Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2011
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to __________
Commission File Number: 333-167667
INNOVATIVE PRODUCT OPPORTUNITIES INC.
---------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 42-1770123
---------------------- --------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
730 Gana Court, Mississauga, Ontario, Canada L5S 1P1
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(Address of principal executive offices)
(347) 789-7131
---------------------
(Registrant's telephone number, including area code)
Not Applicable
---------------------
(Former name, former address and former 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 Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ ] No [ ]
Indicate by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(Section 232.405 of this chapter) during the preceding 12 months (or such
shorter period that the registrant was required to submit and post such
files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filed,
an accelerated filed, a non-accelerated filed, or a small reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"small reporting company" in Rule 12b-2 of the Exchange Act.
Large Accelerated filer [ ] Accelerated filer [ ]
Non-Accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of August 5, 2011 the Issuer had 66,000,000 shares of common stock issued
and outstanding, par value $0.0001 per share.
INNOVATIVE PRODUCTS OPPORTUNITIES INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2011
(A Development Stage Enterprise)
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1 - Balance Sheets as of June 30, 2011 (Unaudited)
and December 31, 2010 (Audited)...................................F1
Statements of Operations for the
three and six months ended June 30, 2011 and 2010 and
from inception (April 3, 2009) to June 30, 2011(Unaudited)....F2
Statement of Stockholders Equity (Deficit) from Inception
(April 3, 2009) to June 30, 2011 (Unaudited)...................F3
Statements of Cash Flows for the six months ended
June 30, 2011 and 2010 and from inception (April 3, 2009)
to June 30, 2011 (Unaudited).......................................F4
.
Notes to Financial Statements (Unaudited).....................F5 - F8
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations...............................................4
Item 3 - Quantitative and Qualitative Disclosures About Market Risk..........8
Item 4T - Controls and Procedures.............................................9
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings...................................................9
Item 1A - Risk Factors........................................................9
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds........14
Item 3 - Defaults Upon Senior Securities....................................14
Item 4 - Reserved...........................................................14
Item 5 - Other Information .................................................14
Item 6 - Exhibits...........................................................14
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Innovative Product Opportunities Inc.
(A Development Stage Enterprise)
BALANCE SHEETS
June 30, December 31,
2011 2010
(unaudited) (Audited)
------------- ------------
ASSETS
Current assets
Cash $ 4,209 $ 15,775
Accounts receivable -- 21,000
Total current assets 4,209 36,775
Total assets $ 4,209 $ 36,775
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities $ 413 $ 460
Due to related party 31,890 33,202
Total current liabilities 32,303 33,662
Total liabilities 32,303 33,662
Stockholders' equity (deficit)
Preferred stock; $0.001 par value;
1,000,000 shares authorized,
-0- issued and outstanding -- --
Common stock; $0.0001 par value;
500,000,000 shares authorized,
66,000,000 shares and 31,000,000 shares
issued and outstanding as of June 30, 2011
and December 31, 2010, respectively 6,600 3,100
Additional paid-in-capital 140,400 108,900
Accumulated deficit during development stage (175,094) (108,887)
----------- ----------
Total stockholders' equity (deficit) (28,094) 3,113
----------- ----------
Total liabilities and stockholders' equity (deficit) $ 4,209 $ 36,775
========== ==========
The accompanying footnotes are an integral part of these financial statements.
F1
Innovative Product Opportunities Inc.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
For the For the For the For the from inception
three months three months six months six months (April 3, 2009)
ended June 30, ended June 30 ended June 30 ended June 30 through
2011 2010 2011 2010 June 30 2011
=============== ============== ============== ============== ================
Sales $ -- $ 21,000 $ -- $ 21,000 $ 21,000
Cost of sales -- -- -- -- --
-------------- ------------- ------------- ------------- ---------------
Gross profit -- 21,000 -- 21,000 21,000
-------------- ------------- ------------- ------------- ---------------
Operating expenses
Bad Debts -- 21,000 -- 21,000 21,000
General and administrative 15,941 110,000 45,207 110,000 175,094
-------------- ------------- ------------- ------------- ---------------
Total expenses 15,941 110,000 66,207 110,000 196,094
-------------- ------------- ------------- ------------- ---------------
Net operating loss (15,941) (89,000) (66,207) (89,000) (175,094)
-------------- ------------- ------------- ------------- ---------------
Other income (loss)
Gain on settlement
of accounts receivable -- 336,000 -- 336,000 336,000
Other-than-temporary
impairment loss
on securities -- -- -- -- (124,950)
Loss on cancelation
of securities -- -- -- -- (211,050)
-------------- ------------- ------------- ------------- ---------------
Total other income (loss) -- 336,000 -- 336,000 --
Income (loss) before taxes (15,941) 247,000 (66,207) 247,000 (175,094)
Provision for income taxes -- 85,750 -- 85,750 --
Net income (loss) (15,941) 161,250 (66,207) 161,250 (175,094)
Other comprehensive income,
net of tax. Net unrealized
gain on investment securities, -- 464,100 -- 464,100 --
available-for-sale,
net of tax of $249,900
Comprehensive income (loss) $ (15,941) $ 625,350 $ (66,207) $ 625,350 $ (175,094)
Basic net loss per
common share $ 0.00 $ 0.01 $ 0.00 $ 0.01
Weighted average number
of common shares outstanding 60,065,935 25,681,324 45,613,259 22,856,359
- basic
The accompanying footnotes are an integral part of these financial statements.
