Item
1. Financial Statements.
PREVENTION
INSURANCE.COM
BALANCE
SHEETS
(Unaudited)
|
|
July 31,
2018
|
|
|
April 30,
2018
|
|
ASSETS
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
|
$
|
-
|
|
|
$
|
-
|
|
Prepayments
|
|
|
833
|
|
|
|
3,333
|
|
Total current assets
|
|
|
833
|
|
|
|
3,333
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
833
|
|
|
$
|
3,333
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accruals
|
|
$
|
7,477
|
|
|
$
|
8,720
|
|
Due to related party
|
|
|
285,341
|
|
|
|
255,025
|
|
Total current liabilities
|
|
|
292,818
|
|
|
|
263,745
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
292,818
|
|
|
|
263,745
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, authorized 10,000,000 shares, zero shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.0001 par value, authorized 100,000,000 shares; 22,340,083 shares issued and 22,340,081 shares outstanding, respectively
|
|
|
2,234
|
|
|
|
2,234
|
|
Additional paid-in capital
|
|
|
4,640,351
|
|
|
|
4,640,351
|
|
Treasury stock, 2 shares, at cost
|
|
|
(52,954
|
)
|
|
|
(52,954
|
)
|
Accumulated deficit
|
|
|
(4,881,616
|
)
|
|
|
(4,850,043
|
)
|
Total stockholders’ deficit
|
|
|
(291,985
|
)
|
|
|
(260,412
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit
|
|
$
|
833
|
|
|
$
|
3,333
|
|
See
accompanying notes to unaudited financial statements.
PREVENTION
INSURANCE.COM
STATEMENTS
OF OPERATIONS
(Unaudited)
|
|
For the three months ended
|
|
|
|
July 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
31,573
|
|
|
|
26,809
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(31,573
|
)
|
|
|
(26,809
|
)
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(31,573
|
)
|
|
$
|
(26,809
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic and diluted
|
|
|
22,340,081
|
|
|
|
2,340,081
|
|
See
accompanying notes to unaudited financial statements.
PREVENTION
INSURANCE.COM
STATEMENTS
OF CASH FLOWS
(Unaudited)
|
|
For the three months ended
|
|
|
|
July 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(31,573
|
)
|
|
$
|
(26,809
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepayments
|
|
|
2,500
|
|
|
|
(15,075
|
)
|
Accounts payable and accruals
|
|
|
(1,243
|
)
|
|
|
5,481
|
|
Net cash used in operating activities
|
|
|
(30,316
|
)
|
|
|
(36,403
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from advances from related party
|
|
|
30,316
|
|
|
|
36,403
|
|
Net cash provided by financing activity
|
|
|
30,316
|
|
|
|
36,403
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
See
accompanying notes to unaudited financial statements.
PREVENTION
INSURANCE.COM
NOTES
TO FINANCIAL STATEMENTS
JULY
31, 2018
(Unaudited)
NOTE
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Nature
of Business
Prevention
Insurance.Com (the “Company”) was incorporated under the laws of the State of Nevada in 1975 as Vita Plus Industries,
Inc. In March 1999, the Company sold its remaining inventory and changed its name to Prevention Insurance.Com.
The
Company’s business is to pursue a business combination through acquisition, or merger with, an existing company. No assurances
can be given that the Company will be successful in locating or negotiating with any target company.
Effective
May 30, 2018, a change of control occurred with respect to the Company. Pursuant to a Stock Purchase Agreement entered into by
and among Chee Chow Teow, EE Meng Teow and Wooi Huat Teow (“Sellers”) and Metrowork, Metrowork acquired from Sellers
all of the shares of common stock held by the Sellers in the Company totaling 15,638,084 shares (representing 70% of the Company’s
issued and outstanding shares of common stock). Our sole officer and director, Mr. Chee Chau Ng, is the sole shareholder and officer
of Metrowork.
Basis
of Presentation
The
summary of significant accounting policies is presented to assist in the understanding of the financial statements. These policies
conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently
applied.
