UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 May 31, 2014


        . TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

FOR THE TRANSITION PERIOD FROM __________ to __________


Commission File Number 333-150061


INNOCENT INC.

(Exact name of small business issuer as specified in its charter)


NEVADA

 

98-0585268

(State of other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)


 

100 King Street, Suite 5600

 

 

Toronto, ON, M5X 1C9

 

(Address of Principal Executive Offices) (Zip Code)


Issuer's telephone number : 888 570 3698


 

3280 Suntree Blvd, Suite 150

 

 

Melbourne, FL. 32940

 

(Former address if changed since last report)


Indicate by check mark whether the issuer (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 issuer 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes       . No  X .


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


Large accelerated filer

        .

Accelerated filer

        .

Non-accelerated filer

        . (Do not check if a smaller reporting company)

Smaller reporting company

   X .


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 July 9, 2014 there were 31,100,000 shares of common stock, par value $0.001, outstanding.





INDEX


PART I – FINANCIAL INFORMATION

 

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

3

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

9

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

15

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

ITEM 1A.

RISK FACTORS

16

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES

17

 

 

 

ITEM 5.

OTHER INFORMATION

18

 

 

 

ITEM 6.

EXHIBITS

18

 

 

 

SIGNATURES

19




2




INNOCENT, INC.

(A Development Stage Company)


UNAUDITED FINANCIAL STATEMENTS

May 31, 2014


Condensed Balance Sheets as of May 31, 2014 (Unaudited) and August 31, 2013

4

 

 

Condensed Statements of Operations for the Three and Nine Months Ended May 31, 2014 and 2013 and the period of September 27, 2006 (Inception) to May 31, 2014 (Unaudited)

5

 

 

Condensed Statements of Cash Flows for the Nine Months Ended May 31, 2014 and 2013 and the period of September 27, 2006 (Inception) to May 31, 2014 (Unaudited)

6

 

 

Notes to Unaudited Condensed Financial Statements

7




3




INNOCENT, INC.

(A Development Stage Company)

Condensed Balance Sheets


 

 

May 31,

2014

 

August 31,

2013

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

$

-

 

$

11,667

 

Notes receivable, net of allowance of $878,354

 

-

 

 

-

Total current assets

 

-

 

 

11,667

 

 

 

 

 

 

 

 

Oil and Natural Gas Property, Unproved (successful efforts method)

 

210,000

 

 

210,000

 

 

 

 

 

 

 

Total assets

$

210,000

 

$

221,667

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Bank overdraft

$

8

 

$

-

 

Accounts Payable

 

450

 

 

-

 

Notes payable (current portion)

 

754,636

 

 

768,466

 

Related party payables

 

870,578

 

 

591,950

 

Interest payable

 

351,047

 

 

261,537

 

Accrued expenses and other liabilities

 

196,050

 

 

114,050

Total current liabilities

 

2,172,770

 

 

1,736,003

 

 

 

 

 

 

 

 

Notes payable (non-current portion)

 

-

 

 

-

Total liabilities

 

2,172,770

 

 

1,736,003

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

Common stock, $0.001 par value; 75,000,000 shares authorized; 26,100,000 and 20,000,000 issued and outstanding at May 31, 2014 and August 31, 2013

 

26,100

 

 

20,000

 

Additional paid in capital

 

347,900

 

 

27,000

 

Deficit accumulated during the development stage

 

(2,336,770)

 

 

(1,561,336)

Total stockholders' deficit

 

(1,962,770)

 

 

(1,514,336)

 

 

 

 

 

 

 

Total liabilities and stockholders' deficit

$

210,000

 

$

221,667


See accompanying notes to unaudited condensed financial statements



4




INNOCENT, INC.

(A Development Stage Company)

Condensed Statements of Operations (unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 27,

2006 (inception),

 

 

Three months ended May 31,

 

Nine months ended May 31,

 

to May 31

 

 

2014

 

2013

 

2014

 

2013

 

2014

Revenues

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration expenses

 

-

 

 

-

 

 

278,500

 

 

-

 

 

278,500

 

Professional fees

 

37,810

 

 

17,600

 

 

339,559

 

 

54,852

 

 

605,849

 

Travel and promotion

 

531

 

 

1,581

 

 

12,245

 

 

12,918

 

 

100,868

 

Bad debt

 

-

 

 

-

 

 

-

 

 

250,000

 

 

878,354

 

Other general and administrative

 

4,482

 

 

2,304

 

 

11,619

 

 

10,008

 

 

102,855

Total operating expenses

 

42,823

 

 

21,485

 

 

641,923

 

 

327,778

 

 

1,966,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(42,823)

 

 

(21,485)

 

 

(641,923)

 

 

(327,778)

 

 

(1,966,426)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

-

 

 

-

 

 

-

 

 

-

 

 

22,468

 

Extinguishment of debt

 

-

 

 

-

 

 

(44,000)

 

 

-

 

 

(44,000)

 

Interest expense

 

(31,532)

 

 

(24,583)

 

 

(89,510)

 

 

(72,626)

 

 

(351,664)

Total other income (expense)

 

(31,532)

 

 

(24,583)

 

 

(133,510)

 

 

(72,626)

 

 

(373,196)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

(74,355)

 

 

(46,068)

 

 

(775,434)

 

 

(400,404)

 

 

(2,339,622)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

-

 

 

-

 

 

-

 

 

-

 

 

2,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(74,355)

 

$

(46,068)

 

$

(775,434)

 

$

(400,404)

 

$

(2,336,770)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per common share

$

(0.00)

 

$

(0.00)

 

$

(0.03)

 

$

(0.02)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

26,100,000

 

 

20,000,000

 

 

24,398,168

 

 

20,000,000

 

 

 


See accompanying notes to unaudited condensed financial statements



5




INNOCENT, INC.

