The accompanying footnotes are an integral part of these financial statements.
18
|
|
|
|
|
|
|
|
|
|
|
Innovative Product Opportunities Inc.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
For the year ended December 31, 2015
|
|
For the year ended December 31, 2014
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
$
|
(663,511)
|
|
$
|
(16,010,604)
|
|
|
Adjustments to reconcile net loss
to cash used in operating activities
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
231
|
|
|
230
|
|
|
|
Bad debt
|
|
|
18,025
|
|
|
--
|
|
|
|
Stock issued for services
|
|
|
369,572
|
|
|
6,507,800
|
|
|
|
Stock issued for debt
|
|
|
--
|
|
|
12,027
|
|
|
|
Loss on issuance of stock-based compensation
|
|
|
--
|
|
|
8,910,300
|
|
|
|
Accretion of debt discount
|
|
|
68,606
|
|
|
447,846
|
|
|
Change in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
Increase in accounts and receivable
|
|
|
(14,591)
|
|
|
(9,300)
|
|
|
|
(Decrease)/Increase in customer deposit
|
|
|
--
|
|
|
(65,000)
|
|
|
|
Increase in deferred revenue
|
|
|
10,288
|
|
|
|
|
|
|
Increase in prepaid expenses
|
|
|
(3,575)
|
|
|
(2,000)
|
|
|
|
Increase in accounts payable and accrued liabilities
|
|
|
179,784
|
|
|
140,040
|
|
|
|
(Decrease)/Increase in accrued interest
|
|
|
--
|
|
|
(967)
|
|
|
|
Net cash (used in) operating activities
|
|
|
(35,171)
|
|
|
(69,628)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing activities
|
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
--
|
|
|
--
|
|
|
|
Net cash used in investing activities
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
|
Bank indebtedness
|
|
|
(14)
|
|
|
14
|
|
|
|
Repayment on advances
|
|
|
(6,506)
|
|
|
(3,112)
|
|
|
|
Advances by related party
|
|
|
22,803
|
|
|
19,003
|
|
|
|
Repayment of advances by related party
|
|
|
(17,015)
|
|
|
--
|
|
|
|
Proceeds from notes payable
|
|
|
35,926
|
|
|
51,729
|
|
|
|
Net cash provided by financing activities
|
|
|
35,194
|
|
|
67,634
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
23
|
|
|
(1,994)
|
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning of the period
|
|
|
--
|
|
|
1,994
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of the period
|
|
$
|
23
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities
|
|
|
Conversion of notes payable for common stock
|
|
$
|
46,620
|
|
$
|
121,270
|
|
|
|
Debt discount recorded in connection with convertible notes
|
|
$
|
|
|
$
|
97,320
|
|
The accompanying footnotes are an integral part of these financial statements.
19
Innovative Product Opportunities Inc.
December 31, 2015 and 2014
NOTES TO CONSOLIDATED 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.
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. On July 8, 2013, Innovative received written notice that Cigar & Spirits will cancel the license agreement on August 1, 2013.
From inception (April 3, 2009) until June 30, 2014 our business was a product development firm creating products designed, prototyped and produced in numerous industries including consumer and household goods, office products, furniture, and toys.
Since July 1, 2014, our business is a research and product development firm specializing in computer vision and gesture recognition technologies targeted at the staging and lighting industry. The operations of the business are carried on by a 100% owned subsidiary, I8 Interactive Corporation, a company incorporated under the laws of Canada.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements present the balance sheets and statements of operations, stockholders' equity and cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.
GOING CONCERN
The Company's 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 at December 31, 2015 of $22,806,708. 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 Office and others, and the use of equity to pay some operating expenses. 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
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.
20
REVENUE RECOGNITION
The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected in advance of product delivery or providing services are recorded as deferred revenue or customer deposits. The company accrues for sales returns, bad debts, and other allowances based on its historical experience. Net sales under certain long-term contracts for product design, which may provide for periodic payments, are recognized under the percentage-of-completion method. Estimated cost-at-completion for these contracts are reviewed on a routine periodic basis, and adjustments are made periodically to the estimated cost-at-completion, based on actual costs incurred, progress made, and estimates of the costs required to complete the contractual requirements. When the estimated cost-at-completion exceeds the contract value, the contract is written down to its net realizable value, and the loss resulting from cost overruns is immediately recognized.
To properly match net sales with costs, certain contracts may have revenue recognized in excess of billings (unbilled revenues), and other contracts may have billings in excess of net sales recognized (customer deposits). Under long-term contracts, the prerequisites for billing the customer for periodic payments generally involve the Company's achievement of contractually specific, objective milestones.
Revenue for services contracts will be recognized under a proportional performance model if the following criteria are met (i) the arrangement provides for periodic billings as services are provided (ii) the customer receives value as the services as rendered, not just upon the completion of the services and (iii) the customer need not re-perform services that it has already received if it terminates the service contract early and hires another service provider to complete the service deliverable. If these criteria are not met, the Company will recognize revenue on the service contracts using the completed contract method.
