U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q 

 

☒    Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended June 30, 2014

 

☐    Transition Report under Section 13 or 15(d) of the Exchange Act

 

For the Transition Period from ________to __________

 

Commission File Number: 0-52905

 

INTERNATIONAL INDUSTRIAL ENTERPRISES, INC.

(Exact Name of Registrant as Specified in its Charter)

 

NEVADA		26-0091556
(State of other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

 

4116 Antique Sterling Ct.
Las Vegas, NV		89129
(Address of principal executive offices)		(Zip Code)

 

Registrant's Phone: (702) 255-4170

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
(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 ☐

 

As of July 9, 2014, the issuer had 2,500,000 shares of common stock issued and outstanding.

 

 

 

INTERNATIONAL INDUSTRIAL ENTERPRISES, INC.

FORM 10-Q

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION		PAGE
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of June 30, 2014 (Unaudited) and December 31, 2013	3
	Consolidated Statements of Operations (Unaudited) For the Three and Six Months Ended June 30, 2014 and 2013	4
	Consolidated Statement of Changes in Stockholders' Equity (Deficit) For the Six Months Ended June 30, 2014 and the Year Ended December 31, 2013	5
	Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2014 and 2013	6
	Notes to the Consolidated Financial Statements (Unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 4.	Controls and Procedures	12
PART II - OTHER INFORMATION
Item 6.	Exhibits	13
Signatures		14

 

 

Item 1. Financial Statements

 

International Industrial Enterprises, Inc.

Condensed Consolidated Balance Sheets

 

		June 30,				December 31,
		2014				2013
		(Unaudited)
ASSETS
Current Assets
Cash		$	-			$	75
Total Current Assets			-				75
Total Assets		$	-			$	75
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Bank overdraft		$	8			$	-
Related party loan (Note D)			29,373				29,373
Advance from shareholder (Note D)			43,157				33,583
Total Current Liabilities			72,538				62,956
Total Liabilities			72,538				62,956
Stockholders' Deficit (Note E)
Common stock, par value $.001, 50,000,000 shares authorized; 2,500,000 issued and outstanding at June 30, 2014 and December 31, 2013.			2,500				2,500
Additional paid-in capital			40,685				40,685
Accumulated deficit			(115,723	)			(106,066	)
Total Stockholders' Deficit			(72,538	)			(62,881	)
Total Liabilities and Stockholders' Deficit		$	-			$	75

 

See accompanying notes to financial statements

 

 

International Industrial Enterprises, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

For the Three and Six Months Ended June 30, 2014 and 2013

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2014				2013				2014				2013
Revenue
Revenue		$	-			$	-			$	-			$	-
Operating expenses
General and administrative			4,490				2,509				9,657				7,728
Total operating expenses			4,490				2,509				9,657				7,728
Loss from operations			(4,490	)			(2,509	)			(9,657	)			(7,728	)
Other income/(expense)
Interest expense			-				-				-				-
Total other income (expense)			-				-				-				-
Net loss		$	(4,490	)		$	(2,509	)		$	(9,657	)		$	(7,728	)
Basic and diluted loss per common share		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted average common shares outstanding			2,500,000				2,500,000				2,500,000				2,500,000

 

See accompanying notes to financial statements

 

 

International Industrial Enterprises, Inc.

Consolidated Statement of Changes in Stockholders' Deficit

For the Six Months Ended June 30, 2014 and the Year Ended December 31, 2013

 

		Common Stock								Additional Paid				Accumulated				Total Stockholder's
		Shares				Amount				In Capital				Deficit				Deficit
Balance, December 31, 2012			2,500,000			$	2,500			$	40,685			$	(93,319	)		$	(50,134	)
Net loss															(12,747	)			(12,747	)
Balance, December 31, 2013			2,500,000			$	2,500			$	40,685			$	(106,066	)		$	(62,881	)
Net loss															(9,657	)			(9,657	)
Balance, June 30, 2014			2,500,000			$	2,500			$	40,685			$	(115,723	)		$	(72,538	)

