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 March 31, 2013
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.)
27141 Aliso Creek Road, Suite 235, Aliso Viejo, California 92656
---------------------------------------------------------
(Address of principal executive offices)
(347) 789-7131
---------------------
(Registrant's telephone number, including area code)
Not Applicable
---------------------
(Former address: 28 Argonaut, Suite 140, Aliso Viejo, California 92656)
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 [X] 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 May 15, 2013 the Issuer had 376,000,000 shares of common stock issued
and outstanding, par value $0.0001 per share.
INNOVATIVE PRODUCT OPPORTUNITIES INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2013
(A Development Stage Enterprise)
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1 - Balance Sheets (Unaudited) as of March 31, 2013
and December 31, 2012 ............................................F1
Statements of Operations (Unaudited) for the three
months ended March 31, 2013 and 2012 and from inception
(April 3, 2009) to March 31, 2013..................................F2
Statements of Cash Flows (Unaudited) for the
three months ended March 31, 2013 and 2012 and from inception
(April 3, 2009) to March 31, 2013.................................F3
Notes to Financial Statements (Unaudited).......................F4-F7
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations...............................................4
Item 3 - Quantitative and Qualitative Disclosures About Market Risk..........7
Item 4T - Controls and Procedures.............................................7
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings...................................................8
Item 1A - Risk Factors........................................................8
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds.........8
Item 3 - Defaults Upon Senior Securities.....................................8
Item 4 - Mine Safety Disclosures.............................................8
Item 5 - Other Information ..................................................9
Item 6 - Exhibits............................................................10
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Innovative Product Opportunities Inc.
(A Development Stage Enterprise)
BALANCE SHEETS
(Unaudited)
March 31, December 31
2012 2013
----------- ---------
ASSETS
Current assets
Cash $1,069 $2,268
Total current assets 1,069 2,268
----------- ---------
Total assets $1,069 $2,268
=========== =========
LIABILITIES AND STOCKHOLDERS'DEFICIT
Current liabilities
Accounts payable and accrued liabilities $7,129 $8,234
Notes payable 96,417 78,417
Due to related party 73,679 73,602
----------- ---------
Total current liabilities 177,225 160,253
----------- ---------
Total liabilities 177,225 160,253
----------- ---------
Stockholders' 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,
348,000,000 and 348,000,0000 shares
issued and outstanding as of
March 31, 2013 and
December 31, 2012, respectively 34,800 34,800
Additional paid-in capital 5,735,800 5,735,800
----------- ---------
Accumulated deficit during
development stage (5,946,756) (5,928,585)
----------- ---------
Total stockholders' deficit (176,156) (157,985)
----------- ---------
Total liabilities and stockholders' deficit $ 1,069 $ 2,268
=========== =========
The accompanying footnotes are an integral part of these financial statements
F1
Innovative Product Opportunities, Inc.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
From
For the three inception
months ended (April 3,
For the three March 31 2009)
months ended 2012 through
March 31, (Restated, March 31,
2013 - Note 1) 2013
------------ ------------ ------------
Sales $ -- $ -- $ 21,000
Cost of sales -- -- --
------------ ------------ ------------
Gross profit -- -- 21,000
------------ ------------ ------------
Operating expenses
Bad debts -- -- 21,000
General and administrative 18,171 32,300 222,156
Stock-based compensation -- -- 5,512,000
------------ ------------ ------------
Total expenses 18,171 32,300 5,755,156
------------ ------------ ------------
Net operating loss (18,171) (32,300) (5,734,156)
------------ ------------ ------------
Other income (expense)
Gain on settlement of
accounts receivable -- -- 336,000
Other-than-temporary impairment
loss on securities -- -- (124,950)
Loss on cancelation
of securities -- -- (211,050)
Loss on debt settlement (212,600)
------------ ------------ ------------
-- -- (212,600)
------------ ------------ ------------
Net loss for the period $ (18,171) $ (32,300) $(5,946,756)
============ ============ ============
Net loss per common share
- basic $ 0.00 $ 0.00
============ ============
Weighted average number of
common shares outstanding
- basic 348,000,000 118,000,000
============ ============
The accompanying footnotes are an integral part of these financial statements.