(A Development Stage Company)

Condensed Statements of Cash Flows (unaudited)


 

 

 

 

 

 

 

September 27,

 

 

 

 

 

 

 

2006

 

 

 

 

 

 

 

(inception) to

 

Nine months ended May 31,

 

May 31,

 

2014

 

2013

 

2014

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

Net loss

$

(775,434)

 

$

(400,404)

 

$

(2,336,770)

 

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

Common stock issued for services

 

250,000

 

 

-

 

 

253,000

 

 

Extinguishment of debt

 

44,000

 

 

-

 

 

44,000

 

 

Allowance for bad debt

 

-

 

 

250,000

 

 

790,010

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

450

 

 

-

 

 

22,580

 

 

Interest payable

 

89,510

 

 

72,627

 

 

351,047

 

 

Accrued expenses and other liabilities

 

82,000

 

 

52,400

 

 

196,050

Cash provided by (used in) operating activities

 

(309,474)

 

 

(25,377)

 

 

(680,083)

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

Investment in intangible asset

 

-

 

 

-

 

 

(210,000)

 

 

Note receivable

 

-

 

 

(250,000)

 

 

(790,010)

Cash flows used in investing activities

 

-

 

 

(250,000)

 

 

(1,000,010)

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

Proceeds from bank overdraft

 

8

 

 

-

 

 

8

 

 

Proceeds from related party loan

 

278,628

 

 

250,500

 

 

896,265

 

 

Repayments of related party loan

 

-

 

 

-

 

 

(25,687)

 

 

Proceeds from notes payable

 

19,170

 

 

15,100

 

 

775,507

 

 

Proceeds from sale of stock

 

-

 

 

-

 

 

34,000

Cash provided by financing activities

 

297,807

 

 

265,600

 

 

1,680,093

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

(11,667)

 

 

(9,777)

 

 

-

 

 

Cash at beginning of period

 

11,667

 

 

9,894

 

 

-

 

 

Cash at end of period

$

-

 

$

117

 

$

-

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing activities

 

 

 

 

 

 

 

 

 

 

Issuance of note for account payable

$

-

 

$

-

 

$

22,130

 

 

Common shares issued for conversion of debt

$

-

 

$

-

 

$

10,000

 

 

Allowance for bad debt

$

-

 

$

-

 

$

540,010

 

 

Acceptance of note payable for investment in intangible assets

$

-

 

$

-

 

$

1,500,500

 

 

Conversion of note payable to common stock

$

33,000

 

$

-

 

$

33,000

 

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow Information:

 

 

 

 

 

 

 

 

 

Cash paid for interest

$

-

 

$

-

 

$

-

 

Cash paid for income taxes

$

-

 

$

-

 

$

-


See accompanying notes to unaudited condensed financial statements



6




INNOCENT, INC.

Notes to Condensed Unaudited Financial Statements

May 31, 2014


NOTE 1 – CONDENSED FINANCIAL STATEMENTS


The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows May 31, 2014 and for all periods presented herein, have been made.


Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s August 31, 2013 audited financial statements. The results of operations for the period ended May 31, 2014 are not necessarily indicative of the operating results for the full year.


NOTE 2 – GOING CONCERN


The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.


In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.


The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern


NOTE 3 – OIL AND GAS PROPERTY


The Company applies the successful efforts method of accounting for oil and gas properties. When incurred, exploration costs such as exploratory geological and geophysical costs, delay rentals, and exploration overhead will be charged against earnings as incurred. If an exploratory well provides evidence to justify potential completion as a producing well, drilling costs associated with the well will be initially capitalized, or suspended, pending a determination as to whether a commercially sufficient quantity of proved reserves can be attributed to the area as a result of drilling. Acquisition costs of unproved properties are periodically assessed for impairment and will be transferred to prove oil and gas properties to the extent the costs are ultimately associated with successful exploration activities. Any significant undeveloped leases will be assessed individually for impairment, based on the Company’s current exploration plans, and a valuation allowance is provided if impairment is indicated.


NOTE 4 – NOTES PAYABLE


From inception to May 31, 2014, the Company has secured loans from various non-related parties to fund operations, including $19,170 received during the nine months ended May 31, 2014. While these loans were secured at various dates, they are each payable on demand and carry interest rates of 10% per annum. There was $754,636 in principal and $245,007 in accrued interest due at May 31, 2014.



7




INNOCENT, INC.