  

See accompanying notes to financial statements

 

 

International Industrial Enterprises, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Six Months Ended June 30, 2014 and 2013

 

		Six Months Ended
		June 30,
Cash flows from operating activities		2014				2013
Net loss		$	(9,657	)		$	(7,728	)
Adjustments to reconcile net loss to net cash used in operating activities:			-				-
Changes in operating assets and liabilities:
Accrued expense			9,574				7,744
Net cash provided by (used) in operating activities			(83	)			16
Cash flows from investing activities			-				-
Bank overdraft			8				-
Cash flows from financing activities			8				-
Net change in cash			(75	)			16
Cash at beginning of period			75				43
Cash at end of period		$	-			$	59

 

See accompanying notes to financial statements

 

 

INTERNATIONAL INDUSTRIAL ENTERPRISES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE A – BASIS OF PRESENTATION, RECENT ACCOUNTING PRONOUNCEMENTS AND ORGANIZATION

 

Basis of Presentation

The unaudited consolidated financial statements of International Industrial Enterprises, Inc. as of June 30, 2014 and for the three and six months ended June 30, 2014 and 2013 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2013 as filed with the Securities and Exchange Commission as part of our Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.

 

Recent Accounting Pronouncements

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion or will have a significant impact on its consolidated financial statements except as described below.

 

On June 10, 2014, accounting principles generally accepted in the United States were amended to remove the definition of a development stage entity thereby removing the financial reporting distinction between development stage entities and other reporting entities.  In addition, the amendments eliminate the requirements for the Company to present inception-to-date information and to label the consolidated financial statements as those of a development stage entity.  The amendments are effective for the Company’s consolidated financial statements as of December 31, 2016, and interim periods therein; however, early application of each of the amendments is permitted for any reporting period.  The Company has adopted the amendments and no longer presents inception-to-date information in the consolidated statements of operations, consolidated statement of changes in stockholders' deficit and consolidated cash flows.  In addition, the consolidated financial statements will no longer be labeled as those of a development stage entity.

 

Organization

International Industrial Enterprises, Inc. (sometimes the “Company”) was incorporated on November 19, 1976 under the laws of the State of Delaware to engage in any lawful corporate activity.

 

We were engaged in real estate investments from formation until April 1982 and we were dormant until July 29, 1994. As at July 31, 1994, all funds raised in order to fulfill our initial objective had been expended. Thereafter, we had very limited operations until June 14, 2004 when we purchased Karlton Management, Inc., whose name was changed to Group One Associates Inc., a Nevada Corporation.

 

In 2004, we were engaged in the designing and printing tourist maps for various Las Vegas destinations. Our business stalled for eight months due to the death of our President in October 2006. On June 18, 2007, a new President was elected and we restarted our business. While we did not own any printing equipment, we intended to job-out our printing needs (maps) to established printing companies. Our tourist maps were to be printed on quality paper stock and our map designs were to be comical as well as informational. We intended to hire experienced advertising salesmen to sell advertising space on our maps. There is vigorous competition in the publishing and distribution of maps of Las Vegas. Some of these maps were sold and some were free. We intended to compete by offering a free Las Vegas map with advertisers, which feature main thoroughfares (no secondary roads) and the location of Hotels, Casinos, Restaurants and tourist locations.

 

We currently have conducted no business that has resulted in any income to the company.

 

 

NOTE B – GOING CONCERN

 

The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern. During the period from February 2, 2005 (date of return to development stage) through June 30, 2014, the Company has incurred an accumulated deficit of $115,723 primarily related to organizational and administrative expenses. The Company has a working capital deficit of $72,538. We expect to incur losses into the foreseeable future. These conditions raise substantial doubt about our ability to continue as a going concern. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. To date the Company has financed its expenses primarily from shareholder loans, payments made by others on behalf of the company and by the settlement of payable amounts with shares of common stock.