F2
Innovative Product Opportunities Inc.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
From Inception (April 3, 2009) to June 30, 2011
(Unaudited)
Preferred Stock Common Stock
Deficit
Accumulated Total
Additional during Shareholders
Paid-in Development Equity
Shares Amount Shares Amount Capital Stage (Deficit)
--------- ----------- ----------- ---------- ------------- -------------- -------------
Balance,
April 3, 2009 -- $ -- --- $ -- $ -- $ -- $ --
Common stock
issued to founder,
$0.0001 per share,
April 3, 2009 -- -- 20,000,000 2,000 -- -- 2,000
Net loss -- -- -- -- -- (2,000) (2,000)
--------- ----------- ----------- ---------- ------------- -------------- -------------
Balance
December 31, 2009 -- -- 20,000,000 2,000 -- (2,000) --
--------- ----------- ----------- ---------- ------------- -------------- -------------
Common stock
issued for services -- -- 11,000,000 1,100 108,900 -- 110,000
Net loss -- -- -- -- -- (106,887) (106,887)
--------- ----------- ----------- ---------- ------------- -------------- -------------
Balance
December 31, 2010 -- -- 31,000,000 3,100 108,900 (108,887) 3,113
--------- ----------- ----------- ---------- ------------- -------------- -------------
Conversion of due
to related party
for common stock -- -- 30,000,000 3,000 27,000 -- 30,000
Common stock
issued for services -- -- 5,000,000 500 4,500 -- 5,000
Net loss -- -- -- -- -- (66,207) (66,207)
--------- ----------- ----------- ---------- ------------- -------------- -------------
Balance
June 30, 2011 -- $ -- 66,000,000 $ 6,600 $ 140,400 $ (175,094) $ (28,094)
--------- ----------- ----------- ---------- ------------- -------------- -------------
The accompanying footnotes are an integral part of these financial statements.
F3
Innovative Product Opportunities Inc.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
From
Inception
(April 3
For the six For the six 2009)
months ended months ended through
June 30, 2011 June 30, 2010 June 30,2011
Cash flows from ------------- ------------- ------------
operating activities
Net loss $ (66,207) $ 161,250 $ (175,094)
Adjustments to reconcile
net loss to cash used in
operating activities
Shares issued to founder -- -- 2,000
Stock issued for services 5,000 110,000 115,000
Settlement of accounts
receivable in shares of
common stock of Metro One -- (21,000) --
Development, Inc.
Gain on accounts receivable
settlement -- (336,000) --
Change in operating assets
and liabilities
Decrease in accounts receivable 21,000 -- --
Increase in accounts payable
and accrued liabilities (47) -- 413
Increase in income tax payable -- 85,750 --
------------- ------------- ------------
Net cash used in
operating activities (40,254) -- (57,681)
------------- ------------- ------------
Cash flow from
financing activities
Advances by
related party 48,688 -- 276,890
Repayment to
related party (20,000) -- (215,000)
------------- ------------- ------------
Net cash provided by
financing activities 28,688 -- (61,890)
------------- ------------- ------------
Net change in cash (11,566) -- 4,209
Cash, beginning of the period 15,775 -- --
------------- ------------- ------------
Cash, end of the period $ 4,209 -- 4,209
------------- ------------- ------------
Supplemental disclosure of
non-cash investing and
financing activities
Conversion of due to related
party for common stock $ 30,000 $ -- $ 30,000
The accompanying footnotes are an integral part of these financial statements.
F4
Innovative Product Opportunities Inc.
(A Development Stage Enterprise)
(Unaudited)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Innovative Product Opportunities Inc. (the "Company" or "Innovative") was
incorporated on April 3, 2009 in the State of Delaware and established a
fiscal year end of December 31. The Company is a development stage enterprise
organized to provide product development to meet the needs of new and emerging
product ideas available for sale today. The Company is currently in the
development stage as defined in Financial Accounting Standards Board ("FASB")
Accounting Standard Codification ("ASC") 915. All activities of the Company to
date relate to its organization and share issuances for services.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited financial statements of Innovative Product
Opportunities Inc. have been prepared without audit pursuant to the rules
and regulations of the 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. The financial
statements should be read in conjunction with the annual financial statements
for the year ended December 31, 2010 of Innovative Product Opportunities Inc.
in our Form 10-K filed on March 29, 2011.
The interim financial statements present the balance sheet, statements of
operations, stockholders' equity (deficit) and cash flows of Innovative
Product Opportunities Inc. The financial statements have been prepared in
accordance with accounting principles generally accepted in the United States.
The interim financial information is unaudited. In the opinion of management,
all adjustments necessary to present fairly the financial position as of
June 30, 2011 and the results of operations, stockholders' equity (deficit)
and cash flows presented herein have been included in the financial statements.
All such adjustments are of a normal and recurring nature. Interim results are
not necessarily indicative of results of operations for the full year.
F5
GOING CONCERN
The Company's financial statements are prepared in accordance with generally
accepted accounting principles applicable to a going concern. This
contemplates the realization of assets and the liquidation of liabilities
in the normal course of business. Currently, the Company does not have
significant operations or a source of revenue
sufficient to cover its operation costs and allow it to continue as a going
concern. The Company has an accumulated deficit during development stage at
June 30, 2011 and December 31, 2010 of $(175,094) and $(108,887), respectively.