Notes to Condensed Unaudited Financial Statements

February 28, 2014


NOTE 5 – EQUITY


On November 14, 2013 the Board of Directors authorized the issuance of five million (5,000,000) shares of rule 144 restricted common stock valued at a price of .05 per share paid by the company and issued to Patrick Johnson for accepting the COO position, his service as a Director and his efforts to bring a new venture and funding to the company. This issuance represents ownership of approximately 20% of the current authorized and outstanding shares of the Company.


On November 26, 2013 the Board of Directors authorized the conversion of $33,000 of debt at a conversion rate of $.07 cents per share for a total of one million one hundred thousand shares (1,100,000) of Innocent Inc. common stock with the difference of $44,000 reflected as Extinguishment of debt.


NOTE 6 – RELATED PARTY NOTES PAYABLE


The Company has secured original loans from related parties totaling $896,265 to fund operations from inception to May 31, 2014 including a $273,500 note payable for exploratory costs incurred during the second quarter of fiscal year 2014. $25,687 of this amount has been repaid leaving a principal balance of $870,578 plus accrued interest of $106,039 due as of May 31, 2014.


During the nine months ended May 31, 2014, the Company entered into an asset purchase agreement with a related party. As part of the purchase agreement, the Company entered into a note payable bearing interest at 10% per annum.


NOTE 7 – SUBSEQUENT EVENTS


On 06/04/2014 the Board of Directors appointed Patrick Johnson, Chief Executive Officer (CEO).


On 06/04/2014 the Board of Directors appointed Terry Lynch, President and Chairman of the Board.


On 06/10/2014 the Company appointed James Kerr, Chief Financial Officer (CFO).




8




ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Forward Looking Statements


This quarterly report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management's plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:


·

the uncertainty of profitability based upon our history of losses;

·

risks related to failure to obtain adequate financing on a timely basis and on acceptable terms to continue as going concern;

·

risks related to our international operations and currency exchange fluctuations;

·

risks related to product liability claims;

·

other risks and uncertainties related to our business plan and business strategy.


This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

 

Forward looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.


Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.


In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to the common shares in our capital stock.


As used in this annual report, the terms "we", "us", "our", the "Company" and "Innocent" mean Innocent, Inc., unless otherwise indicated.


Our Current Business


Innocent, Inc. ("Company") was organized September 27, 2006 under the laws of the State of Nevada for the purpose of selling new food products produced or developed by North American companies to foreign markets. On August 31, 2009, the Company discontinued its involvement in the sales of tea due to a strategic change in business focus by the acquisition of mineral rights as disclosed in the Company's 8-K filed with the SEC on September 2, 2009. The Company currently has limited operations or realized revenues from its planned principle business purpose and, in accordance with Statement of Financial Accounting Standard (SFAS) No. 7, "Accounting and Reporting by Development Stage Enterprises," is considered a Development Stage Enterprise.


On September 1, 2009 the company acquired mining operations in an active working gold mine. The Board of Directors approved the Purchase Agreement from Global Finishing, Inc. (Frankfurt:G8BA) a Nevada Corporation, to purchase its interest in the Maria Olivia Concessions and Miranda PLSA, located in Ecuador, within the prospective gold and silver bearing vein systems. Global Finishing Inc. acquired the concessions from Companis Minera Monte-Verde S.A. Comimontsa in a 100% share exchange for 6,000,000 Global Finishing Inc., Regulation S common shares which represented 22.8% of its shares.



9




On April 7, 2010 the Company decided to direct that the initial funding of $880,000 US held in escrow by Dr. Vicente Sanchez Jaramillo a third party of the initial agreement in Ecuador be returned. The company has received such notification that said funds are being returned to the original accounts as received. Global Finishing, Inc. has confirmed in writing that said funds are the property of Innocent Inc. and will be forwarded upon receipt. The company has adjusted the general ledger to reflect said funds as a subscription receivable until received. Innocent Inc. and Global Finishing Inc. agree that the existing agreement on Miranda and as a result of the new mining laws that went into effect on January 1, 2010, it is in the best interest of all parties to renegotiate the contract, whereby Innocent Inc. will be the direct designated benefactor of the Miranda Mineral Rights.


On May 31, 2010 Innocent Inc. entered into an agreement with Global Finish Inc., a Nevada Corporation, to acquire 51% of the issued and outstanding shares of Global Finishing Inc. in a share exchange whereby Innocent Inc. will issue .9 shares of Innocent Inc. rule 144 restricted common stock for one share of Global Finishing Inc. The agreement has been approved by an excess of 51% of the shareholders of both Global Finishing Inc. and Innocent Inc. by majority shareholder consent in lieu of a meeting. The agreement was signed on May 31, 2010 by the Companies with the approval of the Board of Directors. The agreement provides for 10 working days to administer the share exchange which will result in Global Finishing Inc. to exchange 13,975,208 shares of Global Finishing Inc. 27, 402,369 shares issued and outstanding for 12,557,687 shares of Innocent Inc., representing approximately 25.4% ownership of Innocent committed and issued and outstanding shares of common stock. The agreement further provided for the share exchange of the remaining 49% under the same exchange provisions, and that no additional shares of Global Finish Inc. will be issued until such time as the parties execute the 49% exchange or decide that not additional share exchange will take place. The acquisition of the controlling interest in Global Finishing Inc., will allow Innocent Inc. to proceed with its Ecuador mineral interest, although given the time since the initial agreement, the agreement for the Miranda interest must be renegotiated. Global Finishing Inc. currently owns the majority interest in an approved Ecuador subsidiary, Globalfinishing Ecuador S A that can legally operate and own mining interest and register new mineral rights and agreements. Innocent will retain the ownership rights in Companis Minera Monte-Verde S.A. Comimontsa and the 10,000,000 shares issued in the September 1, 2009 agreement will be offset against the 12,557,687 shares of common stock due to be issued to Global Finish Inc., for the 51% interest, leaving a balance of 2,557,687 additional shares to be issued in the share exchange described above.