 

The Company has limited financial resources available and has been unable to acquire significant funding which would allow the Company to pursue additional business, enable it to engage in research and development, or purchase revenue generating equipment. However, management has been successful in raising sufficient funds to cover the Company’s administrative expenses including the cost of auditing and other administrative costs.

 

The Company will continue to identify new financial partners and investors.  However, there can be no assurance that any additional funds will be available on terms acceptable to the Company or at all.

 

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Group One Associates Inc. All intercompany accounts and transactions have been eliminated.

 

Estimates

The preparation of the Company’s consolidated financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from these estimates and assumptions.

 

Cash and Cash Equivalents 

For purposes of the consolidated statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents.

 

Fair Value Measurement

The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

 

Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. The Company has no assets or liabilities valued with Level 1 inputs.

 

Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. The Company has no assets or liabilities valued with Level 2 inputs.

 

Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company has no assets or liabilities valued with Level 3 inputs.

 

 

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts payable, and accrued liabilities approximate their fair value because of the short-term nature of these instruments and their liquidity. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

 

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. 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 and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively. See “Note G. Income Taxes” for further discussion.

 

Net Income (Loss) Per Share

Pursuant to ASC 260-10-45-10, the computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. However, pursuant to ASC 260-10-45-17, the computation of diluted net income per share shall not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, pursuant to ASC 260-10-45-25, options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money). See “Note F. Net Loss Per Share” for further discussion.

 

NOTE D - RELATED PARTY TRANSACTIONS

 

A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

 

During the six months ended June 30, 2014 and 2013, Jose Fernando Garcia advanced $9,574 and $7,744, respectively, to the Company by making payments for administrative expenses on behalf of the Company. These advances are recorded as accrued liabilities.

 

The Company has an unsecured non-interest bearing related party loan in the amount of $29,373 at June 30, 2014 and December 31, 2013. This advance is from, Jose Fernando Garcia, a shareholder with 20% of the Company’s outstanding common shares. The proceeds were used for daily business operations. The loan bears no interest and it is due on demand.

 

NOTE E - CAPITAL STOCK

 

The Company has no authorized preferred stock.

 

The Company had authorized Fifty Million (50,000,000) shares of common stock with a par value of $0.001 as of June 30, 2014. There were 2,500,000 shares of common stock issued and outstanding as of June 30, 2014.

 

 

NOTE F - NET LOSS PER SHARE

 

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. There are no potentially dilutive securities or derivative instruments outstanding as of June 30, 2014 and 2013.

 

Following is the computation of basic and diluted net loss per share for the three and six months ended June 30, 2014 and 2013:

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2014				2013				2014				2013
Basic and Diluted EPS Computation
Numerator:
Loss available to common stockholders'		$	(4,490	)		$	(2,509	)		$	(9,657	)		$	(7,728	)
Denominator:
Weighted average number of common shares outstanding			2,500,000				2,500,000				2,500,000				2,500,000
Basic and diluted EPS		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)

 

NOTE G – INCOME TAXES

 

No provisions for income taxes have been recorded since the Company has incurred losses since inception.

 

Based on management‘s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset attributable to the future utilization of net operating loss carry forwards as of December 31, 2013 will be realized.  Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements at December 31, 2013. The Company will continue to review this valuation allowance and make adjustments as appropriate.  

 

Current United States tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs.  Therefore, the amount available to offset future taxable income may be limited.

 

NOTE H – SUBSEQUENT EVENTS

 

Pursuant to FASB Accounting Standards Codification 855, Subsequent Events, Including ASC 855-10-S99-2, the Company evaluated subsequent events through the date of this report. No additional disclosures required.

 

  

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the consolidated results of operations and financial condition of International Industrial Enterprises, Inc. and its subsidiaries. The MD&A is provided as a supplement to, and should be read in conjunction with financial statements and the accompanying notes to the financial statements included in this Form 10-Q.

