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EX-23.1 - EXHIBIT 23.1 - Innovative Wireless Technologies, Inc.v309295_ex23-1.htm

 

 

 U.S. SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

Form 10-K

 

(Mark One)

 

ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2011

 

£ TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

  Commission File Number 000-53421  

INNOVATIVE WIRELESS TECHNOLOGIES, INC.

 

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   90-0535563
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

3655 Nobel Drive, Suite 520
San Diego, California 92122

 

 

(Address of principal executive offices)

 

Telephone: (858) 735-8865

 

 

(Registrant’s telephone number, including area code)

 

 

Securities registered under Section 12(b) of the Exchange Act:

 

None.

 

Securities registered under Section 12(g) of the Exchange Act:

 

Common Stock, $0.0001 par value per share

 

 

(Title of Class)

 

Check whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes £   No S

 

Check whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. £

 

Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 S   No £

 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) contained herein, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. S

 

Check whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

  Large Accelerated Filer £ Accelerated Filer £
         
  Non-accelerated Filer £ Smaller Reporting Company S

 

   (Do not check if a smaller reporting company.)

 

Check whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x   No o

 

The aggregate market value of the common stock held by non-affiliates of the issuer was $0.00 on December 31, 2011. Not applicable because no market have been established for the registrant’s common stock.

 

 
 

 

APPLICABLE ONLY TO CORPORATE REGISTRANTS

 

As of March 30, 2012, there were 36,870,388 shares of common stock, par value $.0001, outstanding.

 

FORWARD-LOOKING STATEMENTS

 

Certain statements made in this Annual Report on Form 10-K are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Innovative Wireless Technologies, Inc. (the “Company”) 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 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 Company or any other person that the objectives and plans of the Company will be achieved.

 

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PART I

 

Item 1.   Description of Business.

 

(a)   Business Development

 

Innovative Wireless Technologies, Inc. (the “Company” or the “Registrant”) was incorporated in the State of Delaware on July 24, 2008 as Bayrock Ventures, Inc. The name of the Company was changed to Innovative Wireless Technologies, Inc. on February 24, 2010. Since inception, we have been engaged in organizational efforts and obtaining initial financing. We were formed as a vehicle to pursue a business combination and have made no efforts to identify a possible business combination. As a result, we have not conducted negotiations or entered into a letter of intent concerning any target business. Our business purpose is to seek the acquisition of or merger with, an existing company.

 

(b)   Business of Issuer

 

Based on proposed business activities, we are a “blank check” company. The SEC defines those companies as “any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Exchange Act, and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies.” Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.

 

We were organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. 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. We 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 analysis of new business opportunities has and will be undertaken by or under the supervision of Pavel Alpatov, the sole shareholder of the Registrant. The Registrant has considered potential acquisition transactions with several companies, but as of this date has not entered into any Letter of Intent or other agreement with any party. The Registrant has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In its efforts to analyze potential acquisition targets, the Registrant will consider the following kinds of factors:

 

      (a) Potential for growth, indicated by new technology, anticipated market expansion or new products;

 

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      (b) Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;

 

      (c) Strength and diversity of management, either in place or scheduled for recruitment;

 

      (d) Capital requirements and anticipated availability of required funds, to be provided by the Registrant or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;

 

      (e) The cost of participation by the Registrant as compared to the perceived tangible and intangible values and potentials;

 

      (f) The extent to which the business opportunity can be advanced;

 

      (g) The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and

 

      (h) Other relevant factors.

 

In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Registrant’s limited capital available for investigation, the Registrant may not discover or adequately evaluate adverse facts about the opportunity to be acquired.

 

Form of Acquisition

 

The manner in which the Registrant participates in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of the Registrant and the promoters of the opportunity, and the relative negotiating strength of the Registrant and such promoters.

 

It is likely that the Registrant will acquire its participation in a business opportunity through the issuance of common stock or other securities of the Registrant. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called “tax free” reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were structured to take advantage of these provisions rather than other “tax free” provisions provided under the Code, all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares of the surviving entity. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution to the equity of those who were stockholders of the Registrant prior to such reorganization.

 

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The present stockholder of the Registrant will likely not have control of a majority of the voting shares of the Registrant following a reorganization transaction. As part of such a transaction, the Registrant’s sole director may resign and new directors may be appointed without any vote by stockholders.