On August 27, 2010 Globalfinishing Ecuador acquired the Murciealagos Vizcaya and Lilly Rai mining concessions, located in Ecuador's El Oro Province. Innocent Inc. funded the initial purchase with the assumption of majority ownership of Globalfinishing Ecuador via its acquisition agreement for 51% of Global Finishing Inc. the parent of Globalfinihing Ecuador. Due to the cancellation of the share exchange agreement on October 20, 2010 the parties must negotiate the ownership of initial purchase and subsequent funds due. Innocent Inc. has recorded the funds advanced to Global Finishing Inc. as a note receivable until such time as the matter is resolved. Under the terms of the purchase agreement for the mining properties, Globalfinishing Ecuador owes a total sum of $1,200,000 for the properties, with the initial down payment of $250,000 funded by Innocent Inc. Five additional payments totaling $950,000 are due every sixth month thereafter.


On October 20, 2010 Innocent Inc. has terminated the agreement with Global Finish Inc., a Nevada Corporation, to acquire 51% of the issued and outstanding shares of Global Finishing Inc. in a share exchange whereby Innocent Inc. would have issued .9 shares of Innocent Inc. rule 144 restricted common stock for one share of Global Finishing Inc. The agreement was approved by an excess of 51% of the shareholders of both Global Finishing Inc. and Innocent Inc. by majority shareholder consent in lieu of a meeting. The agreement was signed on May 31, 2010 by the Companies with the approval of the Board of Directors. The agreement provided for 10 working days to administer the share exchange and this provision was extended until Innocent Inc. issued a demand to conclude the transaction and as of this date decided to cancel the agreement. Innocent Inc. and Global Finishing Inc. were unable to reach an acceptable timely conclusion to the share exchange under the terms of the original agreement. Therefore, the Board of Directors of Innocent Inc. cancelled the share exchange agreement effective October 20, 2010. The parties to the original agreement will meet to resolve the funding and purchase of the Murciealagos Vizcaya and Lilly Rai mining concessions in the Zaruma-Portovelo Mining District of Ecuador's El Oro Province. As a result of this decision Innocent Inc. will cancel the original 10,000,000 shares issued under the $880,000.00 subscription agreement due that was subsequently held for the share exchange that the Board of Directors of Innocent Inc. cancelled. The 10,000,000 shares will be returned to treasury and monies advanced for the Murciealagos Vizcaya and Lilly Rai mining concessions will be recorded as a note payable due Innocent Inc. from Global Finishing Inc. until such time as the parties can agree on the terms and conditions of joint ownership.


On October 20, 2010 Innocent Inc. received notification from Ecuador concerning the approval to own an Ecuador Registered Company, “JUST RESOURCES MINAS S.A.” file reference number 732697. This company will be 100% owned by Innocent Inc. and will provide the company a structure to acquire and operate mineral interest in Ecuador in accordance with the new mining laws that went into effect in April 2010. Innocent Inc. is in negotiations with a local executive to manage this newly approved operating company. While approval has been received, no entity has been established.



10




On November 23, 2010 Innocent Inc. acquired from Sedunda Oportunidad, LLC, the 100% working interest in an Oil and Gas Leasehold Estate including the effective net revenues flowing therefrom. The effective net revenue yield is 82% after the landowner Royalty is paid. The property, Thomas Lease, one well located center of south quarter section 7, Township 24 North Range West, Garfield County, Oklahoma, Book 1955 page 534 on 8/13/09. The parties agreed on a purchase price of $150,000 whereby Innocent Inc. will issue a non interest bearing note payable for the purchase price. The note will be a one year demand note payable. The surrounding property of approximately 300 acres contains approximately 45 wells in various states of operation and non-operation that can be acquired. It is anticipated that an additional $150,000 working capital will be required to return the property to the status of a working well, with most of the expense associated to the pipeline of the gas to the refinery, that is already in process. The acquisition of the Thomas Lease from Oportunidad, LLC, included the 100% rights to the property that currently has one gas well that in the past produced both oil and gas. The leasehold assignment also includes a royalty to the land owner and the contract service that maintains and services the well, which totals 18% of the Gross Revenue, leaving a net yield of 84% of the Gross Revenue to Innocent Inc. The well is in the process of refurbishing and at this time we are not ready to make projections of income. The Initial purchase price of $150,000 by issuance of a note payable and $60,000 to-date for site prep and well refurbishing represent the $210,000 investment.


