10-Q 1 form10q_jun302010.htm

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549}

FORM 10-Q

(Mark One)
	X		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended June 30, 2010
			or
			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from___________ to __________
Commission file number 000-52331

PREFERENTIAL EQUITIES, CORP.
(Exact name of registrant as specified in its charter)
NEVADA				91-2015980
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)
P.O. Box 741, Bellevue, WA 98009
(Address of principal executive offices)
(425) 453-0355
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and formal fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 o

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 (§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).
Not Applicable – Issuer does not have a website					Yes o		No o

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
		Large Accelerated Filer o				Accelerated Filer 
		Non-Accelerated Filer o (Do not check if a smaller reporting company)				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 x	No o

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court
Not Applicable	Yes o	No o

APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
5,000,000 common shares issued and outstanding as of August 16, 2010.

PREFERENTIAL EQUITIES CORP.

Form 10-Q

June 30, 2010

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management Discussion and Analysis or Plan of Operating	11
Item 3.	Quantitative and Quantitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures	14
Item 4T	Controls and Procedures	15


PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	15
Item 4.	(Removed and Reserved)	15
Item 5.	Other Information	15
Item 6.	Exhibits and Reports on Form 8-K	16

SIGNATURES		16

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The information in this report for the six months ended June 30, 2010, is unaudited but includes all adjustments (consisting only of normal recurring accruals, unless otherwise indicated) which Preferential Equities, Corp. ("Preferential" or the "Company") considers necessary for a fair presentation of the financial position, results of operations, changes in stockholders' equity and cash flows for those periods.

The condensed consolidated financial statements should be read in conjunction with Preferential's financial statements and the notes thereto contained in Preferential’s Audited Financial Statements for the year ended December 31, 2009, in the Form 10KSB and filed with the SEC on March 26, 2010.

Interim results are not necessarily indicative of results for the full fiscal year.

PREFERENTIAL EQUITIES CORP.

QUARTERLY FINANCIAL STATEMENTS

FOR PERIOD ENDED

June 30, 2010

(UNAUDITED)

PREFERENTIAL EQUITIES CORP.

Index

Financial Statements:

Balance Sheet 1

Statement of Operations 2

Statement of Cash Flows 3

Notes to Financial Statements 4-6

Preferential Equities Corp.
(A Development Stage Company)
Balance Sheets (Unaudited)
ASSETS
				As of			As of
				June 30,			Dec 31,
				2010			2009

	Current Assets
	Cash		$	-		$	-

	Total Current Assets			-			-

	Other Assets

	Total Other Assets			-			-
			$	-		$	-

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

	Current Liabilities
	Accounts Payable						1,000
	Advances from Officer				15,950		11,750
	Total Current Liabilities				15,950		12,750

	Total Liabilities				15,950		12,750
	Stockholders' Equity (Deficit)
	Common stock, ($0.001 par value, 100,000,000 shares
	authorized; 5,000,000 shares issued and outstanding
	as of June 30, 2010 and December 31, 2009 respectively)				5,000		5,000
	Additional paid-in capital
	Deficit accumulated during development stage				(20,950)		(17,750)

	Total Stockholders' Equity (Deficit)				(15,950)		(12,750)

	TOTAL LIABILITIES &
	STOCKHOLDERS' EQUITY (DEFICIT)	$			-	$	-

	See Accompanying Notes and Accountant's Report

Preferential Equities Corp. (A Development Stage Company) Statements of Operations (Unaudited)
										October 2, 2006
		Three Months		Six Months		Three Months		Six Months		(inception)
		Ended		Ended		Ended		Ended		through
		June 30,		June 30,		June 30,		June 30,		June 30,
		2010		2010		2009		2009		2010