 

Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

Overview

 

We are a shell company with no operations. Our statement of operations contains costs primarily associated with the administration of our public company entity.

 

Plan of operation for the next twelve months

We intend to seek, investigate, and, if warranted, effect a business combination with an existing, privately held company. The business combination may be structured as a reverse merger, consolidation, our exchange of stock or any other form which will effectuate the combined entity being a publicly held company. We intend to seek to acquire assets or shares of an entity actively engaged in business which generates revenues in exchange for its securities.

 

We do not propose to restrict our search for any investment opportunity to any particular industry, and may therefore, engage in essentially any business, to the extent of its limited resources.

 

We intend to seek a business opportunity in the form of firms which (i) have recently commenced operations, (ii) are seeking to develop a new product or service, or (iii) are established businesses.

 

We may or may not issue securities in any proposed business combination.

 

Results of Operations

 

Three and Six Months Ended June 30, 2014 Compared with the Three and Six Months Ended June 30, 2013

 

The Company has earned no significant revenue or profits to date, and the Company anticipates that it will continue to incur net losses for the foreseeable future.

 

General and administrative expenses primarily includes costs to administer the public entity. The Company incurred general and administrative expenses of $4,490 for the three months ended June 30, 2014, as compared to $2,509 for the three months ended June 30, 2013. The Company incurred general and administrative expenses of $9,657 for the six months ended June 30, 2014, as compared to $7,728 for the six months ended June 30, 2013.

 

Liquidity and Capital Resources

 

The accompanying financial statements have been prepared assuming we will continue as a going concern. During the period from February 2, 2005 through June 30, 2014, the Company has incurred an accumulated deficit of $115,723 primarily related to organizational and administrative expenses. We expect to incur losses into the foreseeable future. These conditions raise substantial doubt about our ability to continue as a going concern. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. To date the Company has financed its expenses primarily from shareholder loans, payments made by others on behalf of the company and by the settlement of payable amounts with shares of common stock.

 

 

Net cash used by operating activities was $83 for the six months ended June 30, 2014 and provided by of $16 for the six months ended June 30, 2013.

 

Net cash provided by finance activities included bank overdraft of $8 for the six months ended June 30 2014 and $0 for the six months ended June 30, 2013

 

The Company has limited financial resources available and has been unable to acquire significant funding which would allow the Company to pursue additional business, enable it to engage in research and development, or purchase revenue generating equipment. However, management has been successful in raising sufficient funds to cover the Company’s administrative expenses including the cost of auditing and other administrative costs primarily from shareholder loans provided by our primary shareholder.

 

The Company will continue to identify new financial partners and investors. However, there can be no assurance that any additional funds will be available on terms acceptable to the Company or at all. As of June 30, 2014, the company was authorized to issue 50,000,000 shares of common stock.

 

Commitments

We do not have any commitments which are required to be disclosed in tabular form as of June 30, 2014.

 

Off-Balance Sheet Arrangements

As of June 30, 2014, we have no off-balance sheet arrangements such as guarantees, retained or contingent interest in assets transferred, obligation under a derivative instrument and obligation arising out of or a variable interest in an unconsolidated entity.

  

ITEM 4.  CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2014, that our disclosure controls and procedures were effective such that the information required to be disclosed in our United States Securities and Exchange Commission (the “SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

  

PART II OTHER INFORMATION

 

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

 

The following documents are included or incorporated by reference as exhibits to this report: 

 

Exhibit No.		Identification of Exhibit
31.1*		Certification of David Rodgers, Chief Executive Officer and Chief Financial Officer of International Industrial Enterprises, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of David Rodgers, Chief Executive Officer and Chief Financial Officer of International Industrial Enterprises, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

 

* Filed Herewith

 

SIGNATURES 

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

 

Date: August 7, 2014

 

	International Industrial Enterprises, Inc.
	Registrant
	By:	/s/ David Rodgers
		David W. Rodgers Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

 

 

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