 

In the case of an acquisition, the transaction may be accomplished upon the sole determination of our sole stockholder. In the case of a statutory merger or consolidation directly involving us, it will likely be necessary for our sole stockholder to approve such transaction.

 

It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Registrant of the related costs incurred.

 

We presently have no employees. Our sole officer and director is engaged in outside business activities and anticipates that he will devote to our business only several hours per week until the acquisition of a successful business opportunity has been consummated. We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination.

 

Item 1A. Risk Factors.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 1B.  Unresolved Staff Comments.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 2.   Description of Property.

 

We rent 858 square feet at 3655 Nobel Drive, Suite 520, San Diego, CA 92122. The term of the Office Lease is one year, and the base rent is $2,016.30 per month.

 

Item 3.   Legal Proceedings.

 

There are not presently any material pending legal proceedings to which the Registrant is a party or as to which any of its property is subject, and no such proceedings are known to the Registrant to be threatened or contemplated against it.

 

Item 4.   Submission of Matters to Vote of Security Holders.

 

For the fiscal year ended December 31, 2011 there have been no matters submitted to the vote of the security holders.

 

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PART II

 

Item 5.   Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities.

 

Common Stock

 

Our Certificate of Incorporation authorizes the issuance of up to 250,000,000 shares of common stock, par value $.0001 per share (the “Common Stock”). The Common Stock is not listed on a publicly-traded market. As of March 30, 2012, there were two holders of record of the Common Stock.

 

Preferred Stock

 

Our Certificate of Incorporation authorizes the issuance of up to 20,000,000 shares of preferred stock, par value $.0001 per share (the “Preferred Stock”). The Company has not yet issued any of its preferred stock.

 

Dividends

 

We have not paid any dividends on our common stock to date and do not intend to pay dividends prior to the completion of a business combination. The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our then board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The Company does not have any equity compensation plans or any individual compensation arrangements with respect to its common stock or preferred stock. The issuance of any of our common or preferred stock is within the discretion of our Board of Directors, which has the power to issue any or all of our authorized but unissued shares without stockholder approval.

 

Recent Sales of Unregistered Securities

 

The Company’s Board of Directors has the power to issue any or all of the authorized but unissued Common Stock without stockholder approval. The Company currently has no commitments to issue any shares of common stock. However, the Company will, in all likelihood, issue a substantial number of additional shares in connection with a business combination. Since the Company expects to issue additional shares of common stock in connection with a business combination, existing stockholders of the Company may experience substantial dilution in their shares. However, it is impossible to predict whether a business combination will ultimately result in dilution to existing shareholders. If the target has a relatively weak balance sheet, a business combination may result in significant dilution. If a target has a relatively strong balance sheet, there may be little or no dilution.

 

Issuer Purchases of Equity Securities

 

None.

 

Item 6.  Selected Financial Data

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operation.

 

We were organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. 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. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

 

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We do not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with amounts to be loaned to or invested in us by our stockholders, management or other investors.

 

      During the next twelve months we anticipate incurring costs related to:

 

      (i) filing of Exchange Act reports, and

 

      (ii) costs relating to consummating an acquisition.

 

We believe we will be able to meet these costs through amounts, as necessary, to be loaned to or invested in us by our majority stockholder or other investors.

 

We may consider 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.

 

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.

 

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We anticipate 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 even the limited additional capital which we will have and/or 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.

 

We do not currently intend to retain any entity to act as a “finder” to identify and analyze the merits of potential target businesses.

 

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 7A.  Quantitative and Qualitative Disclosures about Market Risk.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 8.   Financial Statements and Supplementary Data.

 

Please see the financial statements beginning on page F-1 located elsewhere in this annual report on Form 10-K and incorporated herein by reference.

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

There are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure.

 

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Item 9A(T). Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of the Company’s management, including the Company’s President, Principal Financial Officer and Secretary, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Annual Report. Because the Company has no officers or employees other than Pavel Alpatov, the Company has been unable to establish disclosure controls and procedures. As a result the Company’s sole officer has concluded that the Company’s disclosure controls and procedures were not effective in providing reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms.

 

Evaluation of Internal Control over Financial Reporting

 

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. An internal control system is intended to be a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because the Company has no officers or employees other than Pavel Alpatov, the Company has been unable to establish internal control over financial reporting.