Interim
Financial Statements
The
accompanying unaudited interim condensed financial statements have been prepared in accordance with GAAP for interim financial
information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals)
considered necessary for fair presentation have been included. While we believe that the disclosures presented herein are adequate
and not misleading, these interim condensed consolidated financial statements should be read in conjunction with the audited financial
statements and the footnotes thereto contained for the year ended April 30, 2018 included our Form 10-K filed on July 30, 2018.
Operating results for the interim periods presented are not necessarily indicative of the results for the full year.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Fair
Value of Financial Instruments
The
fair value of cash and cash equivalents and accounts payable approximates the carrying amount of these financial instruments due
to their short maturity.
Net
Loss per Share Calculation
Basic
net loss per common share (“EPS”) is computed by dividing loss available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income
by the weighted average shares outstanding, assuming all dilutive potential common shares were issued.
Subsequent
Events
The
Company has evaluated all transactions from July 31, 2018 through the financial statement issuance date for subsequent event disclosure
consideration.
Recently
Issued Accounting Pronouncements
In
February 2016, FASB issued ASU No. 2016-02 “Leases” (Topic 842), which creates new accounting and reporting guidelines
for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the
balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance
or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows
arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new
disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from
leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods
within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective
approach. The Company is currently evaluating the impact of the new pronouncement on its financial statements.
In
April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations
and Licensing (Topic 606)”. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers:
Principal versus Agent Considerations (Reporting Revenue Gross verses Net) (Topic 606)”. These amendments provide additional
clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”.
The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance
obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides
a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual
property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal
versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10
and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which the Company intends to adopt for interim
and annual reporting periods beginning after December 15, 2017. The Company has adopted the standard and the adoption did not
have a material effect on its financial statements and disclosures.
In
May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements
and Practical Expedients”, which narrowly amended the revenue recognition guidance regarding collectability, noncash consideration,
presentation of sales tax and transition and is effective during the same period as ASU 2014-09. The Company is currently evaluating
the standard and does not expect the adoption will have a material effect on its financial statements and disclosures.
NOTE
2. GOING CONCERN
The
Company’s financial statements are prepared using accounting principles generally accepted in the United States of America
applicable to a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course
of business. For the three months ended July 31, 2018, the Company reported a net loss of $31,573, negative working capital of
$291,985 and an accumulated deficit of $4,881,616 as of July 31, 2018. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that
may result from the outcome of these uncertainties. The Company’s ability to continue as a going concern is dependent upon
its ability to develop additional sources of capital, locate and complete a merger with another company and ultimately achieve
profitable operations. In the interim, the Company intends to rely upon continued advances form the Company’s majority shareholder
to funds its working capital needs. No assurances can be given that the Company will be successful in locating or negotiating
with any target company or that the majority shareholder will continue to fund the Company’s working capital needs. As a
result, there is substantial doubt about the Company’s ability to continue as a going concern.
NOTE
3. DUE TO RELATED PARTIES
As
of April 30, 2018, Haspro Holdings Sdn. Bhd., an entity related to the Company’s then controlling shareholders (“Former
Affiliate”) had advanced funds totaling $159,505 to the Company to meet its working capital requirements. The advances were
unsecured, interest free and due on demand.
As
of April 30, 2018, Metrowork, a company owned by the Company’s current sole officer and director had advanced funds totaling
$95,519 to the Company to meet its working capital requirements. The advances were unsecured, interest free and due on demand.
On
June 25, 2018, the Former Affiliate assigned to Metrowork all of its rights to its loan to the Company in the amount of $159,505
and in addition, on that date, forever waived and discharged any and all claims that it has or may have against the Company.
During
the three months ended July 31, 2018, Metrowork advanced a further $30,316 to the Company to meet its working capital requirements.
Subsequent
to July 31, 2018 and through the date these financial statements were issued, Metrowork, further advanced funds totaling $23,791
to the Company to meet its working capital requirements. Metrowork is now the Company’s controlling stockholder.