The Company will be dependent upon the raising of additional capital through
placement of its common stock in order to implement its business plan. There
can be no assurance that the Company will be successful in this situation.
Accordingly, these factors raise substantial doubt as to the Company's
ability to continue as a going concern. These financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classifications of liabilities
that might result from this uncertainty. The Company is funding its
initial operations by way of loans from its Chief Executive Officer.
The Company's officers and directors have committed to advancing certain
operating costs of the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers highly
liquid financial instruments purchased with a maturity of three months or
less to be cash equivalents.
INVESTMENT SECURITIES
Equity securities are classified as available for sale and are stated at
fair value with unrealized gains and losses excluded from earnings and
reported in other comprehensive income, net of tax. All available for sale
securities are classified as current assets as they are available to support
the Company's current operating needs in the next 12 months. Realized gains
and losses on the sale of investment securities are recognized at the
settlement date using the specific identification method and are included in
the statements of operations.
In accordance with ASC 320-10, "Investments-Debt and Equity Securities," the
Company evaluates its securities portfolio for other-than-temporary impairment
("OTTI") throughout the year. Each investment that has a fair value less than
the book value is reviewed on a quarterly basis by Management. Management
considers at a minimum the following factors that, both individually or in
combination, could indicate that the decline is other-than-temporary:
(a) the Company has the intent to sell the security;
(b) it is more likely than not that it will be required to sell the security
before recovery; and (c) the Company does not expect to recover the entire
amortized cost basis of the security. Among the factors that are considered
in determining intent is a review of capital adequacy, interest rate risk
profile and liquidity at the Corporation. An impairment charge is recorded
against individual securities if the review described above concludes that
the decline in value is other-than-temporary.
F6
INCOME TAXES
The Company accounts for income taxes in accordance with Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("FASB ASC") 740,
Income Taxes. Under the assets and liability method of FASB ASC 740, deferred
tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
in effect for the year in which those temporary differences are expected to be
recovered or settled. The Company provides a valuation allowance, if necessary,
to reduce deferred tax assets to their estimated realizable value.
NET LOSS PER SHARE
Basic net income (loss) per share includes no dilution and is computed by
dividing loss available to common stockholders by the weighted average number
of common shares outstanding for the period. Dilutive loss per share reflects
the potential dilution of securities that could share in the losses of the
Company. Because the Company does not have any potentially dilutive securities
basic and dilutive earnings per share are equal in the accompanying financial
statement presentation.
FOREIGN CURRENCY TRANSLATION
The financial statements are presented in United States dollars. In accordance
with FASB ASC 830, Foreign Currency Matters, foreign denominated monetary
assets and liabilities are translated to their United States dollar
equivalents using foreign exchange rates which prevailed at the balance sheet
date. Non-monetary assets and liabilities are translated at exchange rates
prevailing at the transaction date. Revenue and expenses are translated at
average rates of exchange during the periods presented. Related translation
adjustments are reported as a separate component of stockholders' equity
(deficit), whereas gains or losses resulting from foreign currency
transactions are included in results of operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
STOCK-BASED COMPENSATION
The Company measures stock-based compensation at the grant date based on the
fair value of the award and recognizes stock-based compensation expense over
the requisite service period.
The Company also grants awards to non-employees and determines the fair value
of such stock-based compensation awards granted as either the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable. If the fair value of the equity
instruments issued is used, it is measured using the stock price and other
measurement assumptions as of the earlier of (1) the date at which a commitment
for performance by the counterparty to earn the equity instruments is reached,
or (2) the date at which the counterparty's performance is completed.
The Company has not adopted a stock option plan and has not granted any stock
options.
F7
FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with the requirements of FASB ASC 820, Fair Value Measurements
and Disclosures, and FASB ASC 825, Financial Instruments, the Company has
determined the estimated fair value of financial instruments using
available market information and appropriate valuation methodologies.
FASB ASC 820 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability (exit price) in an orderly transaction
between market participants at the measurement date. The statement establishes
market or observable inputs as the preferred sources of values, followed by
assumptions based on hypothetical transactions in the absence of market inputs.
The statement requires fair value measurements be classified and disclosed in
one of the following categories:
Level 1 - Quoted prices in active markets for identical assets and liabilities.
Level 2 - Quoted prices in active markets for similar assets and liabilities,
quoted prices for identical or similar instruments in markets that are not
active and model-derived valuations whose inputs are observable or whose
significant value drivers are observable.
Level 3 - Significant inputs to the valuation model are unobservable.
Financial assets and liabilities are classified based on the lowest level of
input that is significant to the fair value measurement.
The fair values of financial instruments, other than Investment securities,
are classified as current assets or liabilities and approximate their carrying
value due to the short-term maturity of the instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
There have been no recent accounting pronouncements or changes in accounting
pronouncements that impacted the first quarter of fiscal 2011, or which are
expected to impact future periods, that were not already adopted and disclosed
in prior periods.
NOTE 3 - DUE TO RELATED PARTY
As of June 30, 2011 and December 31, 2010 advances of $31,890 and $33,202,
respectively, were due to the Company's Chief Executive Officer and majority
shareholder. The balances are non-interest bearing, unsecured and have no
specified terms of repayment.