F2
Innovative Product Opportunities Inc.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
From
For the three inception
months ended (April 3,
For the three March 31 2009)
months ended 2012 through
March 31, (Restated - March 31,
2013 Note 1) 2013
----------- ----------- ------------
Cash flows from operating activities
Net loss $ (18,171) $ (32,300) $ (5,946,756)
Adjustments to reconcile
net loss to net cash used in
operating activities
Shares issued to founder -- -- 2,000
Stock issued for services -- -- 5,512,000
Loss on settlement of debt -- -- 212,600
Change in operating assets
and liabilities
Decrease/Increase in accounts
payable and accrued liabilities (1,105) 5,943 7,129
----------- ----------- ------------
Net cash used in operating
activities (19,276) (26,357) (213,027)
----------- ----------- ------------
Cash flows from financing activities
Advances from related party 1,211 599 340,104
Repayment of advances
to related party (1,134) -- (236,425)
Proceeds from notes payable 18,000 27,500 137,917
Repayment of notes payable -- -- (27,500)
Net cash provided by
financing activities 18,077 28,099 214,096
----------- ----------- ------------
Net change in cash (1,199) 1,742 1,069
Cash, beginning of the period 2,268 6,642 --
----------- ----------- ------------
Cash, end of the period $ 1,069 $ 8,384 $ 1,069
============ =========== ============
Supplemental disclosure of non-cash
investing and financing activities
Conversion of due to related
party for common stock $ -- $ -- $ 30,000
============ =========== ============
The accompanying footnotes are an integral part of these financial statements.
F3
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. The Company is currently
in the development stage as defined in Financial Accounting Standards Board
("FASB") Accounting Standard Codification ("ASC") 915.
On March 1, 2012 the company entered into a license agreement with Szar
International, Inc. (dba Cigar & Spirits Magazine) (-Cigar & Spirits-) and
moved offices to our new California address with Cigar and Spirits. The
agreement grants Innovative the right to market the products of Cigar & Spirits
including but not limited to the sales, promotion, and advertising vehicles of
the Magazine.There are no specific rent terms included in the license agreement
but verbally they have agreed to allow Innovative to use their office on an
on-going basis free of additional charge.
Since March 1, 2012, the Company has not earned revenues from rights acquired
under this license agreement.
Restatement:
The Balance sheet, statement of operations and the statement of cash flows for
the three months ended March 31, 2012 have been restated to exclude the
operations and cash flows of Cigar & Spirits. On April 11, 2013, the Company
reconsidered its original conclusion and determined that the Company is not the
primary beneficiary of Cigar & Spirits since it does not have (1) the
responsibility to absorb the losses of Cigar & Spirits (2) the ability to
direct the activities of Cigar & Spirits. As such, the original Form 10-Q filed
by the Company for the quarterly periods ended March 31, 2012, June 30, 2012
and September 30, 2012 should not be relied on.
A summary of the effect of the restatement is as follows:
As Reported Restatement As Restated
============ =========== ============
Balance sheet as of March 31, 2012
Non-controlling interest $ 22,921 $ (22,921) $ -
Statement of Income - For the
-------------------
Three Months Ended March 31, 2012
Revenue $ 11,855 $ (11,855) $ -
Cost of sales $ 3,063 $ (3,063) $ -
General and administrative expense $ 47,465 $ (15,165) $ 32,300
Net loss attributed to
non-controlling interest $ 6,373 $ (6,373) $ -
Net loss $ (32,300) $ - $ (32,300)
Net loss per share $ (0.00) $ - $ (0.00)
Statement of Cash Flows - For the
-----------------------
Three Months Ended March 31, 2012
Net cash flows used in
operating activities $ (40,182) $ 13,825 $ (26,357)
Net cash provided by
investing activities $ 696 $ (696) $ -
Net cash provided by
financing activities $ 42,051 $ (13,952) $ 28,099
Net change in cash $ 2,565 $ (823) $ 1,742
F4
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, 2012 of Innovative Product Opportunities Inc. in our Form 10-K
filed on April 15, 2013.
The interim financial statements present the balance sheets, statements of
operations 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 March 31, 2013 and the results of operations 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.
GOING CONCERN
The Company's consolidated 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 March 31, 2013 and
December 31, 2012 of $(5,946,756) and $(5,928,585), 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.
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.
F5
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.
NET LOSS PER SHARE
Basic net income (loss) per share includes no dilution and is computed by
dividing net income (loss) available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings
per share is computed by dividing earnings available to common shareholders by
the weighted average number of common shares outstanding for the period
increased to include the number of additional common shares that would have
been outstanding if potentially dilutive securities had been issued. There
were no potentially dilutive securities outstanding during the periods
presented.
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 adopted a stock option plan on August 30, 2011, but 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
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 quarter ended March 31, 2013 or which are
expected to impact future periods, that were not already adopted and disclosed
in prior periods.
