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
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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.
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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
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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.
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