NOTE 4 - STOCKHOLDERS' EQUITY
The Company is authorized to issue an aggregate of 500,000,000 common shares
with a par value of $0.0001 per share and 1,000,000 shares of preferred
stock with a par value of $0.001 per share. No preferred shares have been
issued.
On April 15, 2011, the Company repaid $30,000 of advances due to related
party by exchanging 30,000,000 shares of common stock with the Company's
Chief Executive Officer and majority shareholder.
On April 18, 2011, the Company issued a total of 5,000,000 shares of common
stock valued at $5,000 as compensation to a director and the Chief
Financial Officer.
F8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains "forward-looking statements" that involve
risks and uncertainties. You should not place undue reliance on these
forward-looking statements. Our actual results could differ materially from
those anticipated in the forward-looking statements for many reasons, including
the risks described in our Form 10-K filed
March 29, 2011 and other filings we make
with the Securities and Exchange Commission. Although we believe the
expectations reflected in the forward-looking statements are reasonable, they
relate only to events as of the date on which the statements are made. We do
not intend to update any of the forward-looking statements after the date of
this report to conform these statements to actual results or to changes in our
expectations, except as required by law.
The following discussion and analysis of financial condition and results of
operations is based upon, and should be read in conjunction with our audited
financial statements and related notes thereto included elsewhere in this
report, and in our Form 10-K filed March 29, 2011.
BUSINESS OVERVIEW
We incorporated on April 3, 2009 as Innovative Product Opportunities Inc. under
the laws of the State of Delaware. We are currently in the development stage.
Additionally, we have not completed development of any product. We
expect to incur losses in the foreseeable future due to significant costs
associated with our business startup, developing our business and costs
associated with on-going operations. Our business is to be a service only
product development firm to meet the needs of new and emerging product ideas
available for sale today and in the future. Our Certified Engineering
Technicians can participate in the creation of products, from hand sketches
and design through prototyping and construction. We offer project management
to assist our client to produce finished parts ready to market in numerous
industries including, but not limited to, consumer and household goods, office
products, furniture, and toys. We believe that we will be able to deliver a
complete solution to startup and development stage companies.
We have no plans to engage in, a merger or acquisition with any other company,
entity or person.
4
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported
in the Financial Statements and accompanying notes. Estimates are
used for, but not limited to, the accounting for the allowance for doubtful
accounts, inventories, impairment of long-term assets, stock-based
compensation, income taxes and loss contingencies. Management bases its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. Actual results could differ
from these estimates under different assumptions or conditions.
We believe the following critical accounting policies, among others, may be
impacted significantly by judgment, assumptions and estimates used in the
preparation of the Financial Statements:
INVESTMENT SECURITIES
Equity securities are classified as available for sale and are stated at fair
value with unrealized gains and losses excluded from earnings and reported in
other comprehensive income, net of tax. All available for sale securities are
classified as current assets as they are available to support the Company's
current operating needs in the next 12 months. Realized gains and losses on the
sale of investment securities are recognized at the settlement date using the
specific identification method and are included in the statements of operations
In accordance with ASC 320-10, "Investments-Debt and Equity Securities," the
Company evaluates its securities portfolio for other-than-temporary impairment
("OTTI") throughout the year. Each investment that has a fair value less than
the book value is reviewed on a quarterly basis by Management. Management
considers at a minimum the following factors that, both individually or in
combination, could indicate that the decline is other-than-temporary:
(a) the Company has the intent to sell the security; (b) it is more likely
than not that it will be required to sell the security before recovery; and
(c) the Company does not expect to recover the entire amortized cost basis of
the security. Among the factors that are considered in determining intent is a
review of capital adequacy, interest rate risk profile and liquidity at the
Corporation. An impairment charge is recorded against individual securities if
the review described above concludes that the decline in value is
other-than-temporary.
5
STOCK-BASED COMPENSATION
The Company measures stock-based compensation at the grant date based on the
fair value of the award and recognizes stock-based compensation expense over
the requisite service period.
The Company also grants awards to non-employees and determines the fair value
of such stock-based compensation awards granted as either the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable. If the fair value of the equity
instruments issued is used, it is measured using the stock price and other
measurement assumptions as of the earlier of (1) the date at which a commitment
for performance by the counterparty to earn the equity instruments is reached,
or (2) the date at which the counterparty's performance is completed.
The Company has not adopted a stock option plan and has not granted any stock
options.
FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with the requirements of FASB ASC 820, Fair Value Measurements
and Disclosures, and FASB ASC 825, Financial Instruments, the Company has
determined the estimated fair value of financial instruments using
available market information and appropriate valuation methodologies.
FASB ASC 820 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability (exit price) in an orderly transaction
between market participants at the measurement date. The statement establishes
market or observable inputs as the preferred sources of values, followed by
assumptions based on hypothetical transactions in the absence of market inputs.
The statement requires fair value measurements be classified and disclosed in
one of the following categories:
Level 1 - Quoted prices in active markets for identical assets and liabilities.
Level 2 - Quoted prices in active markets for similar assets and liabilities,
quoted prices for identical or similar instruments in markets that are not
active and model-derived valuations whose inputs are observable or whose s
ignificant value drivers are observable.
Level 3 - Significant inputs to the valuation model are unobservable.
Financial assets and liabilities are classified based on the lowest level of
input that is significant to the fair value measurement.
EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
There have been no recent accounting pronouncements or changes in accounting
pronouncements that impacted the first quarter of fiscal 2011, or which are
expected to impact future periods, that were not already adopted and disclosed
in prior periods.
RESULTS OF OPERATIONS
COMPARISON OF RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010.
REVENUES
Our revenue for the three and six months ended June 30, 2011 was $0 and $0,
respectively, compared to $21,000 and $21,000 for the three and six months
ended June 30, 2010, respectively. We are completely dependent upon the
willingness of our management to fund our initial operations by way of
loans from our Chief Executive Officer.
COSTS OF GOODS SOLD
We did not incur cost of sales for the three and six months ended
June 30, 2011 and 2010.
6
GENERAL AND ADMINISTRATIVE EXPENSES
Our general and administrative expense for the three and six months ended
June 30, 2011 were $15,941 and $45,207, respectively, compared to $110,000
and $110,000 for the three and six months ended June 30, 2010, respectively.
The expenses can be primarily attributed to our need to pay for professional
fees and our transfer agent. In addition, we incurred bad debt expense of
$21,000 for the six month period ended June 30, 2011.
NET INCOME/LOSS
Our net loss for the three and six months ended June 30, 2011 were $(15,941)
and $(66,207), respectively, compared to net income of $161,250 and $161,250
for the three and six months ended June 30, 2010, respectively. Our losses
during the periods ended June 30, 2011 is due to costs associated with
professional fees and our transfer agent as described above. Our net income
during the periods ended June 30, 2010 was due to a gain on settlement of
account receivable of $336,000.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
As of June 30, 2011, we had total current assets of $4,209 and total current
liabilities of $32,303, resulting in a working capital deficit of $(28,094).
At the end of the quarterly period ending June 30, 2011, we had cash of $4,209
. Our cash flows from operating activities for the six months ended
June 30, 2011 resulted in cash used of $40,254. Our current cash balance and
cash flow from operating activities will not be sufficient to fund our
operations. Our cash flow from financing activities for the six months ended
June 30, 2011 was $28,688. The Company has an accumulated deficit during
development stage at June 30, 2011 and December 31, 2010 of $(175,094) and
$(108,887), respectively. These conditions led to our auditor reporting
substantial doubt about our ability to continue as a going concern.
Over the next 12 months we expect to expend approximately $25,000 in cash for
legal, accounting and related services. Cash used for other expenditures is
expected to be minimal. We hope to be able to compensate our independent
contractors with stock-based compensation, which will not require us to use
our cash, although there can be no assurances that we will be successful in
these efforts.
We expect to be able to secure capital through advances from our
Chief Executive Officer in order to pay expenses such as organizational costs,
filing fees, accounting fees and legal fees. We believe it will be difficult
to secure capital in the future because we have no assets to secure debt and
there is currently no trading market for our securities. We will need
additional capital in the next twelve months and if we cannot raise such
capital on acceptable terms, we may have to curtail our operations or terminate
our business entirely.
7
The inability to obtain financing or generate sufficient cash from operations
could require us to reduce or eliminate expenditures for developing products
and services, or otherwise curtail or discontinue our operations, which could
have a material adverse effect on our business, financial condition and
results of operations. Furthermore, to the extent that we raise additional
capital through the sale of equity or convertible debt securities, the
issuance of such securities may result in dilution to existing stockholders.
If we raise additional funds through the issuance of debt securities, these
securities may have rights, preferences and privileges senior to holders of
our common stock and the terms of such debt could impose restrictions on our
operations. Regardless of whether our cash assets prove to be inadequate to
meet our operational needs, we may seek to compensate providers of services
by issuing stock in lieu of cash, which may also result in dilution to
existing stockholders.
OPERATING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS
We are currently funding our initial operations by way of issuing 20,000,000
shares of our common stock valued at $0.0001 per share to our Chief
Executive Officer. We hope to be able to compensate our independent
contractors with stock-based compensation, which will not require us to use
our cash, although there can be no assurances that we will be successful in
these efforts. Our Chief Executive Officer has committed to
advancing us an additional $25,000 for certain operating costs in order to
start implementing our business plan. The funds are loaned to the Company as
required to pay amounts owed by the Company. As such, our operating capital
is currently limited to the personal resources of our Chief Executive Officer.
The loans from our Chief Executive Officer are unsecured and non-interest
bearing and have no set terms of repayment. We anticipate receiving additional
capital once we are able to have our securities quoted on a public exchange,
there is no guarantee our stock will establish a market on a public exchange.
OFF-BALANCE SHEET TRANSACTIONS
We currently have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future material effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act
and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure
reporting obligations and therefore are not required to provide the information
requested by this Item.
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ITEM 4T. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Our management evaluated, with the participation of our Chief Executive Officer
and our Chief Financial Officer, the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended, as of the end of the period
covered by this quarterly report on Form 10-Q. Based on this evaluation,
our Chief Executive Officer and our Chief Financial Officer have concluded
that our disclosure controls and procedures are effective to ensure that
information we are required to disclose in reports that we file or submit
under the Securities Exchange Act of 1934 (i) is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms, and (ii) is accumulated and communicated
to our management, including our Chief Executive Officer and our Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure. Our disclosure controls and procedures are designed to provide
reasonable assurance that such information is accumulated and communicated
to our management. Our disclosure controls and procedures include components
of our internal control over financial reporting. Management's assessment of
the effectiveness of our internal control over financial reporting is
expressed at the level of reasonable assurance that the control system, no
matter how well designed and operated, can provide only reasonable, but not
absolute, assurance that the control system's objectives will be met.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting that
occurred during the quarter ended June 30, 2011 that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We may be involved from time to time in ordinary litigation, negotiation and
settlement matters that will not have a material effect on our operations or
finances. We are not aware of any pending or threatened litigation against our
Company or our officers and directors in their capacity as such that could
have a material impact on our operations or finances.