NOTE 3 - NOTES PAYABLE
On January 8, 2013, the company issued a promissory note in the amount of
$6,000. This note is unsecured, bears no interest and is payable on
demand by the note holder. March 31, 2013, the noteholder was a 6% shareholder
On February 2, 2013, the company issued a promissory note in the amount of
$6,000. This note is unsecured, bears no interest and is payable on
demand by the note holder.March 31, 2013, the noteholder was a 6% shareholder
On February 22, 2013, the company issued a promissory note in the amount of
$6,000. This note is unsecured, bears no interest and is payable on
demand by the note holder. March 31, 2013, the noteholder was a 6% shareholder
F6
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.
NOTE 5 - SUBSEQUENT EVENTS
On April 30, 2013, the Company received for no consideration 12,000,000 shares
of its common stock for cancellation.The effect of the cancellation of shares
was immaterial thus no retroactive treatment was applied.
On May 8, 2013, the Company issued 40,000,000 shares of common stock valued at
$76,000 as stock-based compensation for business development and consulting
services.
F7
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 on April 15, 2013, 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 on April 15, 2013.
BUSINESS OVERVIEW
We were 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 as the Company has not generated significant revenue from its operations
and is currently seeking new business opportunities. 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.
On March 1, 2012, we entered into a License Agreement with Szar International,
Inc. (dba Cigar & Spirits Magazine) ('Cigar & Spirits'). Under the terms of
the Agreement, we have the right to market the products of Cigar & Spirits
including but not limited to the sales, promotion and advertising vehicles.
We have agreed to pay a fee of 1.5% of all sales generated plus a management
fee of 1.5% based on the total monies paid for employee salaries, benefits
and commissions. The Company is responsible for all expenses that relate to
sales generated under the License Agreement. Cigar & Spirits may at any time
in its sole discretion, with sixty days prior notice, terminate the agreement
and revoke the license granted for any reason whatsoever and upon such
termination we will immediately stop using the Cigar & Spirits trade names.
Since March 1, 2012, the Company has not earned revenues from rights acquired
under this license agreement.
4
RESULTS OF OPERATIONS
COMPARISON OF RESULTS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2013 AND
2012 AND FROM INCEPTION (APRIL 3, 2009) THROUGH MARCH 31, 2013.
REVENUES
For the three months ended March 31, 2013 and 2012 we generated $0 and $0 in
revenue, respectively. We recorded revenue of $21,000 for the cumulative
period from Inception (April 3, 2009) through March 31, 2013. We earned $21,000
of revenue from a contract for design consultation in 2010. This amount was
originally booked as Accounts Recieveable and since it was not collected in a
reasonible period, an allowance was booked in the subsequent period. We are
completely dependent upon the willingness of our management to fund our initial
operations by way of loans from our Chief Executive Officer.and shareholders
COSTS OF GOODS SOLD
We did not incur cost of sales for the three months ended March 31, 2013 and
2012 and for the cumulative period from Inception (April 3, 2009 through
March 31, 2013.
OPERATING EXPENSES
Our general and administrative expense for the three months ended
March 31, 2013 and 2012 was $18,171 and $32,300, respectively. The expenses
can be primarily attributed to our need to pay for professional fees and our
transfer agent. The decrease in general and administrative expenses in
primarily attributed to investor relations.
NET INCOME/LOSS
Our net loss for the three months ended March 31, 2013 and 2012 was $18,171
and $32,300, respectively. Our losses during the quarter ended
March 31, 2013 and 2012 are due to costs associated with professional fees
and our transfer agent.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
As of March 31, 2013, we had total current assets of $1,069 and total current
liabilities of $177,225, resulting in a working capital deficit of $176,156.
At March 31, 2013, we had cash of $1,069. Our cash flows used in operating
activities for the three months ended March 31, 2013 was $19,276. 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 three
months ended March 31, 2013 was $18,077. The Company has an accumulated deficit
during development stage at March 31, 2013 and December 31, 2012 of $5,946,756
and $5,928,585, respectively. The deficit reported at March 31, 2013 is largely
a result of operating expenses for professional fees, our transfer agent,
stock-based compensation and loss on settlement of debt.
5
Over the next 12 months we expect to expend approximately $50,000 in cash for
legal, accounting and related services and an additional $150,000 in cash to
implement our business plan. 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 and others 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.