Revenues

Revenues	$	-	$	-	$	-	$	-	$	-


Total Revenues		-		-		-		-		-

Operating Costs
Administrative Expenses		1,100		3,200		2,000		3,250		20,950



Total Operating Costs		1,100		3,200		2,000		3,250		20,950


Net Income (Loss)	$	(1,100)	$	(3,200)	$	(2,000)	$	(3,250)	$	(20,950)


Basic earnings (loss) per share	$	(0.00)	$	(0.00)	$	(0.00)	$	(0.00)

Weighted average number of
common shares outstanding		5,000,000		5,000,000		5,000,000		5,000,000

See Accompanying Notes and Accountant’s Report

Preferential Equities Corp. (A Development Stage Company) Statements of Cash Flows (Unaudited)
							October 2, 2006
		Six Months			Six Months		(inception)
		Ended			Ended		through
		June ,			June 30,		June 30,
		2010			2009		2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(3,200)		$	(3,250)	$	(20,950)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:

Changes in operating assets and liabilities:
(Increase) Decrease in Subscription Receivable
Increase (Decrease) in Accounts Payable					3,250		-
Increase (Decrease) in Advances from officers		3,200			-		15,950

*Net cash provided by (used in) operating activities*		-					(5,000)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of equipment		-			-		-


*Net cash provided by (used in) investing activities*		-			-		-

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance of common stock							5,000
Additional paid-in capital

*Net cash provided by (used in) financing activities*		-			-		5,000



*Net increase (decrease) in cash*		-			-		-

*Cash at beginning of period*							-

*Cash at end of period*	$	-		$	-	$	-
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during year for :

Interest	$		$		-	$	-

Income Taxes	$		$		-	$	-

See Accompanying Notes and Accountant's Report

PREFERENTIAL EQUITIES CORP.
(A Development Stage Company)
Notes to Financial Statements
June 30, 20010

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Preferential Equities, Corp. (the Company) was incorporated under the laws of the State of Nevada on October 2, 2006. The Company is pursuing their business as may be necessary, convenient or desirable to accomplish.

The Company is in the development stage. Its activities to date have been limited to capital formation, organization and development of its business plan. The Company has not commenced operations.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Accounting

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a December 31, year-end.

b. Basic Earnings per Share

ASC No.260 “Earnings Per Share”, which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. The Company has adopted the provisions of ASC No. 260.

Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company.

c. Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

d. Use of Estimates and Assumptions

The preparation of financial statements in conformity with generally accepted accounting principles 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. In accordance with ASC No. 250 all adjustments are normal and recurring.

PREFERENTIAL EQUITIES CORP.
(A Development Stage Company)
Notes to Financial Statements
June 30 20010

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

e. Income Taxes

Income taxes are provided in accordance with ASC No. 740, “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

NOTE 3. GOING CONCERN

The accompanying financial statements are presented on a going concern basis. The Company had no operations during the period from October 2, 2006 (date of inception) to June 30, 2010, generated no revenues, and incurred losses of $ 20,950. This condition raises substantial doubt about the Company’s ability to continue as a going concern. Because the Company is currently in the development stage and has minimal expenses, management believes that the company’s current cash of $ -0- is sufficient to cover the expenses they will incur during the next twelve months in a limited operations scenario or until they raise additional funding.

NOTE 4. WARRANTS AND OPTIONS

There are no warrants or options outstanding to acquire any additional shares of common stock.

NOTE 5. RELATED PARTY TRANSACTIONS

The sole officer and director of the Company may, in the future, become involved in other business opportunities as they become available, he may face a conflict in selecting between the Company and his other business opportunities. The Company has not formulated a policy for the resolution of such conflicts.

Harry Miller, sole officer and director of the Company, will not be paid for any underwriting services that he performs on behalf of the Company with respect to the Company’s upcoming SB-2 offering. He will also not receive any interest on any funds

PREFERENTIAL EQUITIES CORP.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010

that he advances to the Company for offering expenses prior to the offering being closed which will be repaid from the proceeds of the offering.

