FORWARD-LOOKING STATEMENTS
Certain statements made in this Annual Report on Form 10-K are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Registrant to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Registrant’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Registrant. Although the Registrant believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Registrant or any other person that the objectives and plans of the Registrant will be achieved.
Item 1. Description of Business
Business Development & Business Overview
Prevention Insurance.com (“we,” “us,” “our,” “the Company” or “Prevention Insurance”) was incorporated in the State of Nevada on May 7, 1975, under the name Vita Plus, Inc. The name was later changed to Vita Plus Industries, Inc. and in 2000 the Company’s name was changed to its current name Prevention Insurance.com.
From inception until early 1999, the Company’s principal business consisted of the sale and distribution of our own formulations of specific vitamins and nutritional supplements, and of various other health and personal care products. In 1991 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. 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 terminated all business activities associated with the distribution of individual vitamins and dietary supplements. We did, however, retain our insurance agency license, our Prevention Insurance website and ownership rights in certain trademarks.
In 2005, the Company added a second line of business focused on the development of ATM machine sale operations. On December 28, 2007, the Company entered into a letter agreement (the “Letter Agreement”), with Paragon Capital LP (“Paragon”) and Scott Goldsmith, which after the satisfaction of the terms of the Letter Agreement, would result in a change in control of the Company. In connection with the terms of the Letter Agreement, the Company and Paragon entered into a stock purchase agreement (the “Purchase Agreement”) pursuant to which Paragon purchased an aggregate of 71,428,571 shares of the Company’s common stock, par value $0.01 per share (the “Old Common Stock”) for an aggregate purchase price equal to $250,000. As provided pursuant to the terms of the Purchase Agreement, our current sole officer and director, Alan P. Donenfeld, was elected to the Board of Directors of the Company and appointed to serve as the Company’s President, Chief Executive Officer and Chief Financial Officer.
On February 5, 2008, in connection with the transactions contemplated by the Letter Agreement, Mr. Goldsmith, Paragon and the Company signed an agreement and release (the “Release”), which provided for, among other items, (a) cancellation of 1,000,000 shares of the Company’s preferred stock, par value $0.01 per share (the “Old Preferred Stock”), issued in the name of Mr. Goldsmith, (b) cancellation of warrants to purchase up to 2,000,000 shares of the Company’s Old Common Stock, in exchange for (1) payment in full of all of the Company’s liabilities, debts, and payables, (2) an initial payment to Mr. Goldsmith of $200,000, (3) conveyance of the assets and liabilities of Quick Pay, Inc. to Mr. Goldsmith, (4) an additional payment to Mr. Goldsmith, upon certain events happening such as a reverse merger with a private company, of $400,000 or 1,600,000 shares of Old Common Stock, regardless of any stock splits for a period from four years from the date of the issuance of the stock and (5) future assignment of warrants held by Paragon to Mr. Goldsmith upon completion of a reverse merger.
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On September 22, 2009, the Company issued 1,600,000 shares of its Old Common Stock to Scott Goldsmith in satisfaction of the $400,000 payment required pursuant to the Release.
On March 8, 2010, the Company, Paragon and Scott Goldsmith entered into an agreement (the “Agreement”) whereby the Company paid Goldsmith $65,000 in consideration for the following: 1) Paragon transferred ownership to Goldsmith of a warrant, issued to Paragon on April 30, 2008 (originally due April 30, 2011) (the “April 30, 2008 Warrant”), to purchase 10,000,000 shares of the Company’s Old Common Stock at an exercise price of $0.01 per share; 2) the Company extended the maturity date of the April 30, 2008 Warrant from April 30, 2011to April 30, 2013, pursuant to a warrant extension agreement; and 3) Goldsmith agreed to cancel Paragon’s requirement to issue 4,000,000 warrants to Goldsmith pursuant to the parties’ Settlement and Release Agreement dated February 5, 2008.
On April 27, 2011, the Company amended its articles of incorporation to (1) effect a one for one hundred (1:100) reverse stock split of its Old Common Stock (the “Reverse Split”) and (2) change the par value of the capital stock of the Company such that the Company has 100,000,000 shares of common stock, par value $0.0001 per share (the “Common Stock”) and 10,000,000 shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”) authorized.
As a result of the Reverse Split, each one hundred (100) shares of Old Common Stock of the Company issued and outstanding or held as unissued immediately prior to the Reverse Split was automatically without any action on the part of the holder thereof, reclassified and changed into one (1) share of Common Stock. Upon the conversion of the Old Common Stock, any fractional shares were disregarded and rounded up to the nearest whole number of shares of Common Stock. In addition, the total number of issued and outstanding warrants of the Company and the related exercise prices were adjusted in accordance with the Reverse Split ratio.
Current Business and Plan of Operations
Under SEC Rule 12b-2 under the Exchange Act, the Company qualifies as a “shell company,” because it has no or nominal assets (other than cash) and no or nominal operations. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as it is subject to those requirements.
The Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
The analysis of new business opportunities will be undertaken by or under the supervision of our management and the Company’s principal shareholders. Current or future management of the Company may decide to hire outside consultants to assist in the investigation and selection of business opportunities, and might pay a finder’s fee, in stock or in cash, as allowed by law. Since the Company has no current plans to use any outside consultants, no criteria or policies have been adopted.
As of the date of the period covered by this report, the Company has not entered into any definitive agreement with any party, nor have there been any specific discussions with any potential business combination candidate regarding business opportunities for the Company. The Company has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In its efforts to analyze potential acquisition targets, the Company will consider the following kinds of factors:
(a) Potential for growth, indicated by new technology, anticipated market expansion or new products;
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(b) Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;
(c) Strength and diversity of management, either in place or scheduled for recruitment;
(d) Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;
(e) The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;
(f) The extent to which the business opportunity can be advanced; and
(g) The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items.
In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Company's limited capital available for investigation, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired. In evaluating a prospective business combination, we will conduct as extensive a due diligence review of potential targets as possible given the lack of information which may be available regarding private companies, our limited personnel and financial resources and the inexperience of our management with respect to such activities. We expect that our due diligence will encompass, among other things, meetings with the target business’s incumbent management and inspection of its facilities, as necessary, as well as a review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage, including but not limited to attorneys, accountants, consultants or such other professionals. The costs associated with hiring third parties to complete a business combination target may be significant and are difficult to determine as such costs may vary depending on a variety of factors, including the amount of time it takes to complete a business combination, the location of the target company and the size and the complexity of the target company. Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target business before we consummate a business combination. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds available to us, would be desirable. We will be particularly dependent in making decisions upon information provided by the promoters, owners, sponsors or others associated with the target business seeking our participation.