ITEM 1A. RISK FACTORS
WE ARE A DEVELOPMENT STAGE ENTERPRISE THAT LACKS ANY OPERATING HISTORY OR
REVENUES AND WE MAY NEVER GENERATE REVENUES OR BECOME PROFITABLE.
We are a development stage enterprise without financial resources and an
operating history on which an investor can base its assessment of our
business plan. We expect to incur losses in the foreseeable future due
to significant costs associated with our business startup and development,
including costs associated with our on-going operations. Our operations
may never generate sufficient revenues to fund our continuing operations
and we may never generate positive cash flow from our operations. Further,
we may not attain or sustain profitability in any future period. If we do
not successfully develop our business, you may lose all or part of your
investment.
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IF WE FAIL TO SUCCESSFULLY MANAGE OUR NEW PRODUCT DEVELOPMENT OR NEW PRODUCT
MARKET EXPANSION, OR IF WE FAIL TO ANTICIPATE THE ISSUES ASSOCIATED WITH
SUCH DEVELOPMENT OR EXPANSION, OUR BUSINESS MAY SUFFER.
We have not completed development on any product. Our ability to
anticipate and manage a variety of issues associated with any new product
development or market expansion, such as:
* difficulties faced in manufacturing;
* market acceptance;
* effective management of inventory levels in line with anticipated
product demand; and
* quality problems or other defects in the early stages of product
introduction that were not anticipated in the design of those products.
Our business may suffer if we fail to successfully anticipate and manage
these issues associated with product development and market expansion and you
may lose all or part of your investment.
OUR INDEPENDENT AUDITORS HAVE EXPRESSED DOUBT ABOUT OUR ABILITY TO CONTINUE
AS A GOING CONCERN.
Currently, we do not have any material assets, nor do we have operations or
a source of revenue sufficient to cover our operational costs and allow us
to continue as a going concern. Since our inception on April 3, 2009 through
June 30, 2011, we have an accumulated deficit during the development stage of
$(175,094)and $(108,887), respectively. The Company will be dependent upon
the raising of additional capital through placement of its common stock in
order to implement our business plan. We are currently funding our initial
operations by way of loans from our Chief Executive Officer and through the
issuance of common stock in exchange for services. Accordingly, these factors
raise substantial doubt as to our ability to continue as a going concern.
CURRENT DECLINING GENERAL ECONOMIC OR BUSINESS CONDITIONS MAY HAVE A NEGATIVE
IMPACT ON OUR BUSINESS.
Our current and future business plans depend, in large part, on the overall
state of the economy. Concerns over inflation, energy costs, geopolitical
issues, the availability and cost of credit, the U.S. mortgage market and a
declining real estate market in the U.S. have contributed to increased
volatility and diminished expectations for the global economy and expectations
of slower global economic growth going forward. These factors, combined with
volatile oil prices, declining business and consumer confidence and increased
unemployment, have precipitated a global economic slowdown. If the economic
climate does not improve or continues to deteriorate, it could have a material
adverse effect on our ability to implement our business plan.
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IF WE ARE UNABLE TO OBTAIN ADDITIONAL FINANCING, WE MAY NOT BE ABLE TO FULFILL
OUR BUSINESS PLAN.
We require substantial funds to further develop and implement our business
plan. Over the next 12 months we expect to expend approximately $25,000 in cash
for legal, accounting and related services. To meet our future obligations,
from time to time, we may need to issue debt or shares of our common stock or
other equity instruments such as warrants. However, we may not be able to
obtain additional financing when needed, or if available, such financing may
not be on commercially reasonable terms. If we are unable to obtain financing
when needed, we may be forced to curtail our planned development, which would
negatively affect the value of your investment.
WE CURRENTLY DO NOT HAVE ANY CUSTOMERS AND IF WE CANNOT ATTRACT CUSTOMERS WE
WILL NOT GENERATE REVENUES AND OUR BUSINESS WILL FAIL.
As of August 5, 2011, we have had only one customer. We may not be able to
successfully attract other customers and in the event that we do attract
customers,we may not be able to maintain such customers and as a result, we
will not
generate revenues and our business will fail. If our business fails, you will
lose all or part of your investment.
OUR ORIGINAL SHAREHOLDERS HAVE CONTROL OVER OUR POLICIES AND AFFAIRS AND THEY
MAY TAKE CORPORATE ACTIONS THAT COULD NEGATIVELY IMPACT OUR BUSINESS AND
STOCK PRICE.
Our original shareholder on August 5, 2011 owned approximately 75.8% of our
voting securities.The original shareholders will control our policies and
affairs and all corporate actions requiring shareholder approval, including
the election of directors. Additionally, these holdings may delay, deter or
prevent transactions, such as mergers or tender offers, that would otherwise
benefit investors.