The company has been dependent upon related party/shareholders for its funding to date and currently lacks funding to complete the opportunities in Ecuador. Although, we plan to pursue the Note Receivable from Global Finishing Inc., instead of a joint ownership of Murciealagos Vizcaya and Lilly Rai mining concessions, there can be no assurances that Global Finishing Inc., will execute a funding plan to complete the acquisition or a plan that will insure that Innocent Inc. is repaid, therefore we have financially reserved the note payable against earnings. In the event Global Finishing Inc. secures the property and/or funding, Innocent Inc., will utilize all remedies available to recover the entire note receivable.


On February 14, 2011 Innocent Inc. Board of Directors approved a letter of intent ("LOI") which constitutes an expression of the intent of Steele Resources, Inc. ("SRI") to enter into a Joint Venture Agreement with Innocent Inc. ("INI") which will govern the exploration and operations of mineral rights within the A&P Patented Claims and the Pony exploration projects jointly referred to as the Mineral Hill Project ("Mineral Hill Project"). The agreement (non- binding LOI) has been funded with the initial payment, completing the initial obligation of Innocent, Inc. as provided in the LOI attached as an exhibit. Innocent, Inc. expects that the second deposit will be funded no later than the end of February 2011, in accordance with the Letter of Intent executed on January 27, 2011. The parties have verbally agreed to extend the funding dates from the original agreement to allow time for the Funder to forward the funds to Innocent, Inc. if necessary. Although the Funder of the initial payment has committed the balance of the funds and we expect that obligation to be met, no guarantee can be issued until such time as the funds are received by the funding source.


On February 21, 2011 Innocent Inc., entered into a material definitive agreement with Steele Resources, Inc. (SELR: OTCBB) to acquire 50% of the Mineral Hill Gold Exploration Project. The project is located near Pony Hill, Montana in the Mineral Hill Mining District and consists of 17 patented and 67 unpatented lode mining claims (approximately 1,800 acres). The agreement is a 50/50 Joint Venture under which the two companies will work together to explore and operate the claims. The initial participating interests of Innocent, Inc. and Steele Resources, Inc. in the JV will be 50% and 50%. Under the terms of the agreement, Innocent may contribute up to $5,000,000 in operating funds over one year. In the event those funds are not provided, Innocent will forfeit 10% per $1,000,000 not provided. Steele Resources, Inc. will act as the operating partner and have a commitment to match up to $5,000,000 in funding within one year of Innocent, Inc. contributing its first $1,000,000. Steel Resources, Inc. will forfeit 10% per $1,000,000 not provided under its obligation. Innocent Inc. has made the initial payment of three hundred thousand dollars ($300,000) under the terms of the LOI dated January 27, 2011. The second payment is expected be completed on or before May 31th, 2011.


Pursuant to a non-binding Letter of Intent entered into on January 27, 2011 (the “LOI”), between Steele Resources Corporation (“SRC”) and Innocent, Inc. (“INCT”), INCT and SRC expressed an interest in entering into a Joint Venture in which INCT would provide up to $5,000,000 of funding to explore the Mineral Hill Mining Project located near Pony, Montana. Pursuant to the LOI, INCT was required advance up to $500,000 to SRC’s subsidiary, Steele Resources, Inc. (“SRI”) in order to allow SRI to close on two mineral leases representing the Mineral Hill Mining Project. Pursuant to the LOI, on February 7, 2011, INCT advanced an initial $300,000 which allowed SRI to close on the Pony Project representing 17 patented and 67 unpatented mining claims located in the Pony Mining District of Montana.



11




Pursuant to the LOI, on February 20, 2011 INCT and SRC entered into a definitive Joint Venture Agreement (the “JV Agreement”) relating to the Mineral Hill Mining Project. Pursuant to the JV Agreement INCT agreed to provide up to $5,000,000 to fund the exploration and development of the Mineral Hill Mining Project. However, the JV Agreement was conditioned upon INCT providing an initial $550,000 to close the Pony Project and the A&P Project, of which $300,000 was provided on February 15, 2011 and the remaining $250,000 was funded on March 23, 2011. In addition, the parties have agreed to amend the JV Agreement to allow INCT to fund an additional $450,000 on or before March 31, 2011. The JV Agreement provides that when INCT provides at least $1,000,000 of financing, then SRC would agree to match INCT’s investment up to $5,000,000 thus providing up to an aggregate of $10,000,000 to explore and, if warranted, develop the Mineral Hill Mining Project. Under the terms of the JV Agreement INCT and SRC would each own 50% of the Joint Venture however the percentage ownership would be reduced by 10% for each $1,000,000 a party failed to contribute to the Joint Venture.


Of the funds received on March 23, 2011, $200,000 will be used to allow SRI to close on the Atlantic and Pacific mining property mineral lease (the”A&P Project”) representing two patented mining claims located next to the Pony Project and together representing the Mineral Hill Mining Project.