While the Company is seeking additional capital, Mr. Miller has advanced funds to the Company to pay any costs incurred by it. These funds are interest free. The balance due Mr. Miller was $ 15,950 on June 30, 2010.

NOTE 6. INCOME TAXES

	As of June 30, 2010

Deferred tax assets:	2,663
Net operating tax carryforwards	$ -0-
Other	-0-
Gross deferred tax assets	-0-
Valuation allowance	(2,663)

Net deferred tax assets	$ -0-

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance.

NOTE 7. NET OPERATING LOSSES

As of June 30, 2010, the Company has net operating loss carryforwards of $ 20,950. Net operating loss carryforward expires twenty years from the date the loss was incurred.

NOTE 8. STOCK TRANSACTIONS

Transactions, other than employees’ stock issuance, are in accordance with ASC No. 505. Thus issuances shall be accounted for based on the fair value of the consideration received. Transactions with employees’ stock issuance are in accordance with ASC No. 718. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.

PREFERENTIAL EQUITIES CORP.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010

On October 2, 2006 the Company issued a total of 5,000,000 shares of common stock to a director for cash in the amount of $0.001 per share for a total of $5,000.

As of June 30, 2010 the Company had 5,000,000 shares of common stock issued and outstanding.

NOTE 9. STOCKHOLDERS’ EQUITY

The stockholders’ equity section of the Company contains the following classes of capital stock as of June 30, 2010:

Common stock, $ 0.001 par value: 100,000,000 shares authorized; 5,000,000 shares issued and outstanding.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussion and analysis should be read in conjunction with the financial statements, including the notes thereto, appearing elsewhere in this document.

The "Plan of Operations" of Preferential Equities Inc., is incorporated by reference from the Preferential’s
Form SB-1, as amended, filed with the SEC on December 4, 2006.

Formation

Preferential Equities Corp. ("Preferential"), was incorporated on October 2, 2006, in the State of Nevada, to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. Pursuant to the Articles of Incorporation, Preferential is authorized to issue 100,000,000 shares of Common Stock at $0.001 par value. Each holder of the Common Stock shall be entitled to one vote for each share of Common Stock held. As of August 16, 2010, there are 5,000,000 shares of Common Stock outstanding.

Plan of Operations.

Our business purpose is to seek, investigate and, if such investigation warrants, merge or acquire an interest in business opportunities presented to us by persons or companies who or which desire to seek the perceived advantages of a Securities Exchange Act of 1934 registered corporation. We have not restricted our search to any specific business, industry, or geographical location and we may participate in a business venture of virtually any kind or nature. This discussion of the proposed business is purposefully general and is not meant to be restrictive of our virtually unlimited discretion to search for and enter into potential business opportunities. We may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

Mr. Miller has limited experience in managing companies similar to Preferential and we shall now be relying upon his efforts in accomplishing the business purposes of Preferential. It is not anticipated that any outside consultants or advisors will be utilized by Preferential to effectuate its business purposes described herein. However, if Preferential does retain such an outside consultant or advisor, any cash fee earned by such party will need to be paid by the prospective merger/acquisition candidate, as Preferential has no cash assets with which to pay such obligation. There have been no contracts or agreements with any outside consultants and none are anticipated in the future.

Marketing. Mr. Miller, our President, has contacted a couple of broker-dealer, venture capitalist and other members of the financial community who he had a pre-existing relationship and who were likely to have clients, associates and contacts interested in a blank check company such as Preferential. To date, Mr. Miller has reviewed the business plans and met the principals of at least two potential reverse merger/acquisition candidates. Mr. Miller did not, however, find a suitable privately held company seeking to consummate a reverse merger/acquisition transaction. Mr. Harry Miller plans on continuing to tap into his extensive network of business contacts in North America in seeking a suitable business entity to consummate a reverse merger/acquisition transaction for Preferential. Mr. Miller has not identified a specific potential merger or acquisition candidate at this time.

