
Advance from officer / shareholder 18,500 -
Bank Overdraft 3,179 2,432
----------- -----------
TOTAL CURRENT LIABILITIES 31,352 12,431
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Commitments
Stockholders' (deficit):
Preferred stock, par value $ .01,
2,000,000 shares authorized,
no shares issued or outstanding - -
Common stock, $.01 par value,
100,000,000 shares authorized,
19,569,362 shares issued and outstanding 195,708 192,308
Additional paid in capital 3,588,442 3,581,842
Accumulated (deficit) (3,762,548) (3,733,627)
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21,602 40,523
Less: Treasury stock, at cost (52,954) (52,954)
Less: Stock Subscriptions Receivable - -
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Total Stockholders' (Deficit) (31,352) (12,431)
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Total Liabilities and Stockholders' (Deficit) $ - $ -
========== ===========
SEE NOTES TO FINANCIAL STATEMENTS
PREVENTION INSURANCE.COM
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JULY 31,
Unaudited
2006 2005
======== ========
Commission income $ 21,121 $ 29,856
Cost of Goods Sold 198 -
General and administrative expenses 49,844 80,858
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(Loss) from operations (28,921) (51,002)
Interest expense - -
-------- --------
(Loss) before income taxes (28,921) (51,002)
Income taxes - -
-------- --------
Net (loss) $(28,921) $(51,002)
======== ========
(Loss) per share $ (0.01) $ (0.01)
======== ========
SEE NOTES TO FINANCIAL STATEMENTS
PREVENTION INSURANCE.COM
STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)
FOR THE THREE MONTHS ENDED JULY 31, 2006
Preferred Common Additional
Stock Par Stock Par Paid in Accumulated Treasury Stock
Number Value Number Value Capital Deficit Stock Subscriptions Total
----------- ------- ---------- -------- ---------- ------------ --------- ------------- --------
Balance April 30, 2006 - $ - 19,229,362 $192,308 $3,581,842 $ (3,733,627) $ (52,954) $ - $(12,431)
=========== ======= ========== ======== ========== ============ ========= ============= ========
Shares issued for cash - - 340,000 $ 3,400 $ 6,600 $ - $ - $ - 350,000
Net (loss) for the period
ended July 31, 2006 - $ - - $ - $ - $ (28,921) $ - $ - (28,921)
----------- ------- ---------- -------- ---------- ------------ --------- ------------- --------
- $ - 19,569,362 $195,708 $3,588,442 $ (3,762,548) $ (52,954) $ - $(31,352)
=========== ======= ========== ======== ========== ============ ========= ============= ========
SEE NOTES TO FINANCIAL STATEMENTS
PREVENTION INSURANCE.COM
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 31,2006
(Unaudited)
2006 2005
========= =========
Cash flows from operating activities:
Net loss $(28,921) $(51,002)
Adjustments to reconcile net loss to - -
net cash used by operating activities: - -
Changes in operating assets and liabilities: - -
Stock issued for services and to settle debt - -
Increase / (Decrease) in accounts payable (325) 11,569
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Net cash used by operating activities (29,246) (39,433)
Cash flows from investing activities:
Purchase of property and equipment - -
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Net cash used by investing activities - -
Cash flows from financing activities:
Proceeds from issuance of common stock 10,000 15,875
Advance from officer / shareholder 18,500 15,000
Bank Overdraft 3,179 6,228
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Net cash provided by financing activities 31,679 37,103
========= =========
Net increase in cash 2,432 (2,330)
Cash, beginning of period (2,432) 2,330
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Cash, end of period - -
========= =========
SEE NOTES TO FINANCIAL STATEMENTS
PREVENTION INSURANCE.COM
NOTES TO FINANCIAL STATEMENTS
AS OF JULY 31, 2006
1. FINANCIAL STATEMENT PRESENTATION
The financial statements have been prepared in accordance with Securities and
Exchange Commission requirements for interim financial statements. Therefore,
they do not include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete financial
statements. These financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's Annual Report
on Form 10-KSB/A for the year ended April 30, 2006 as filed with the Securities
and Exchange Commission on August 16, 2006.
The results of operations for the interim periods shown in this report are not
necessarily indicative of results to be expected for the full year. In the
opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature.
GOING CONCERN ISSUES
As discussed above, the companies 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 courseof business. Currently,
the Company has no continuing source of revenues and its ability to remain a
going concern is subject to its ability to raise capital either from equity or
debt and/or its successful operations as a long term solution to its lack of
resources. To date, management has demonstrated the ability to raise sufficient
capital to continue its limited operations.
2. STOCKHOLDERS' EQUITY
During the three months ended July 31, 2006, the Company received cash of
$10,000 for 340,000 shares of common stock (an average of approximately $.03
per share).