NOTE
4. SUBSEQUENT EVENTS
On
August 24, 2018, our majority shareholder (holding 70% of our outstanding common stock) executed written consent approving the
following corporate actions (“
Corporate Actions
”):
|
i)
|
Effect
a reverse split of our outstanding common stock, $0.0001 par value, on a one (1) post-split
for ten (10) pre-split share basis, and
|
|
ii)
|
Amend
our Articles of Incorporation to increase our authorized shares of common stock, $0.0001
par value, from 100,000,000 to 200,000,000.
|
The
Corporate Actions were adopted at a meeting of our Board of Directors on August 22, 2018, and the Board of Directors recommended
that the Corporate Actions be presented to our shareholders for approval. The record date of the Corporate Actions was August
23, 2018.
On
August 29, 2018, the Company filed a preliminary Schedule 14C Information Statement with the Securities and Exchange Commission
regarding the Corporate Actions.
On
September 9, 2018, the Company filed a definitive Schedule 14C Information Statement with the Securities and Exchange Commission
regarding the Corporate Actions. The Corporate Actions would become effective no sooner than twenty (20) calendar days following
the mailing of the Definitive Information Statement or October 1, 2018.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking
Statements
Certain
statements made in this quarterly report on Form 10-Q are “forward-looking statements” (within the meaning of the
Private Securities Litigation Reform Act of 1995) in regard to the plans and objectives of management for future operations. Such
statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements
of the registrant to be materially different from any future results, performance or achievements expressed or implied by such
forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous
risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion
of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive
and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of
which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements
included in this quarterly report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be regarded as a representation by the registrant or
any other person that the objectives and plans of the registrant will be achieved.
Substantial
risks exist with respect to an investment in the Company. These risks include but are not limited to, those factors discussed
in our Annual Report on Form 10-K for the fiscal year ended April 30, 2018, filed with the Securities and Exchange Commission
(” Commission “) on July 30, 2018. More broadly, these factors include, but are not limited to:
|
●
|
We
have incurred significant losses and expect to incur future losses;
|
|
●
|
Our
current financial condition and immediate need for capital;
|
|
●
|
Potential
significant dilution resulting from the issuance of new securities for any funding, debt
conversion or any business combination; and
|
|
●
|
We
are a “penny stock” company.
|
Description
of Business
Prevention
Insurance.com (“we,” “us,” “our,” or the “Company”) was incorporated in the State
of Nevada on May 7, 1975, under the name Vita Plus, Inc. The name was later changed to Vita Plus Industries, Inc. and in 2000
the Company’s name was changed to its current name Prevention Insurance.com.
The
Company is a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”). Our
principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through
a combination with a business rather than immediate, short-term earnings. The Company will not restrict our potential candidate
target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
The
Company currently does not engage in any business activities that provide cash flow. During the next twelve months
we anticipate incurring costs related to:
(i) filing
Exchange Act reports, and
(ii) investigating,
analyzing and consummating an acquisition.
We
believe we will be able to meet these costs through deferral of fees by certain service providers and additional amounts, as necessary,
to be loaned to or invested in us by our stockholders, management or other investors. As of July 31, 2018, the Company has $0
in cash. There are no assurances that the Company will be able to secure any additional funding as needed. Currently,
our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain
the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come
due. Our ability to continue as a going concern is also dependent on our ability to find a suitable target company
and enter into a possible reverse merger with such company. Management’s plan includes obtaining additional funds by equity
financing through a reverse merger transaction and/or related party advances; however there is no assurance of additional funding
being available.
The
Company may consider acquiring a business which has recently commenced operations, is a developing company in need of additional
funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business
which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business
combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which
desires to establish a public trading market for its shares while avoiding, among other things, the time delays, significant expense,
and loss of voting control which may occur in a public offering.
Our
management has not entered into any agreements with any party regarding a business combination. Any target business that
is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities
without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business
and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business
combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to
evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess
all significant risks. Our management anticipates that it will likely be able to effect only one business combination, due
primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur
as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free
reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit
us to offset potential losses from one venture against gains from another.