Evaluation of Acquisition Opportunities. Mr. Miller will obtain from potential private company candidates written materials regarding these privately held companies prior to considering a reverse merger/acquisition transaction with said companies. Mr. Miller plans on requesting or will request such items as:

a description of products, services and company history;
management resumes;
available projections with related assumptions upon which they are based;
an explanation of proprietary products and services;
evidence of existing patents, trademarks or service marks or rights thereto;
present and proposed forms of compensation to management;
a description of transactions between the privately-held company and its affiliates during relevant prior periods;
a description of present and required facilities;
an analysis of risks and competitive conditions;
a financial plan of operation and estimated capital requirements;
audited financial statements; and
other information deemed relevant.

Mr. Miller will endeavor to personally meet with management and key personal of companies which he considers are serious candidates for concluding a reverse merger or acquisition. Preferential will also attempt to obtain independent analysis or verification of certain information provided, check references of management and key personnel and take other reasonable investigative measures, to the extent of Preferential’s limited financial resources. Preferential will not acquire or merge with any company for which current audited financial statements cannot be obtained prior to or within a reasonable period of time after closing of the proposed transaction.

Mr. Miller intends to take into consideration the following factors when analyzing a company for its potential as a reverse merger/acquisition candidate:

potential for growth, indicated by new technology, anticipated market expansion or new products;
competitive position compared to other companies of similar size and experience within the privately-held company's industry segment as well as within the industry as a whole;
strength and diversity of management; either in place or scheduled for recruitment;
capital requirements and anticipated availability of required funds to be provided by us or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;
the extent to which the business of the privately-held company can be advanced;
The regulatory environment within the privately-held company's industry;
the market performance of equity securities of similarly situated companies in the privately-held company's industry; and
the reputation of owners, principals and/or managers for complying with and not violating federal and/or state securities laws.

The time, effort and expense required to evaluate a privately-held company for a reverse merger/acquisition transaction with Preferential and to effectuate such a transaction cannot be predicted with any degree of accuracy. Preferential does not have any full-time employees and Mr. Miller, the sole unpaid employee of Preferential, is not required to devote any specific amount of time to the business of Preferential.

Preferential does not intend to merge with or acquire a business or company in which Mr. Miller has, directly or indirectly, an ownership interest in.

Treatment of Reverse Merger/Acquisition Transaction. The SEC considers a reverse merger/acquisition transaction to be a capital transaction in substance, rather than a business combination. That is, the transaction will be equivalent to the issuance of stock by the privately-held company for the net monetary assets of Preferential, accompanied by a recapitalization. As a result, the post-reverse merger/acquisition comparative historical financial statements for Preferential will be those of the privately-held company, with appropriate footnote disclosure concerning the changes in the capital structure of the privately-held company, effected at the reverse merger/acquisition transaction date.

Cost Projections. It is anticipated that Preferential will incur nominal expenses in the implementation of its business plan. Our main cost is related to compliance with our ongoing reporting issuer obligations with the SEC. Because Preferential has no capital with which to pay these anticipated expenses, Mr. Harry Miller has verbally agreed to pay these charges with his personal funds. Any monies loaned to Preferential by Mr. Miller will be unsecured and non- interest bearing. We expect that any loans made to us by Mr. Miller will be repaid from cash generated from our operations after we have merged or acquired a privately held company. Mr. Miller has agreed that the repayment of any loans made by it to Preferential will not impede, or be made conditional in any manner, to consummation of a proposed transaction.

Loss Per Period/General and Administrative Expenses

Preferential's net loss for the six months ended June 30, 2010 was $3,250. Preferential has accumulated a net loss from October 2, 2006 (inception) through to June 30, 2010 of $20,950. All of these expenses have been audit and financial statement review related.

Preferential will continue to sustain operating expenses without corresponding revenues, at least until the consummation of a merger, acquisition or business combination. This will result in Preferential incurring a net operating loss which will increase continuously until Preferential can consummate a merger, acquisition or business combination with a profitable business opportunity.