3. RELATED PARTY TRANSACTIONS
During the three months ended July 31, 2006, the Company's founder advanced the
Company cash of $18,500.
Officer Compensation for the three months ended July 31, 2006, totaled $22,953.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS. This Report contains forward-
looking statements. Such forward-looking statements include statements
regarding, among other things, (a) our projected sales and profitability, (b)
our growth strategies, (c) anticipated trends in our industry, (d) our future
financing plans, (e) our anticipated needs for working capital, (f) our lack of
operational experience, and (g) the benefits related to ownership of our common
stock. Forward-looking statements, which involve assumptions and describe our
future plans, strategies, and expectations, are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend," or "project" or the negative of these words or other
variations on these words or comparable terminology. This information may
involve known and unknown risks, uncertainties, and other factors that may
cause our actual results, performance, or achievements to be materially
different from the future results, performance, or achievements expressed or
implied by any forward-looking statements. These statements may be found under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," as well as in this Report generally. Actual events
or results may differ materially from those discussed in forward-looking
statements as a result of various factors, including, without limitation, the
risks outlined under "Risk Factors" and matters described in this Report
generally. In light of these risks and uncertainties, there can be no
assurance that the forward-looking statements contained in this report will in
fact occur as projected.
DESCRIPTION OF OUR BUSINESS
Prevention Insurance.com (the "Company") was incorporated in the State of
Nevada on May 7, 1975, to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. The Company
was originally incorporated under the name Vita Plus, Inc. later we changed our
name to Vita Industries, Inc. and in 1999 again changed it to Prevention
Insurance.com.
HISTORY.
In 1983 we made a public offering of 700,000 shares of our common stock for our
own account. We registered the stock under the Securities Act of 1933. Upon
completion of that offering, we registered the stock under Section 12 (g) the
National Association of Securities Dealers Automated Quotation
System("NASDAQ"). However, in 1989 we terminated the registration of our stock
under Section 12(g) of the Act because our total assets had decreased to less
than $3,000,000 and we were no longer required to file reports with the
Securities and Exchange Commission. Our stock was then no longer quoted on
NASDAQ.
From inception until early 1999, our principle business engagement had
been the sale and distribution of its own formulations of specific vitamins and
nutritional supplements, and of various other health and personal care
products. We sold our products through traditional methods: we employed a
force of salespersons at our headquarters in Las Vegas, Nevada and compensated
them on a commission basis: we also sold through a network of independent
brokers. Our sales were made primarily to drug stores and other large
retailers. Beginning in 1983, we also manufactured some of our products.
However, after a period of approximately eight years, we stopped the
manufacturing activity because it did not prove to be profitable. In 1981 we
were licensed in Nevada as an agent for health and life insurance.
Historically since 1991 we have not derived any significant income from sales
of insurance policies.
During the mid 1990s we developed the concept of reducing insurance costs for
both health and life insurance through prevention measures that is by
emphasizing the maintenance of good health by members of the insured
population. Subsequently, we began the development of hybrid insurance products
incorporating preventive features with traditional health and life insurance
products. Specifically, we developed two specially formulated preparations of
vitamins and nutritional supplements: Nutra-Prevention Formula and Nutra-
Protection. Those are formulations that emphasize health maintenance by
providing multiple vitamins and a wide range of additional nutritional
supplements for daily consumption, and which we believe provide optimal
nutrition necessary for good health. We had planned to commence negotiations
for joint venture arrangements with insurance companies using those two
formulations to offer low-cost, preventive nutritional products combined with
reduced premium rates for specialty insurance policies, but to date we have not
entered into any such joint ventures.
Effective March 15, 1999, we sold for cash substantially all of our
assets associated with the traditional distribution of vitamin and dietary
supplement formulations, including all inventory of vitamins and nutritional
supplements and substantially all of our furniture and fixtures, and terminated
all business activities associated with the distribution of individual vitamins
and dietary supplements. However, we did retain our insurance agency license,
our newly developed Prevention Insurance website and the ownership rights in
the trademarks for Nutra-Prevention and Nutra-Protection formulas.
GENERAL.
We will attempt to locate and negotiate with a business entity for the merger
of that target business into the Company. In certain instances, a target
business may wish to become a subsidiary of the Company or may wish to
contribute assets to the Company rather than merge. No assurances can be given
that we will be successful in locating or negotiating with any target business.
Management believes that there are perceived benefits to being a
reporting company with a class of registered securities. These are commonly
thought to include (1) the ability to use registered securities to make
acquisition of assets or businesses; (2) increased visibility in the financial
community; (3) the facilitation of borrowing from financial institutions; (4)
improved trading efficiency; (5) stockholder liquidity; (6) greater ease in
subsequently raising capital; (7) compensation of key employees through stock
options; (8) enhanced corporate image; and (9) a presence in the United States
capital market.