The Company received a notification from its joint venture partner (SRI), that Innocent Inc. was in default on the balance of its funding commitment of the $1,000,000. The Company did not agree with the exact interpretation of the default and Innocent Inc. is seeking the additional capital to fulfill its committed obligation. After further discussion the JV Partners have decided that in consideration of Innocent’s willingness to negotiate, in good faith, a payment plan for the $460,000 currently due from the commitment under the Joint Venture Agreement. Steele Resources is willing to withdraw the default condition established in its letter of notification conditional upon Innocent Inc. entering into a negotiation process with Steele by May 2, 2011. Steele Resources stated that it would not seek any default remediation so long as Innocent negotiates a “good faith” funding solution. The JV Agreement is clear that under the terms of the JV Agreement INCT and SRC would each own 50% of the Joint Venture however the percentage ownership would be reduced by 10% for each $1,000,000 a party failed to contribute to the Joint Venture . The balance of the $460,000 is still due Steele to complete the initial obligation of Innocent. Innocent expected, due to a shareholder nonbinding commitment letter to complete this funding, and as of the date of this Form Q filing the funding has not been completed. The shareholder that issued the nonbinding commitment letter in May has issued a follow up letter stating the intent to complete a private placement in August and September 2011 and explained the delay was due to unavoidable causes. Although the company believes the intent of the Shareholder in reference to a private placement to be a good faith commitment, there can be no guarantee that the funds will received or received in a timely manner to complete the $460,000 obligation since Steele may utilize a third party to secure the funds. Under the terms and conditions of the agreement, Steel is within its right to secure the funds from a third party or advance the funds itself and become the majority shareholder of the JV. The full agreement was filed by Innocent in an 8K filing.


On August 30, 2011 Innocent Inc. notified Steele Resources the company no longer felt that the capital committed and necessary for the JV Agreement could be secured by Innocent in a timely manner and Innocent Inc. felt it was in the best interest of the shareholders of both companies to terminate the agreement. The parties to the original agreement terminated the agreement on Aug 31, 2011 in accordance with the terms and conditions that have been filed in an 8K regulatory filing.


The Company has advanced funds totaling $290,010 to Steele Resources with the intention of establishing a joint venture. The venture did not materialize and Steele Resources has agreed to return the funds to the Company. We have not received repayment as of May 31, 2012 but anticipate doing so in the near term. No allowance for bad debt has been established as a result.


On September 6, 2011 Global Finishing Inc. and Innocent Inc. entered into an agreement whereby Global assigned 50% interest of the MURCIELAGOS VIZCAYA and LILLY RAI, Ecuador properties as collateral for the $390,000 outstanding note due Innocent Inc.


On May 31, 2012 Innocent Inc. and Steele Resources Inc., agreed and entered into an Amended Agreement to the August 30, 2011 Termination of Definitive Agreement. The detailed agreement is filed as an 8K event.


On 10/30/2013 Innocent Inc. and Ewing Oil Company LLC, a Colorado, Limited Liability Corporation whose principal place of business is located at P.O. Box 431, Burbank, California 91503 singed an asset purchase agreement. Ewing Oil Company is majority owned by Patrick Johnson, a current Director and COO of Innocent Inc. The agreement includes the sale, assignment, transfer, conveyance and deliver to Innocent Inc. free and clear of all liens, encumbrances, claims, clouds, charges; intellectual property, goodwill, materials, supplies, business records, and other proprietary assets in regard to Oil And Gas Leases (the “Leases”) located in Texas and Oklahoma. The purchase price of two hundred seventy three thousand five hundred dollars ($273,500) is payable by the issuance of a note payable with the annual interest rate of ten percent (10%). Innocent Inc. will seek the funding to complete the necessary drilling program and secure the leases. The agreement will include the following intellectual property and assets.



12




On 11/4/ 2013 the company received official communication that Marcus Mueller, was resigning as a Director of Innocent Inc. to pursue other interest. The Board of Directors then appointed Patrick Johnson to serve as a Director of Innocent Inc.


On 11/13/2013 the Board of Directors appointed Patrick Johnson (37), Chief Operating Officer (COO).


On 11/13/2013 Innocent Inc. signed an exploration agreement with Evergreen Petroleum of Dallas, TX. Evergreen has over 150 years’ experience in the oil and gas industry, and particular with expertise in the state of Wyoming will be the General Manager of the Exploration Project including selection of areas to lease, drilling exploratory wells, drilling development wells, and producing oil and gas found. Evergreen has conducted and will continue to conduct both regional and local geological studies to define prospects that are worthy of acquiring oil and gas leases. Preliminary examinations of title to the minerals in these selected areas and the acquisition of said leases will be carried out for and on behalf of the Parties by Pacer Energy LLC (“Pacer”) of Gillette, Wyoming. The Operator of the drilling venture will be L & J Operating Inc. of Gillette, Wyoming, with the responsibility of obtaining the required bonds, preparation of the Joint Operating Agreement A.A.P.L. Form 610 – 1989. This team will be responsible for the selection of all contractors and suppliers, payment of all invoices, sale of produced oil, payment of Ad Valorem, Conservation, and Severance Taxes and payment to the Parties of their net income on a monthly basis. We will engage engineering and geological consultants as required. All the activities of the Operator shall be under the supervision of the parties to this agreement including daily and other interval reports. Innocent Inc. will be responsible for the funding of this project, with the initial operating funds of twenty-five thousand dollars ($25,000) due in 30 days from the date of the agreement.