 

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 assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on our assessment, we concluded that, as of December 31, 2011, the Company’s internal control over financial reporting was not effective, based on those criteria.

  

Changes in Internal Controls over Financial Reporting

 

There have been no significant changes to the Company’s internal controls over financial reporting that occurred during our last fiscal quarter of the year ended December 31, 2011, that materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.

 

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Item 9B. Other Information.

 

None.

 

PART III

 

Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.

 

(a) Identification of Directors and Officers.

 

A. Identification of Directors and Officers. The current officers and directors will serve for one year or until their respective successors are elected and qualified. They are:

 

Name   Age   Position(s)
         
Pavel Alpatov   31   Chairman of the Board of Directors, Chief Executive Officer, President, Secretary and Treasurer

 

Pavel Alpatov  is the Chairman of the Board of Directors, Chief Executive Officer, President, Secretary and Treasurer of the Company. Mr. Alpatov has served as an officer and Director of the Company since October 16, 2009. His business experience is as follows:

 

Pavel Alpatov, age 31, has been the President, Chief Financial Officer, Secretary and Director of Innovative Wireless Technologies, Inc., a Delaware corporation, since he acquired all of the outstanding common stock on October 16, 2009. Mr. Alpatov received his BBA in 2001 and MBA in 2003 at the Academy of national economy under the government of the Russian Federation. From 2003-2006, Mr. Alpatov worked for Sistema group developing security products and wireless technologies. From 2006-2008, Mr. Alpatov worked for Horus Capital in reconstruction and development. Mr. Alpatov received his degree in economics in 2008, and he is currently teaching business planning and innovative management.

 

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B. Significant Employees.

 

As of the date hereof, the Company has no significant employees.

 

C. Family Relationships.

 

There are no family relationships among directors, executive officers, or persons nominated or chosen by the issuer to become directors or executive officers.

 

D. Involvement in Certain Legal Proceedings.

 

There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of Registrant during the past five years.

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Exchange Act requires the Company’s directors and officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of beneficial ownership and changes in beneficial ownership of the Company’s securities with the SEC on Forms 3, 4 and 5. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

 

Based solely on the Company’s review of the copies of the forms received by it during the fiscal year ended December 31, 2011 and written representations that no other reports were required, the Company believes that believes that no person who, at any time during such fiscal year, was a director, officer or beneficial owner of more than 10% of the Company’s common stock failed to comply with all Section 16(a) filing requirements during such fiscal years.

 

Code of Ethics

 

We have not adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions in that our sole officer and director serve in these capacities.

 

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Nominating Committee

 

We have not adopted any procedures by which security holders may recommend nominees to our Board of Directors.

 

Audit Committee

 

The Board of Directors acts as the audit committee. The Company does not have a qualified financial expert at this time because it has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate financial resources at this time to hire such an expert. The Company intends to continue to search for a qualified individual for hire.

 

Item 11.   Executive Compensation.

 

Our officer and director does not receive any compensation for services rendered to the Company since inception, has not received such compensation in the past, and is not accruing any compensation pursuant to any agreement with the Company. No remuneration of any nature has been paid for or on account of services rendered by a director in such capacity. Our officers and directors intend to devote no more than a few hours a week to our affairs.

 

Our officers and directors will not receive any finder’s fee, either directly or indirectly, as a result of any efforts to implement our business plan outlined herein.

 

It is possible that, after we successfully consummates a business combination with an unaffiliated entity, that entity may desire to employ or retain one or a number of members of our management for the purposes of providing services to the surviving entity. However, we have adopted a policy whereby the offer of any post-transaction employment to members of management will not be a consideration in our decision whether to undertake any proposed transaction.

 

No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted for the benefit of its employees.

 

There are no understandings or agreements regarding compensation our management will receive after a business combination that is required to be included in this table, or otherwise.

 

Director Compensation

 

We do not currently pay any cash fees to our directors, nor do we pay directors’ expenses in attending board meetings.

 

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Employment Agreements

 

The Company is not a party to any employment agreements.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

(a) Security ownership of certain beneficial owners.

 

The following table sets forth, as of March 30, 2012, the number of shares of Common Stock owned of record and beneficially by executive officers, directors and persons who hold 5% or more of the outstanding Common Stock of the Company. Also included are the shares held by all executive officers and directors as a group.