A business entity, if any, which may be interested in a business
combination with us may include (1) a company for which a primary purpose of
becoming public is the use of its securities for the acquisition of assets or
businesses; (2) a company which is unable to find an underwriter of its
securities or is unable to find an underwriter of securities on terms
acceptable to it; (3) a company which wishes to become public with less
dilution of its common stock than would occur normally upon an underwriting;
(4) a company which believes that it will be able to obtain investment capital
on more favorable terms after it has become public; (5) a foreign company which
may wish to gain an initial entry into the United States securities market; (6)
a special situation company, such as a company seeking a public market to
satisfy redemption requirements under a qualified Employee Stock Option Plan;
or (7) a company seeking one or more of the other perceived benefits of
becoming a public company.
Management will continue to seek a qualified company as a candidate for
a business combination. We are authorized to enter into a definitive agreement
with a wide variety of businesses without limitation as to their industry or
revenues. It is not possible at this time to predict which company, if any, we
will enter into a definitive agreement or what will be the industry, operating
history, revenues, future prospects or other characteristics of that company.
Following a business combination we may benefit from the services of
others in regard to accounting, legal services, underwritings and corporate
public relations. If requested by a target business, management may recommend
one or more underwriters, financial advisors, accountants, public relations
firms or other consultants to provide such services.
A potential target business may have an agreement with a consultant or
advisor providing that services of the consultant or advisor be continued after
any business combination. Additionally, a target business may be presented to
us only on the condition that the services of a consultant or advisor be
continued after a merger or acquisition. Such preexisting agreements of target
businesses for the continuation of the services of attorneys, accountants,
advisors or consultants could be a factor in the selection of a target
business.
In implementing a structure for a particular business acquisition, we
may become a party to a merger, consolidation, reorganization, joint venture,
or licensing agreement with another corporation or entity. We may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is likely that our present management and stockholder will no longer be in
our control. In addition, it is likely that our officer and director will, as
part of the terms of the acquisition transaction, resign and be replaced by one
or more new officers and directors.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances however, as a
negotiated element of its transaction, we may agree to register all or a part
of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after we have
entered into an agreement for a business combination or have consummated a
business combination and we are no longer considered a blank check company. The
issuance of additional securities and their potential sale into any trading
market which may develop in our securities may depress the market value of our
securities in the future if such a market develops, of which there is no
assurance.
While the terms of a business transaction to which we may be a party
cannot be predicted, it is expected that the parties to the business
transaction will desire to avoid the creation of a taxable event and thereby
structure the acquisition in a tax-free reorganization under Sections 351 or
368 of the Internal Revenue Code of 1986, as amended.
With respect to any merger or acquisition negotiations with a target
business, management expects to focus on the percentage of the Company which
target business stockholder would acquire in exchange for their shareholdings
in the target business. Depending upon, among other things, the target
business's assets and liabilities, our stockholder will in all likelihood hold
a substantially lesser percentage ownership interest in the Company following
any merger or acquisition. Any merger or acquisition effected by us can be
expected to have a significant dilutive effect on the percentage of shares held
by our stockholder at such time.
No assurances can be given that we will be able to enter into a business
combination, as to the terms of a business combination, or as to the nature of
the target business.
As of the date hereof, management has not made any final decision
concerning or entered into any written agreements for a business combination.
When any such agreement is reached or other material fact occurs, we will file
notice of such agreement or fact with the Securities and Exchange Commission on
Form 8-K. Persons reading this Form 10-KSB are advised to determine if we have
subsequently filed a Form 8-K.
We anticipate that the selection of a business opportunity in which to
participate will be complex and without certainty of success. Management
believes (but has not conducted any research to confirm) that there are
numerous firms seeking the perceived benefits of a publicly registered
corporation. Such perceived benefits may include facilitating or improving the
terms on which additional equity financing may be sought, providing liquidity
for incentive stock options or similar benefits to key employees, increasing
the opportunity to use securities for acquisitions, and providing liquidity for
stockholder and other factors. Business opportunities may be available 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.
We are presently pursuing the acquisition of 18 free standing MRI imaging
centers that are located across the United States. We have received a term
sheet from a California Trust Fund that indicates a interest in providing the
funding to complete the acquisition. We anticipate providing that the due
diligence goes smoothly the acquisition should close within 90 days.
GOING CONCERN
There is substantial doubt about the ability of Prevention Insurance.com
to continue as a going concern as disclosed in the notes to the April 30, 2006
financial statements filed by Prevention Insurance.com on Form 10-KSB. Those
conditions continued through the first quarter of 2006 resulting in operating
losses and liquidity shortages. As of July 31, 2006, current liabilities
exceed current assets by approximately $31,000.