We
will not acquire or merge with any entity which cannot provide audited financial statements at or within a reasonable period of
time after closing of the proposed transaction. We are subject to all the reporting requirements included in the Exchange Act.
Included in these requirements is our duty to file audited financial statements as part of our Form 8-K to be filed with the Securities
and Exchange Commission upon consummation of a merger or acquisition, as well as our audited financial statements included in
our annual report on Form 10-K. If such audited financial statements are not available at closing, or within time parameters necessary
to insure our compliance with the requirements of the Exchange Act, or if the audited financial statements provided do not conform
to the representations made by the target business, the closing documents may provide that the proposed transaction will be voidable
at the discretion of our present management.
A
business combination with a target business will normally involve the transfer to the target business of the majority of our common
stock, and the substitution by the target business of its own management and board of directors.
The
Company anticipates that the selection of a business combination will be complex and extremely risky. Because of general economic
conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes
that there are numerous firms seeking the perceived benefits of becoming a publicly traded corporation. Such perceived benefits
of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional
equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for
providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions,
joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different
industries and at various stages of development, all of which will make the task of comparative investigation and analysis of
such business opportunities extremely difficult and complex.
The
Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital,
locate and complete a merger with another company and ultimately achieve profitable operations. No assurances can be given that
the Company will be successful in locating or negotiating with any target company.
Liquidity
and Capital Resources
As
of July 31, 2018, the Company had assets of $833 in respect of certain prepaid expenses. This compares with current assets of
$3,333 in respect of certain prepaid expenses as of April 30, 2018. The Company’s current liabilities as of July 31, 2018
totaled $292,818, $7,477 relating to accounts payable and accruals and $285,341 of advances from a related party. This compares
with current liabilities of $263,745 as of April 30, 2018, comprising $8,720 of accounts payable and $255,025 due to related parties.
The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
The
following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the
three months ended July 31, 2018 and 2017:
|
|
Three
Months
Ended
July 31,
2018
|
|
|
Three
Months
Ended
July 31,
2017
|
|
Net Cash Used in Operating Activities
|
|
$
|
(30,316
|
)
|
|
$
|
(36,403
|
)
|
Net Cash Used in Investing Activities
|
|
$
|
-
|
|
|
$
|
-
|
|
Net Cash Provided by Financing Activities
|
|
$
|
30,316
|
|
|
$
|
36,403
|
|
Net Change in Cash
|
|
$
|
-
|
|
|
$
|
-
|
|
Operating
Activities
During
the three months ended July 31, 2018, the Company incurred a net loss of $31,573 which, after adjusting for a decrease in prepaid
expenses of $2,500 and a decrease in accounts payable of $1,243, resulted in net cash of $30,316 being used in operating activities
during the period. By comparison, during the three months ended July 31, 2017, the Company incurred a net loss of $26,809 which,
after adjusting for an increase in prepayments of $15,075 and an increase in accounts payable of $5,481 resulted in net cash of
$36,403 being used in operating activities during the period.
Investing
Activities
The
Company neither generated nor used funds in investing activities during the three months ended July 31, 2018 and 2017.
Financing
Activities
During
the three months ended July 31, 2018, the Company received $30,316 by way of advances from a related party entity. By comparison,
during the three months ended July 31, 2017, the Company received $36,403 by way of advances from two related party entities.
The
Company is dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its
business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related
parties to provide continued funding and capital resources. No assurances can be given that the Company will be successful in
locating or negotiating with any target company or that the related parties will continue to fund the Company’s working
capital needs. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
Results
of Operations
The
Company has not conducted any active operations since the divestment of the ATM machine sales operations as of October 31, 2008. No
revenue has been generated by the Company during the three months ended July 31, 2018 and 2017. It is unlikely the Company will
have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance. It
is management’s assertion that these circumstances may hinder the Company’s ability to continue as a going concern. The
Company’s plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates.