 

Name and Address  Amount and Nature of
Beneficial Ownership
   Percentage of Class 
Pavel Alpatov
306 N West El Norte Pkwy
Escondido, CA 92026
   31,340,000    85%
           
MechTech, LLC
P.O. Box 7103
Rancho Santa Fe, CA 92067
   5,530,388    15%
           
All Officers and Directors as a group   31,340,000    85%

 

Item 13. Certain Relationships and Related Transactions.

 

Except as otherwise indicated herein, there have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.

 

Item 14.  Principal Accounting Fees and Services.

 

Stan J.H. Lee, CPA (“SJHL”) is the Company’s independent registered public accounting firm.

 

Audit Fees

 

The firm of SJHL acts as our principal accountant. SJHL billed the Company $7,700 during the period from January 1, 2011 to December 31, 2011 for its audit of our financial statements which were included in our Form 10-K for the year ended December 31, 2011 and $4,300 for the period from January 1, 2010 to December 31, 2010.

 

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Audit-Related Fees

 

There were no fees billed by SJHL for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements for the fiscal year ended December 31, 2011.

 

Tax Fees

 

There were no fees billed by SJHL for professional services for tax compliance, tax advice, and tax planning for the fiscal year ended December 31, 2011.

 

All Other Fees

 

There were no fees billed by SJHL for other products and services for the fiscal year ended December 31, 2011.

 

Audit Committee’s Pre-Approval Process

 

The Board of Directors acts as the audit committee of the Company, and accordingly, all services are approved by all the members of the Board of Directors.

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

(a) Exhibits:

 

Exhibit No.   Description
     
3.1   Certificate of Incorporation was filed as Exhibit 3.1 to Form 10-12G as filed with the U.S. Securities and Exchange Commission on September 18, 2008 and incorporated herein by this reference.
     
3.2   By-laws were filed as Exhibit 3.2 to Form 10-12G as filed with the U.S. Securities and Exchange Commission on September 18, 2008 and incorporated herein by this reference.
     
3.3   Certificate of Amendment dated February 24, 2010, changing name of the Company to Innovative Wireless Technologies, Inc. was filed as Exhibit 3.3 to Form 10-K as filed with the U.S. Securities and Exchange Commission on March 29, 2010 and incorporated herein by this reference.
     
10.1*   Loan Agreement dated as of October 7, 2011, between Pavel Alpatov, as Lender, and Innovative Wireless Technologies, Inc., as Borrower.
     
10.2   Loan Agreement dated July 8, 2011, between Pavel Alpatov, as Lender, and Innovative Wireless Technologies, as Borrower was filed as Exhibit 10.1 to Form 10-Q as filed with the U.S. Securities and Exchange Commission on November 21, 2011 and incorporated herein by this reference.
     
10.3   Loan Agreement dated July 8, 2011, between Pavel Alpatov, as Lender, and Innovative Wireless Technologies, as Borrower was filed as Exhibit 10.1 to Form 8-K as filed with the U.S. Securities and Exchange Commission on May 4, 2011 and incorporated herein by this reference.
     
10.4   Amendment to Exclusive Distribution and Marketing Agreement dated February 28, 2011, between Innovative Wireless Technologies, Inc. and MechTech, LLC was filed as Exhibit 10.1 to Form 8-K as filed with the U.S. Securities and Exchange Commission on March 8, 2011 and incorporated herein by this reference.
     
23.1*   Consent of Stan J.H. Lee, CPA.
     
31.1*   Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2011.
     
31.2*   Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2011.
     
32.1*   Certification of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
     
32.2*   Certification of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
     
*   Filed herewith.

 

14
 

 

(b) The following documents are filed as part of the report:

 

1. Financial Statements: Balance Sheet, Statement of Operations, Statement of Stockholder’s Equity, Statement of Cash Flows, and Notes to Financial Statements.

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  INNOVATIVE WIRELESS TECHNOLOGIES, INC.
     