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 operations by way of cash advances from our
Chief Executive Officer and others. 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 that we will be required to raise an
additional $200,000 in cash by issuing new debt or equity for operating costs
in order to implement our business plan in the next twelve months. 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 and others. The loans from our Chief Executive
Officer and others are unsecured and non-interest bearing and have no set
terms of repayment. Our common stock started trading over the counter and has
been quoted on the Over-The Counter Bulletin Board since February 17, 2011.
The stock currently trades under the symbol 'IPRU.OB.'
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.
6
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.
ITEM 4T. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15 of the Securities Exchange Act of 1934, our
principal executive officer and principal financial officer evaluated our
company's disclosure controls and procedures (as defined in Rules 13a-15(e) of
the Securities Exchange Act of 1934) as of the end of the period covered by
this report. Based on this evaluation, our principal executive officer and
principal financial officer concluded that as of the end of the period covered
by this report, these disclosure controls and procedures were not effective to
ensure that the information required to be disclosed by our company in reports
it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities Exchange Commission and to ensure that such
information is accumulated and communicated to our company's management,
including our principal executive officer and principal financial officer, to
allow timely decisions regarding required disclosure. The conclusion that our
disclosure controls and procedures were not effective was due to the presence
of the following material weaknesses in internal control over financial
reporting which are indicative of many small companies with small staff:
(i) inadequate segregation of duties and effective risk assessment; and
(ii) insufficient written policies and procedures for accounting and financial
reporting with respect to the requirements and application of both United
States generally accepted accounting principles and Securities and Exchange
Commission guidelines. Management anticipates that such disclosure controls and
procedures will not be effective until the material weaknesses are remediated.
We plan to take steps to enhance and improve the design of our internal
controls over financial reporting. During the period covered by this quarterly
report on Form 10-Q, we have not been able to remediate the material weaknesses
identified above. To remediate such weaknesses, we plan to implement the
following changes during our fiscal year ending December 31, 2013, subject to
obtaining additional financing: (i) appoint additional qualified personnel to
address inadequate segregation of duties and ineffective risk management; and
(ii) adopt sufficient written policies and procedures for accounting and
financial reporting. The remediation efforts set out above are largely
dependent upon our securing additional financing to cover the costs of
implementing the changes required. If we are unsuccessful in securing such
funds, remediation efforts may be adversely affected in a material manner.
Because of the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues, if any, within
our company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty and that breakdowns
can occur because of simple error or mistake.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during
the quarter ended March 31, 2013 that have materially affected or are
reasonably likely to materially affect, our internal control over financial
reporting.
7
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
A smaller reporting company is not required to provide the information
required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
During the quarter ended March 31, 2013, we did not have any defaults
upon senior securities.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
8
ITEM 5. OTHER INFORMATION.
The Balance sheet, statement of operations and the statement of cash flows for
the three months ended March 31, 2012 have been restated to exclude the
operations and cash flows of Cigar & Spirits. On April 11, 2013, the Company
reconsidered its original conclusion and determined that the Company is not the
primary beneficiary of Cigar & Spirits since it does not have (1) the
responsibility to absorb the losses of Cigar & Spirits (2) the ability to
direct the activities of Cigar & Spirits. As such, the original Form 10-Q filed
by the Company for the quarterly periods ended March 31, 2012, June 30, 2012
and September 30, 2012 should not be relied on.
A summary of the effect of the restatement is as follows:
As Reported Restatement As Restated
============ =========== ============
Balance sheet as of March 31, 2012
Non-controlling interest $ 22,921 $ (22,921) $ -
Statement of Income - For the
-------------------
Three Months Ended March 31, 2012
Revenue $ 11,855 $ (11,855) $ -
Cost of sales $ 3,063 $ (3,063) $ -
General and administrative expense $ 47,465 $ (15,165) $ 32,300
Net loss attributed to
non-controlling interest $ 6,373 $ (6,373) $ -
Net loss $ (32,300) $ - $ (32,300)
Net loss per share $ (0.00) $ - $ (0.00)
Statement of Cash Flows - For the
-----------------------
Three Months Ended March 31, 2012
Net cash flows used in
operating activities $ (40,182) $ 13,825 $ (26,357)
Net cash provided by
investing activities $ 696 $ (696) $ -
Net cash provided by
financing activities $ 42,051 $ (13,952) $ 28,099
Net change in cash $ 2,565 $ (823) $ 1,742
9
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.
10
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: May 15, 2013 By:/s/ Doug Clark
----------------------------
Doug Clark, Principal Executive Officer
President and Chairman of the Board
Dated: May 15, 2013 By:/s/ Robert McLean
----------------------------
Robert McLean, Principal Accounting Officer
11