For
the three months ended July 31, 2018 and 2017
During
the three months ended July 31, 2018, the Company incurred a net loss of $31,573, comprised of general and administrative expenses,
including legal, accounting, and other professional service fees incurred in relation to the preparation and filing of the Company’s
periodic reports on Form 10-K and Form 10-Q.
During
the three months ended July 31, 2017, the Company incurred a net loss of $26,809, comprised of general and administrative expenses,
including legal, accounting, and other professional service fees incurred in relation to the preparation and filing of the Company’s
periodic reports on Form 10-K and Form 10-Q.
General
and administrative expenses were $4,764 higher in the three months ended July 31, 2018 as compared to the three months ended July
31, 2017. The principal reason for this variance relates to the fact that we recognized more SEC filing fees and expense in respect
of our annual membership of the OTC Market during the three months ended July 31, 2018 than we did during the three months ended
July 31, 2017.
Off-Balance
Sheet Arrangements
The
Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect
on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
Contractual
Obligations
As
a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this
information.
Item
4. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
In
connection with the preparation of this quarterly report, an evaluation was carried out by the Company’s management, with
the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act (“Exchange Act”)
as of July 31, 2018. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports
filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in
the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the
principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
Based
on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s
disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required
to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was not
accumulated and communicated to management, including the principal executive officer and the principal financial officer, to
allow timely decisions regarding required disclosures.
Management’s
Report on Internal Control over Financial Reporting
The
management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
The Company’s internal control over financial reporting is a process, under the supervision of the principal executive officer
and the principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of the Company’s financial statements for external purposes in accordance with United States generally
accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
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i)
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Pertain
to the maintenance of records that is in reasonable detail accurately and fairly reflect
the transactions and dispositions of the Company’s assets;
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|
ii)
|
Provide
reasonable assurance that transactions are recorded as necessary to permit preparation
of the financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures are being made only in accordance with the authorizations
of management and the board of directors; and
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iii)
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Provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company’s assets that could have a material effect on
the financial statements.
|
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions or that the degree of compliance with the policies or procedures may deteriorate.
The
Company’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of
July 31, 2018, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission, which assessment identified material weaknesses in internal control over financial reporting.
A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that
creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented
or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did
identify a material weakness, management considers its internal control over financial reporting to be ineffective.
Management has concluded
that our internal control over financial reporting had the following material deficiencies:
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i)
|
We
were unable to maintain segregation of duties within our business operations due to our
reliance on a single individual fulfilling the role of sole officer and director.
|
|
ii)
|
Lack
of a functioning audit committee due to a lack of a majority of independent members and
a lack of a majority of outside directors on our Board of Directors, resulting in ineffective
oversight in the establishment and monitoring of required internal controls and procedures.
|
While
these control deficiencies did not result in any audit adjustments to our 2018 or 2017 interim or annual financial statements,
it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties. Accordingly,
we have determined that this control deficiency constitutes a material weakness.
To
the extent reasonably possible, given our limited resources, our goal is, upon consummation of a merger with a private operating
company, to separate the responsibilities of principal executive officer and principal financial officer, intending to rely on
two or more individuals. We will also seek to expand our current board of directors to include additional individuals willing
to perform directorial functions. Since the recited remedial actions will require that we hire or engage additional personnel,
this material weakness may not be overcome in the near term due to our limited financial resources. Until such remedial actions
can be realized, we will continue to rely on the advice of outside professionals and consultants.
This
quarterly report does not include an attestation report of our registered public accounting firm regarding our internal controls
over financial reporting. Management’s report was not subject to attestation by our registered public accounting
firm pursuant to Section 404(c) of the Sarbanes-Oxley Act that permit us to provide only management’s report in this annual
report.
Changes
in Internal Controls over Financial Reporting
During
the quarter ended July 31, 2018, there has been no change in internal control over financial reporting that has materially affected
or is reasonably likely to materially affect our internal control over financial reporting.