WE MAY ENCOUNTER DIFFICULTIES MANAGING OUR PLANNED GROWTH, WHICH WOULD
ADVERSELY AFFECT OUR BUSINESS AND COULD RESULT IN INCREASING COSTS AS WELL
AS A DECREASE IN OUR STOCK PRICE.
We intend to establish a customer base and develop new products for them.
To manage our anticipated growth, we must continue to improve our operational
and financial systems and expand, train, retain and manage our employee base
to meet new opportunities. Because of the registration of our securities, we
are subject to reporting and disclosure obligations, and we anticipate that
we will hire additional finance and administrative personnel to address these
obligations. In addition, the anticipated growth of our business will place a
significant strain on our existing managerial and financial resources. If we
cannot effectively manage our growth, our business may be harmed.
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IF WE LOSE THE RESEARCH AND DEVELOPMENT SKILLS AND MANUFACTURING CAPABILITIES
OF OUR FOUNDER, OUR ABILITY TO ATTAIN PROFITABILITY MAY BE IMPEDED AND IF WE
DO NOT ATTAIN PROFITABILITY, OUR STOCK PRICE MAY DECREASE AND YOU COULD LOSE
PART OR ALL OF YOUR INVESTMENT.
Doug Clark founded our Company. He invested the necessary start-up costs
from his personal finances and he is our Certified Engineering Technician. In
addition, Mr. Clark has relationships with key suppliers. These
relationships with suppliers afford us access to valuable resources that help
ensure product availability on time that is competitively priced. Our success
depends in large part upon Mr. Clark 's contacts in this industry. If we were
to lose the benefit of his services, our ability to obtain materials at an
affordable price would be adversely affected which would have a negative impact
on our operations. We presently have no employment agreement with Mr. Clark.
WE WILL INCUR INCREASED COSTS AND DEMANDS UPON MANAGEMENT AS A RESULT OF
COMPLYING WITH THE LAWS AND REGULATIONS AFFECTING PUBLIC COMPANIES, WHICH COULD
HARM OUR OPERATING RESULTS.
As a public company, we will incur significant additional legal, accounting and
other expenses that we did not incur as a private company, including costs
associated with public company reporting requirements. We also will incur
costs associated with corporate governance requirements, including requirements
under Section 404 and other provisions of the Sarbanes-Oxley Act, as well as
rules implemented by the Securities and Exchange Commission ("SEC"). The
expenses incurred by reporting companies for reporting and corporate governance
purposes have increased dramatically in recent years. We expect these rules
and regulations to substantially increase our legal and financial compliance
costs and to make some activities more time-consuming and costly. We are unable
to currently estimate these costs with any degree of certainty. We also expect
these new rules and regulations may make it more difficult and more expensive
for us to obtain director and officer liability insurance, and we may be
required to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage previously available. As a
result, it may be more difficult for us to attract and retain qualified
individuals to serve on our board of directors or as our executive officers.
Currently we do not have a system of checks and balances in place covering our
financial operations and investors will bear the economic risk associated with
the lack of such oversight.
BECAUSE WE DO NOT HAVE AN AUDIT COMMITTEE, SHAREHOLDERS WILL HAVE TO RELY ON
THE DIRECTORS, WHO ARE NOT INDEPENDENT, TO PERFORM THESE FUNCTIONS.
We do not have an audit or compensation committee comprised of independent
directors. These functions are performed by the board of directors as a whole.
The members of the Board of Directors are not independent directors. Thus,
there is a potential conflict in that the board members are also engaged in
management and participate in decisions concerning management compensation and
audit issues that may affect management performance.
TO DATE WE HAVE GENERATED $21,000 OF REVENUES FROM OPERATIONS SINCE INCEPTION
AND WE MAY HAVE ADDITIONAL CAPITAL REQUIREMENTS TO CONTINUE OUR OPERATIONS BUT
THEY MIGHT NOT BE AVAILABLE TO US ON FAVORABLE TERMS OR AT ALL, AND IF
UNAVAILABLE OUR ABILITY TO RUN OUR BUSINESS WILL BE IMPAIRED.
We have limited working capital. As a result, it may be impossible to expand
our operations. If we are unable to generate sufficient revenues to cover
operating expenses or raise additional funds after the twelve months or during
the twelve months should we determine to undertake additional projects, outside
of our current business plan, we will be unlikely to expand our business
operations.
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RISKS RELATED TO OUR STOCK
OUR COMMON STOCK MAY BE
DIFFICULT OR IMPOSSIBLE TO SELL YOUR SHARES FOR THE FORESEEABLE FUTURE.
Our shares are listed on the Over-the-Counter Bulletin Board,
trading symbol IPRU.
"PENNY STOCK" RULES MAY MAKE BUYING OR SELLING OUR SECURITIES DIFFICULT WHICH
MAY MAKE OUR STOCK LESS LIQUID AND MAKE IT HARDER FOR INVESTORS TO BUY AND
SELL OUR SHARES.