Dated: April 16, 2012 By:  /s/ Pavel Alpatov
    Pavel Alpatov
    President and Director
    Principal Executive Officer
    Principal Financial Officer

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

    Title   Date  
/s/ Pavel Alpatov   President, Secretary, Chief   April 16, 2012  
Pavel Alpatov   Financial Officer and Sole Director      

 

15
 

  

INNOVATIVE WIRELESS TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

DECEMBER 31, 2011

 

INDEX TO FINANCIAL STATEMENTS

 

  PAGE
   
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F2
   
BALANCE SHEETS F3
   
 STATEMENTS OF OPERATIONS   F4
   
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) F5
   
STATEMENTS OF CASH FLOWS F6
   
NOTES TO FINANCIAL STATEMENTS F7

 

F-1
 

 

Stan J.H. Lee, CPA

2160 North Central Rd. Suite 209 *Fort Lee * NJ 07024-7547

P.O. Box 436402 * San Diego * CA 92143-6402

619-623-7799 * Fax 619-564-3408 * E-mail) stan2u@gmail.com

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Management and Shareholders of

Innovative Wireless Technologies, Inc.;

 

We have audited the accompanying balance sheet of Innovative Wireless Technologies, Inc. (the “Company”) as of December 31, 2011 and 2010 and the related statements of operations, stockholders’ deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Innovative Wireless Technologies, Inc. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the note to the financial statements, the Company has not established any source of revenue to cover its operating costs and losses from operations raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Stan J.H. Lee, CPA  
Stan J.H. Lee, CPA  
March 27, 2012  
Fort Lee, NJ 07024  

 

F-2
 

 

Innovative Wireless Technologies, Inc.

(a Development stage Company)

Balance Sheets

 

   As of 
   Dec 31,   Dec 31, 
   2011   2010 
Assets:          
           
Current Assets:          
Cash  $5,585   $32,554 
Inventory   241,541    - 
Prepaid rent   18,306    - 
           
Total current Assets   265,432    32,554 
           
Patents   553    553 
Property, equipment and leasehold improvement, net of accumulated depreciation of $ 520   7,621    0 
           
Total Assets  $273,606   $33,107 
           
Liabilities and Shareholders' Equity:          
           
Current Liabilities:          
           
Accrued interest  $21,001   $4,930 
Accrued expense        34,750 
Accrued Payroll liabilities   2,058      
Due to related parties   2,745    - 
           
Total Current Liabilties   25,804    39,680 
           
Borrowing from others   749,896    149,970 
           
Total Liabilities   775,700    189,650 
           
Shareholders' Equity;          
Prefered stock, $ .0001 par value, 20,000,000 shares authorized, none issued and outstanding   -      
Common Stock, $0.0001 par value, 250,000,000 shares authorized 36,870,388 issued and outstanding as of December 31, 2011 and 2010, respectively   3,687    3,687 
Paid-in capital   12,234    12,234 
Deficit during Development Stage   (518,015)   (172,464)
           
    (502,094)   (156,543)
           
Total Liabilities and Shareholders' Equity  $273,606   $33,107 

 

See Notes to Financial Statements

 

F-3
 

 

Innovative Wireless Technologies, Inc.

(a Development stage Company)

Statement of Operations

 

           Cumulative since 
   For the   For the   July 24, 2008 
   year ended   year ended   (Inception) 
   12/31/2011   12/31/2010   12/31/2011 
             
Revenue  $-   $-   $- 
                
Operating Expenses:               
                
Legal, audit and other general & administrative   314,403    164,400    481,937 
Payroll expenses   15,123         15,123 
                
    329,526    164,400    497,060 
                
Total Expenses:   329,526    164,400    497,060 
                
Other income (loss)             - 
                
Interest expense   16,026         20,956 
                
Total other income (loss)   2,465    16,026    20,956 
                
Income ( Loss) before income taxes   (345,552)   (164,400)   (518,016)
                
Provision for income taxes   -         - 
                
Net loss   (345,552)  $(164,400)   (518,016)
                
Loss per share   (0.009)   (0.005)     
                
Weighted average common shares (basic and diluted)   36,870,388    33,552,155      

 

See Notes to Financial Statements

 

F-4
 

 

 

Innovative Wireless Technologies, Inc.

(a Development Stage Company)

Statement of Shareholders' Equity

 

   Number of
Common
Shares
   Amount   Additional
Paid-In
Capital
   Deficit
Accumulated
during
development
stage
   Total 
                     
Pre-Inception Balance   -   $-   $-   $-   $- 
                          
Common Stock Issued for services to founder on 07/24/2008   31,340,000    3,134    -    -    3,134 
                        - 
Net Loss for the Period                  (3,134)   (3,134)
                          
Balance as of 12/31/2008   31,340,000    3,134    -    (3,134)   - 
                          
Net Loss for the Period   -    -    -    #REF!    #REF! 
                          