On 11/14/2013 the Board of Directors authorized the issuance of five million (5,000,000) shares of rule 144 restricted common stock at a price of .015 per share value paid by the company and issued to Patrick Johnson for accepting the COO position, service as a Director and his efforts to bring a new venture and funding to the company. This issuance represents ownership of 20% of the current authorized and outstanding shares (25,000,000) of Innocent Inc.


RESULTS OF OPERATIONS


The following is a discussion and analysis of our results of operation for the three-month period ended May 31, 2014, and the factors that could affect our future financial condition. This discussion and analysis should be read in conjunction with our unaudited financial statements and the notes thereto included elsewhere in this quarterly report. Our financial statements are prepared in accordance with United States generally accepted accounting principles. All references to dollar amounts in this section are in United States dollars unless expressly stated otherwise.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 27,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2006 (inception)

 

 

Three months ended May 31,

 

Nine months ended May 31,

 

to May 31,

 

 

2014

 

2013

 

2014

 

2013

 

2014

Revenues

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration expenses

 

 

 

 

 

-

 

 

278,500

 

 

-

 

 

278,500

Professional fees

 

 

37,810

 

 

17,600

 

 

339,559

 

 

54,852

 

 

605,849

Travel and promotion

 

 

531

 

 

1,581

 

 

12,245

 

 

12,918

 

 

100,868

Bad debt

 

 

-

 

 

-

 

 

-

 

 

250,000

 

 

878,354

Other general and administrative

 

 

4,482

 

 

2,304

 

 

11,619

 

 

10,008

 

 

102,855

Total operating expenses

 

 

42,823

 

 

21,485

 

 

641,923

 

 

327,778

 

 

1,966,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(42,823)

 

 

(21,485)

 

 

( 641,923 )

 

 

(327,778)

 

 

( 1,966,426 )


Revenue


Our gross revenue for the three-month period ended May 31, 2014, was $0, compared to $0 for the same period in fiscal 2013. Prior revenues and cost of sales have been included in income from discontinued operations.



13




Operating expenses


The primary increase in the operating expenses for the third quarter over the prior quarter was the addition of the company COO, Mr. Johnson, the company accrued $21,500 consulting wages.


Liquidity and Capital Resourc e


 

 

May 31,

2014

 

August 31,

2013

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$

-

 

$

11,667

 

 

 

 

 

 

 

Total current assets

 

 

-

 

 

11,667

 

 

 

 

 

 

 

Fixed assets

 

 

210,000

 

 

210,000

 

 

 

 

 

 

 

Total assets

 

$

210,000

 

$

221,667


Cash Flows


 

 

 

 

 

 

 

 

September 27,

 

 

 

 

 

 

 

 

2006

 

 

 

 

 

 

 

 

(inception) to

 

 

Nine months ended May 31,

 

May 31,

 

 

2014

 

2013

 

2014

 

 

 

 

 

 

 

 

 

 

Cash provided by (used in) operating activities

 

$

(309,474)

 

$

(25,377)

 

$

(680,083)

 

 

 

 

 

 

 

 

 

 

Cash flows used in investing activities

 

 

-

 

 

(250,000)

 

 

(1,000,010)

 

 

 

 

 

 

 

 

 

 

Cash provided by financing activities

 

 

297,807

 

 

265,600

 

 

1,680,093

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$

-

 

$

117

 

$

-


We had cash of $0; accounts payable and accrued liabilities of $196,050, notes payable totalling $754,636 and related party notes totalling $870,578, interest expense of $31,532 for the second quarter and $351,047 from the inception period, and an accumulated Net Loss of (2,336,770) as of May 31, 2014.


Cash Used In Operating Activities


Our cash balance of $0 as of May 31, 2014, is a decreased of $ 11,667 during the nine months ended as compared to $ 11,667 Aug 31, 2013.


Going Concern


The audited financial statements for the year ended August 31, 2013, included in our annual report on the Form 10-K filed with Securities and Exchange Commission, have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has generated no revenue since inception, and has never paid any dividends and is unlikely to pay dividends or generate substantial earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As at May 31, 2014, our company has accumulated losses of $2,336,770 since inception. As we do not have sufficient funds for our planned operations, we will be required to raise additional funds for operations and expansion.



14




Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended August 31, 2013, our independent registered auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent registered auditors.


The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.


Future Financings


The company’s operating budget to maintain the public entity reporting requirements is approximately $50,000. We continue to present to various funding groups the current opportunities in attempts to secure additional capital.


We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to secure sufficient funding from the sale of our common stock to fund our marketing plan and operations. At this time, we cannot provide investors with any assurance that we will be able to secure sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing and continue to be dependent upon related party/shareholder funding. The company plans to secure additional capital by the use of Notes Payable, Convertible Notes Payable, Private Placements, and partnerships and revenue sharing in future opportunities. This financing activity may lead to stock dilution and changes in control


Off-Balance Sheet Arrangements


We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.


Item 3.

Quantitative and Qualitative Disclosures About Market Risk.


Not Applicable.


Item 4T.

Controls and Procedures.


Evaluation of Disclosure Controls and Procedure


We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15 (e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.