Management continues to meet operating deficits primarily through Revenue
our ATM equipment sales division, Quick Pay that is selling ATM machines to
retail outlets around the U. S. We have also received a small amount of capital
from existing shareholders through periodic stock sales.
CRITICAL ACCOUNTING POLICIES
REVENUE RECOGNITION
Prevention Insuarnce.com recognizes Commission income from the sale of
ATM machines and the related costs of these sales are recognized at the
time of sale.
RESULTS OF OPERATIONS
Results of Operations For The Three Month Period Ended July 31, 2006
Compared To The Same Period Ended July 31, 2005
REVENUES.
Revenues for the three months ended July 31, 2006 were $21,121 versus
$29,856 for the corresponding 2005 period, a decrease of $8,735 or 29%. The
decrease was attributable to fewer sales of eTotalSource's CD training
products.
EXPENSES.
General and administrative expenses for the three month period ended July
31, 2006 were $50,042 as compared to $80,858 for the comparable 2005 period, a
decrease of $30,816 or 38%. The decrease was primarily due to a decrease in
stock compensation and professional fees.
GAIN (LOSS) FROM OPERATIONS.
Prevention Insurance.com recognized a loss for the three month period
ended July 31, 2006 in the amount of $28,921 or $0.01 per share, as compared
with a loss of $51,002 or $0.01 per share for the corresponding period ended
July 31, 2005. The decrease of $22,081 or $0.003 per share was attributable to
the decrease of professional fees.
FACILITIES AND LEASES
Prevention Insurance.com leases office space under a non-cancelable
operating lease in Las Vegas, Nevada. The lease requires minimum monthly
payments of approximately $500 per month. The lease expires April 30, 2008
with minimum rent payable for the year of $4,500.
DIVIDENDS
Prevention Insurance.com does not intend to pay dividends in the
foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
We have, and will continue to have, no capital with which to provide the owners
of business opportunities with any cash or other assets. Our stockholder has
agreed that they will advance any additional funds which we need for operating
capital and for costs in connection with searching for or completing an
acquisition or merger. Such advances will be made without expectation of
repayment unless the owners of the business which we acquire or merge with
agree to repay all or a portion of such advances. There is no minimum or
maximum amount such stockholder will advance to us. We will not borrow any
funds for the purpose of repaying advances made by such stockholder, and we
will not borrow any funds to make any payments to our promoters, management or
their affiliates or associates.
Our condition is at present under-capitalized. We have basically been able to
pay off all of our payables as agreed. Revenue to date has been provided by our
ATM equipment sales division, Quick Pay that is selling ATM machines to retail
outlets around the U. S. We have also received a small amount of capital from
existing shareholders through periodic stock sales. We will also be seeking out
private equity capital or a strategic partner as possible sources of financing.
QUICK PAY ATM DIVISION
Our ATM division is growing. Our average number of ATM placement has increased
from 2 - 3 per month to 6-10 per month. Revenue is projected next year at
$200,000 or more in sales. We anticipate opening an additional sales office to
boost sales further.
We have recently started marketing a new ATM insurance policy that insures the
machine as well as the cash inside for a nominal premium. With hundreds of
thousands of ATM machines out in the market this should prove to be a lucrative
and profitable niche for us. We have sold our first policies and intend to
expend the effort this year.
ITEM 3. CONTROLS AND PROCEDURES.
A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our President and Chief Executive Officer, after evaluating the effectiveness
of the Company's "disclosure controls and procedures" (as defined in the
Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or 15d-15(e)) as
of the end of the period covered by this quarterly report, have concluded that
our disclosure controls and procedures are effective at a reasonable assurance
level based on their evaluation of these controls and procedures required by
paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.
B. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
In connection with the evaluation of our internal controls during the
Company's last fiscal quarter, our President and Chief Executive Officer have
determined that there are no changes to Prevention Insuarnce.com' internal
controls over financial reporting that have materially affected, or are
reasonably likely to materially effect, the Company's internal controls over
financial reporting.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no legal proceedings against us and we are unaware of such
proceedings contemplated against us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
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 AND REPORTS ON FORM 8-K
A. EXHIBITS PURSUANT TO REGULATION S-K:
Exhibit 31.1 Section 302 Certification by President and Chief
Executive Officer
Exhibit 32.1 Section 906 Certification by President and Chief
Executive Officer
B. REPORTS ON FORM 8-K:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
PREVENTION INSURANCE.COM
(Registrant)
September 15, 2006 By: /s/ Scott Goldsmith
-------------------
Scott Goldsmith,
President, Chief Executive Officer,
and Director