Balance as of 12/31/2009   31,340,000    3,134    -    (3,134)   - 
                          
Common Stock issued for assets purchase, 08/06/2010   5,530,388    553    12,234    -    12,787 
Net Loss for the Period   -    -    -    (169,330)   (169,330)
                          
Balance as of 12/31/2010   36,870,388   $3,687   $12,234   $(172,464)  $(156,543)
                          
Net Loss for the Period   -    -    -    (345,552)   (345,552)
                          
Balance as of 12/31/2011   36,870,388    3,687    12,234    (518,015)   (502,094)

 

See Notes to Financial Statements

 

F-5
 

 

Innovative Wireless Technologies, Inc.

(a Development Stage Company)

Statements of Cash Flows

 

       Cumulative since 
     July 24, 2008  
  For the
 year ended
   (Inception)
to December 31,
 
    12/31/11   12/31/10   2011 
             
Cash Flows From Operating Activities               
                
Net loss  $(345,552)  $(164,400)  $(518,016)
                
Adjustments to reconcile net income (loss) to net cash (used in) operations               
                
Depreciation   520         520 
Common stock issued for service   -    -    3,134 
Stock issued for purchase of assets        12,787    12,787 
Changes in inventory   (241,541)        (241,541)
 Increase (decrease) in current liabilities   (16,621)   34,750    (3,387)
                
Net Cash provided by (used in) operations   (603,194)   (116,863)   (746,503)
                
    -    -    - 
                
Cash Flows From Investing Activities               
                
Prepaid Rent   (18,306)          
Expenditure for property, equipment and leasehold improvements   (8,141)   -      
Acquisition of patent        (553)   (553)
                
Net cash provided by investing activities   (26,447)   (553)   (553)
                
Cash Flows From Financing Activities               
                
Issuance of capital stock               
Due to a related party   2,746         2,745 
Borrowing From Other   599,926    149,970    749,896 
                
Net cash provided by financing activities   602,672    149,970    752,641 
                
Net increase (decrease)   (26,969)   32,554    5,585 
Cash at the Beginning of the Period:   32,554    -    - 
Cash at the End of the Period  $5,585   $32,554   $5,585 
    -           
Noncash transaction               
                
Common stock issued for purchase of assets  $-   $12,787   $12,787 
                
Supplemental Disclosures of Cash Flow Information               
                
Interest paid   $16,026   $    $20,956 
Income taxes paid  $-   $-   $- 

 

See Notes to Financial Statements

 

F-6
 

 

INNOVATIVE WIRELESS TECHNOLOGIES, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2011

 

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Innovative Wireless Technologies, Inc. (the "Company"), was incorporated in the State of Delaware on July 24, 2008, as Bayrock Ventures, Inc. The name of the Company was changed to Innovative Wireless Technologies, Inc. on February 24, 2010. Since inception, we have been engaged in organizational efforts and obtaining initial financing. We were formed as a vehicle to pursue a business combination and have made no efforts to identify a possible business combination. As a result, we have not conducted negotiations or entered into a letter of intent concerning any target business. Our business purpose is to seek the acquisition of or merger with and existing company.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

BASIS OF PRESENTATION - DEVELOPMENT STAGE COMPANY

 

The Company is a development stage company as defined by ASC 915-10-05, “Development Stage Entity”.  The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced.  All losses accumulated, since inception, have been considered as part of the Company’s development stage activities.

 

ACCOUNTING METHOD

 

The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending on December 31.

 

USE OF ESTIMATES

 

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. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.

 

CASH EQUIVALENTS

 

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

 

INCOME TAXES

 

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

F-7
 

 

ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.

 

BASIC EARNINGS (LOSS) PER SHARE

 

Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period.  Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of both common and preferred stock outstanding for the period. 

 

STOCK-BASED COMPENSATION

 

The Company recognizes the services received or goods acquired in a share-based payment transaction as services are received or when it obtains the goods as an increase in equity or a liability, depending on whether the instruments granted satisfy the equity or liability classification criteria [FAS-123(R), par.5].