Liquidity and Capital Resources Liquidity

As of June 30, 2010, Preferential had no cash and $15,950 in liabilities of which $15,950 are funds owed to Mr. Miller its sole officer and director. Preferential is monitoring its cash position to minimize expenditures. In the event Mr. Miller does not continue to loan money to Preferential, Preferential will not have sufficient cash to pursue any future business combination opportunities.

Off-balance sheet arrangements

As of June 30, 2010, Preferential has had no off-balance sheet arrangements.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This Form 10-QSB report may contain certain "forward-looking" statements as such term is defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and/or releases, which represent our expectations or beliefs, including but not limited to, statements concerning our economic performance, financial condition, growth and marketing strategies, availability of additional capital, ability to attract suitable personal and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate," "might," or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important facts, including but not limited to those risk factors in Preferential's Registration Statement on Form SB-1, as amended, filed with the SEC on December 4, 2006.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is not required to provide the information required under this item.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

Disclosure controls are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management carried out an evaluation (with the participation of our CEO and CFO), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, the Company's CEO and CFO have concluded that the Company's disclosure controls and procedures were effective as of June 30, 2010.

(b) Internal control over financial reporting

Management's annual report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting should include those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our 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.

As required by Rule 13a-15(c) promulgated under the Exchange Act, our management, with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), evaluated the effectiveness of our internal control over financial reporting as of June 30, 2010. Management's assessment took into consideration the size and complexity of the company and was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting -Guidance for Smaller Public Companies. In performing the assessment, management has concluded that our internal control over financial reporting was effective as of June 30, 2010.

Attestation report of the registered public accounting firm

This quarterly report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.

Changes in internal control over financial reporting

There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.

Changes in Internal Controls

Based on the evaluation as of June 30, 2010, Harry Miller, our President, Chief Executive Officer, and Chief Financial Officer has concluded that there were no significant changes in our internal controls over financial reporting or in any other areas that could significantly affect our internal controls subsequent to the date of his most recent evaluation, including corrective actions with regard to significant deficiencies and material weaknesses.

ITEM 4T. CONTROLS AND PROCEDURES.

See Item 4 above.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

To Preferential's knowledge, no lawsuits were commenced against Preferential during the six months ended June 30, 2010 nor did Preferential commence any lawsuits during the same period. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Changes in Securities

There have been no changes in securities for the six months ended June 30, 2010.

Recent Sales of Registered Securities

There have been no unregistered sale of securities for the six months ended June 30, 2010.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

We have not issued senior securities.

ITEM 4. (REMOVED AND RESERVED)

Not Applicable.

ITEM 5. OTHER INFORMATION

There is no other information to disclose concerning the six months ended June 30, 2010.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The following Exhibits are furnished as part of this Form 10-Q, pursuant to Item 601 of Regulation S-B.

Exhibit Number		Exhibit Title

3.1		Articles of Incorporation (incorporated by reference from our Form SB-1 Registration Statement, filed December 4, 2006)
3.2		Bylaws (incorporated by reference from our Form SB-1 Registration Statement, filed December 4, 2006)
31.1		Certificate of CEO as Required by Rule 13a-14(a)/15d-14
31.2		Certificate of CFO as Required by Rule 13a-14(a)/15d-14
32		Certificate of CEO/CFO as Required by Rule 13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code

SIGNATURES

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

	PREFERENTIAL EQUITIES CORP.

Date: August 16, 2010	/s/ Harry Miller
By:	Harry Miller, President, CEO, Secretary, Treasurer, CFO, Principal Accounting Officer and sole Director.

Financial Statements:

	Balance Sheet	1

	Statement of Operations	2

	Statement of Cash Flows	3

Notes to Financial Statements		4-6

Preferential Equities Corp. 10-Q