The Company's Chief Executive Officer, who is its principal executive and chief financial officer, completed an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period (Feb 28, 2014) covered by this Form 10-Q. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosures. Based on that evaluation, the Company's Chief Executive Officer & CFO, has concluded the Company's disclosure controls and procedures, as of the end of the fiscal year covered by this Form 10-Q were ineffective because of comments from the SEC that required additional disclosure and restatement of other disclosed information.



15




Based upon the evaluation of our controls, the chief executive officer/CFO has concluded that, the disclosure controls and procedures are ineffective providing reasonable assurance that material information relating to the company activity is communicated in sufficient detail. Although, changes have been made to provide the level of detail that is required in the company filings based upon the SEC comments, the company is not prepared at this time to remove the ineffective status of the disclosure controls and procedures. The company will continue to work in these deficiencies.


Changes in Internal Control Over Financial Reporting.


There was no change in our internal control over financial reporting that occurred during the last fiscal quarter ended Feb 28, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II - OTHER INFORMATION


ITEM 1.

LEGAL PROCEEDINGS


None.


ITEM 1A.

RISK FACTORS.


Risks and Uncertainties


WE MAY BE ADVERSELY AFFECTED BY VALUE OF OUR PRODUCT GIVEN IT IS SET BY WORLD DEMAND AND BEYOND OUR CONTROL


We face risks of losses in inventory value given the nature of the valuation of precious metals. The value of such metals is determined by the demand for them on a global scale and is beyond our control. While we do not anticipate there to be a significant decrease in the value of precious metals, we cannot guarantee any such change in value


THERE IS SUBSTANTIAL UNCERTAINTY AS TO WHETHER WE WILL CONTINUE OPERATIONS.


If we discontinue operations, you could lose your investment. Our auditors have discussed their uncertainty regarding our business operations in their audit report dated August 31, 2011. This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such, we may have to cease operations and you could lose your entire investment.


WE LACK AN OPERATING HISTORY


There is no assurance that our future operations will result in continued profitable revenues. If we cannot generate sufficient revenues to operate profitably, our business will fail. We have very little operating history upon which an evaluation of our future success. We cannot guarantee that we will be successful in generating revenues in the future. Failure to generate revenues will cause us to go out of business.


BECAUSE OUR MANAGEMENT DOES NOT HAVE PRIOR EXPERIENCE IN MINING, OUR BUSINESS HAS A HIGHER RISK OF FAILURE.


Our current directors do not have experience in the mining industry. As a result, we may not be able to recognize and take advantage of opportunities without the aid of qualified marketing and business development consultants. Our directors' decisions and choices may not be well thought out and our operations, earnings and ultimate financial success may suffer irreparable harm as a result.



16




OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS AND THE FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK


Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these l penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.


In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority has adopted rules that require that in recommending an investment to a customer, a broker- dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the National Association of Securities Dealers believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The National Association of Securities Dealers' requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock .


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


On 11/26/2013 the Board of Directors authorized the conversion of old debt into Innocent Inc. Free Trading Common Stock in the amount of thirty three thousand dollars ($33,000) to QuoteBrand at a conversion rate of $.03 cents per share for a total of one million one hundred thousand shares (1,100,000) of Innocent Inc. common stock. This conversion will reduce the QuoteBrand Note Payable, issued on February 15, 2011 for cash funds received by Innocent Inc. in the amount of three hundred fifteen thousand dollars ($315,000) with a current balance due of three hundred eighty seven thousand one hundred forty eight dollars ($387,148) as of May 31, 2013. The new funds received will be recorded as a new note payable with the same interest rate of 10%.


On 11/14/2013 the Board of Directors authorized the issuance of five million (5,000,000) shares of rule 144 restricted common stock at a price of .015 per share value paid by the company and issued to Patrick Johnson for accepting the COO position, service as a Director and his efforts to bring a new venture and funding to the company. This issuance represents ownership of 20% of the current authorized and outstanding shares (25,000,000) of Innocent Inc.


During the period from September 27, 2006 (inception) to November 30, 2008, the Company issued 4,000,000 shares of common stock at $0.001 per share to its directors for total proceeds of $4,000 and 3,000,000 shares of common stock at $0.010 per share for total proceeds of $30,000. These funds we used for company initial operating expenses.


During the year ended August 31, 2010 the Company also issued 3,000,000 shares of its common stock to its president for consideration of services provided. These shares were valued at $.001 per share for total consideration of $3,000. Further during the year ended August 31, 2010, the Company issued 10,000,000 shares valued at $.001 for the conversion of a $10,000 note payable. The funds were utilized for company operations. Also during the year ended November 30, 2010 the Company issued 10,000,000 shares of its common stock which were held in escrow pending the close of a share exchange. These shares were rescinded.



17




ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.


None.


ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.


None


ITEM 5.

OTHER INFORMATION.


None


ITEM 6.

EXHIBITS


Exhibit Number

 

Title of Document

31.1

 

Sec.302 Certification of CEO/CFO

32.1

101

 

Sec.906 Certification of CEO/CFO

XBRL (eXtensible Business Reporting Language)















SIGNATURES


In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Innocent, Inc.



/s/ Patrick Johnson

Patrick Johnson

CEO

July 9, 2014



18


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