 

A share-based payment transaction with employees is measured base on the fair value (or, in some cases, a calculated or intrinsic value) of the equity instrument issued. If the fair value of goods or services received in a share- based payment with non-employees is more reliably measurable than the fair value of the equity instrument issued, the fair value of the goods or services received shall be used to measure the transaction. Conversely, if the fair value of the equity instruments issued in a share-based payment transaction with non-employees is more reliably measurable than the fair value of the consideration received, the transaction is measured at the fair value of the equity instruments issued [FAS-123(R), par.7].

 

The cost of services received from employees in exchange for awards of share- based compensation generally is measured at the fair value of the equity instruments issued or at the fair value of the liabilities incurred. The fair value of the liabilities incurred in share-based transactions with employees is remeasured at the end of each reporting period until settlement [FAS-123(R), par.10].

 

Share-based payments awarded to an employee of the reporting entity by a related party or other holder of an economic interest in the entity as compensation for services provided to the entity are share-based transactions to be accounted for under FAS-123(R) unless the transfer is clearly for a purpose other than compensation for services to the reporting entity. The substance of such a transaction is that the economic interest holder makes a capital contribution to the reporting entity and that entity makes a share- based payment to its employee in exchange for services rendered [FAS-123(R), par.11].

 

IMPACT OF NEW ACCOUNTING STANDARDS

 

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material affect on the accompanying financial statements.

 

F-8
 

 

NOTE 3. LOANS

 

The Company has outstanding unsecured loans in the total amount of $749,985 from two related parties as of December 31, 2011

 

Creditor  Date of
Original Loan
  Maturity Date  Maximum
Principal
   Interest Rate  Balance as
of
Dec 31,
2011
 
Meridian World Trading Co. Inc.  (related party)  June 6, 2010  June 19, 2013  $100,000   10 % per annum  $50,000 
Mr.Pavel Alpatov, controlling shareholder and related party  October 8, 2010  October 7, 2020  $100,000   10 % per annum  $99,970 
Mr.Pavel Alpatov, controlling shareholder and related party  February 15, 2011  February 15, 2021  $400,000   10% per annum  $399,985 
Mr.Pavel Alpatov, controlling shareholder and related party  July 15, 2011  July 15, 2021  $100,000   10%  per annum  $99,985 
Mr.Pavel Alpatov, controlling shareholder and related party  October 7, 2011  October 7, 2021  $100,000   10 % per annum  $99,955 
Total               $749,895 

 

NOTE 4. 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 that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not established any source of revenue to cover its operating costs. The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured. The Company will offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.

 

F-9
 

 

NOTE 5. SHAREHOLDER'S EQUITY

 

On July 24, 2008, the Board of Directors issued 31,340,000 shares of common stock for $3,134 in services to the founding shareholder of the Company to fund organizational start-up costs.

 

On August 6, 2010, the Board of Directors issued 5,530,388 shares of common stock pursuant to the terms of an Asset Purchase Agreement with MechTech, LLC.

 

The stockholders' equity section of the Company contains the following classes of capital stock as of December 31, 2010 and 2009.

 

* Common stock, $ 0.0001 par value: 250,000,000 shares authorized; 36,870,388 shares issued and outstanding as of December 31, 2011 and 2010.

 

* Preferred stock, $ 0.0001 par value: 20,000,000 shares authorized; but not issued and outstanding.

 

NOTE 6. INCOME TAX

 

At December 31, 2011, deferred tax assets consist of:    
Net operating loss carry forward – net of  tax  $181,305 
Start-up costs capitalized for tax purposes   -0- 
Gross deferred tax assets   181,305 
Valuation allowance   (181,305)
Net deferred tax assets  $- 

 

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and net operating loss carry forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a full valuation allowance. The Company’s valuation allowance increased by $120,943 during 2011.

 

The difference between the statutory tax rate of 35% and the effective tax rate of 0% is due to the valuation allowance for deferred income tax assets.

 

NOTE 7- Related Party Transactions

 

The Company neither owns nor leases any real or personal property. An officer of the corporation provides office services without charge. Such costs are immaterial to the financial statements and accordingly, have not been reflected therein. The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.

 

NOTE 8. COMMITMENT AND CONTINGENCY

 

There is no commitment or contingency to disclose during the period ended December 31, 2011.

 

NOTE 9. SUBSEQUENT EVENTS

 

The Company has performed an evaluation of subsequent events in accordance with ASC Topic 855 and the Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements.

 

F-10