Trading in our securities is subject to the SEC's "penny stock" rules and it
is anticipated that trading in our securities will continue to be subject to
the penny stock rules for the foreseeable future. The SEC has adopted
regulations that generally define a penny stock to be any equity security
that has a market price of less than $5.00 per share, subject to certain
exceptions. These rules require that any broker-dealer who recommends our
securities to persons other than prior customers and accredited investors
must, prior to the sale, make a special written suitability determination for
the purchaser and receive the purchaser's written agreement to execute the
transaction. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated with
trading in the penny stock market. In addition, broker-dealers must disclose
commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities they offer. The additional burdens
imposed upon broker-dealers by these requirements may discourage broker-dealers
from recommending transactions in our securities, which could severely limit
the liquidity of our securities and consequently adversely affect the market
price for our securities.
OUR STOCK PRICE MAY BE VOLATILE, AND YOU MAY NOT BE ABLE TO RESELL SHARES OF
OUR COMMON STOCK AT OR ABOVE THE PRICE YOU PAID.
We cannot predict the extent to which a trading market will remain or how
liquid that market might become. The selling stockholders will sell their
shares at such prices and such times as they determine. It is possible that
they may not sell their shares at all. The selling stockholders will sell at
prevailing market prices or privately negotiated prices. The trading price
of our common stock is therefore likely to be highly volatile and could be
subject to wide fluctuations in price in response to various factors, some of
which are beyond our control. These factors include:
- Quarterly variations in our results of operations or those of our
competitors.
- Announcements by us or our competitors of acquisitions, new products,
significant contracts, commercial relationships or capital
commitments.
- The emergence of new sales channels in which we are unable to
compete effectively.
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- Our ability to develop and market new and enhanced products on a
timely basis.
- Commencement of, or our involvement in, litigation.
- Any major change in our board or management.
- General economic conditions and slow or negative growth of related
markets.
In addition, the stock market in general has experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the
operating performance of individual companies. These broad market and industry
factors may seriously harm the market price of our common stock, regardless
of our actual operating performance. In addition, in the past, following
periods of volatility in the overall market and the market price of a company's
securities, securities class action litigation has often been instituted
against these companies. This litigation, if instituted against us, could
result in substantial costs and a diversion of our management's attention
and resources.
WE MAY ISSUE ADDITIONAL SHARES OF COMMON STOCK WHICH WOULD REDUCE INVESTORS'
PERCENTAGE OF OWNERSHIP, DECREASE THE VALUE OF INVESTORS' INVESTMENT AND MAY
DILUTE OUR SHARE VALUE.
Our Certificate of Incorporation authorizes the issuance of 500,000,000 shares
of common stock and 1,000,000 shares of preferred stock. In the past, we
have been able to pay for some of the services we require through the issuance
of our common stock. We may continue to compensate our consultants and other
staff with common stock in order to preserve our cash for other uses. The
future issuance of authorized common stock may result in substantial dilution
in the percentage of our common stock held by our then existing stockholders.
The issuance of common stock for future services or acquisitions or other
corporate actions may have the effect of diluting the value of the common
stock held by our investors, may decrease the value of our investors'
investment and might have an adverse effect on any trading market for our
common stock, if one ever exists.
WE DO NOT PLAN TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE, AND, AS A RESULT,
STOCKHOLDERS WILL NEED TO SELL SHARES TO REALIZE A RETURN ON THEIR INVESTMENT.
We have not declared or paid any cash dividends on our capital stock since
inception. We intend to retain any future earnings to finance the operation
and expansion of our business and do not anticipate paying any cash
dividends in the foreseeable future. As a result, stockholders will need to
sell shares of common stock in order to realize a return on their investment,
if any.
YOU MAY NOT BE ABLE TO SELL YOUR SHARES IN OUR COMPANY
Our securities are subject to the penny stock rules, which apply
generally to equity securities with a price of less than $5.00 per share,
other than securities registered on certain national exchanges or quoted on
the NASDAQ system. The penny stock rules reduce the level of trading activity
and the secondary market for a security that becomes subject to the penny
stock rules. Therefore, investors may find it more difficult
to sell their Shares.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On April 15, 2011, the Company repaid $30,000 of advances due to related party
by exchanging 30,000,000 shares of common stock with the Company's Chief
Executive Officer and majority shareholder.
On April 18, 2011, the Company issued a total of 5,000,000 shares of common
stock valued at $5,000 as compensation to a director and the Chief Financial
Officer.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
During the quarter ended June 30, 2011, we did not have any defaults upon
senior securities.
ITEM 4. Reserved
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
3.1 Certificate of Incorporation, dated April 3, 2009 (included as
Exhibit 3.1 to the Form S-1 filed June 22, 2010, and incorporated
herein by reference).
3.2 Bylaws, dated April 3, 2009 (included as Exhibit 3.2 to the Form S-1
filed June 22, 2010, and incorporated herein by reference).
4.1 Specimen Stock Certificate (included as Exhibit 4.1 to the Form S-1
filed June 22, 2010, and incorporated herein by reference).
10.1 Innovative Product Opportunities Inc. Trust Agreement (included as
Exhibit 10.1 to the Form S-1 filed June 22, 2010, and incorporated
herein by reference).
31.1 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350,as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 Interactive Data Files for the Innovative Product Opportunities Inc.
Form 10Q for the period ended June 30, 2011
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.
INNOVATIVE PRODUCTS OPPORTUNITIES INC.
Dated: August 5, 2011 By:/s/ Doug Clark
----------------------------
Doug Clark,
Principal Executive Officer,
President and Chairman of the Board
Dated: August 5, 2011 By:/s/ Robert McLean
----------------------------
Robert McLean,
Principal Accounting Officer
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