INCOME TAXES
The Company accounts for income taxes in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("FASB ASC") 740, Income Taxes. Under the assets and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.
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.
FOREIGN CURRENCY TRANSLATION
The financial statements are presented in the Companys functional currency which is the United States dollars. In accordance with FASB ASC 830, Foreign Currency Matters, foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the periods presented. Related translation adjustments are reported as a separate component of stockholders' equity (deficit), whereas gains or losses resulting from foreign currency transactions are included in results of operations.
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.
21
The Company has not adopted a stock option plan and has not granted any stock options.
COMPREHENSIVE INCOME (LOSS)
The Company has adopted ASC Topic 220 - Comprehensive Income, which establishes standards for reporting and the display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners or distributions to owners. Among other disclosures, Topic 220 requires that all items that are required to be recognized under the current accounting standards as a component of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income is displayed in the statement of stockholders' deficit and in the balance sheet as a component of stockholders' deficit.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of operations or financial condition.
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entitys ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entitys ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact the adopting ASU 2014-15 on the Companys financial statement presentation and disclosures.
22
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
NOTE 3 - CUSTOMER DEPOSITS
The company has invoiced and received cash in the amount of $65,000 for a new product design project on behalf of two customers. The customer deposits were received from two customers, Al Kau and Aaron Shrira, who are shareholders and note holders of the Company.
In accordance with the revenue recognition policy of the Company, $65,000 of revenue was recognized during the year ended December 31, 2014 as the service contract was completed.
NOTE 4 ADVANCES
Advances are non-interest bearing, unsecured and due on demand.
NOTE 5 CONVERTIBLE NOTES
On June 10, 2014, the Company agreed to amend and add certain terms to unsecured, non-interest bearing promissory notes payable on demand issued to The Cellular Connection Ltd. issued during the period from February 22, 2013 to June 10, 2014 with a total carrying value $42,189. Under the terms of the Side Letter Agreement, the issue price of the Note is $42,189 with a face value of $54,193 and interest rate 20% per year. The terms of the Note include a fixed conversion price of $0.0002 per share of Companys common stock and a maturity date of December 31, 2014. The amendment of the terms of the Note resulted in a beneficial conversion feature of $42,189. The beneficial conversion feature of $42,189 is included in additional paid-in capital. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the note. On June 20 and 26, 2014 the Company elected to convert $5,500 of principal into 27,500,000 shares of the Company's common stock. In accordance with the original terms of the Side Letter Agreement, the convertible note was renewed on January 1, 2015, the face value increased by 20% and the maturity date was extended to December 31, 2015. From January 1 to December 31, 2015, the Company elected to convert $31,932 of principal and interest of a convertible note due to The Cellular Connection Ltd. into 319,320,000 shares of common stock of the Company at a fixed conversion price of $0.0001 per share. The consolidated statement of operations includes interest expense of $9,739 and $54,193 for the year ended December 31, 2015 and 2014, respectively.
On June 10, 2014, the Company entered into Side Letter Agreement with the Dorset Solutions Inc. to amend and add certain terms to invoices issued for services during the period from August 21, 2012 to May 17, 2014 with a total carrying value $17,150. Under the terms of the Side Letter Agreement, the issue price of the Note is $17,150 with a face value of $22,295 and interest rate 20% per year. The terms of the Note include a fixed conversion price of $0.0002 per share of Companys common stock and a maturity date of December 31, 2014. The amendment of the terms of the Note resulted in a beneficial conversion feature of $17,150. The beneficial conversion feature of $17,150 is included in additional paid-in capital. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the note. In accordance with the original terms of the Side Letter Agreement, the convertible note was renewed on January 1, 2015, the face value increased by 20% and the maturity date was extended to December 31, 2015. The consolidated statement of operations includes interest expense of $4,459 and $22,295 for the year ended December 31, 2015 and 2014, respectively.
On June 10, 2014, the Company entered into Side Letter Agreement with the Doug Clark, former Chief Executive Officer, to amend and add certain terms to the related party advances of $82,495 for the period from March 2009 to June 2014 and officer and director compensation accrued and unpaid of $137,000 for the period October 1, 2013 to May 19, 2014. Under the terms of the Side Letter Agreement, the issue price of the Note is $219,495 with a face value of $272,038 and interest rate 20% per year. The terms of the Note include a fixed conversion price of $0.0002 per share of Companys common stock and a maturity date of December 31, 2014. The amendment of the terms of the Note resulted in a beneficial conversion feature of $219,495. The beneficial conversion feature of $219,495 is included in additional paid-in capital. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the note. In accordance with the original terms of the Side Letter Agreement, the convertible note was renewed on January 1, 2015, the face value increased by 20% and the maturity date was extended to December 31, 2015. From January 1 to December 31, 2015, the Company elected to convert $14,688 of principal and interest of a convertible note due to Doug Clark into 73,437,515 shares of common stock of the Company at a fixed conversion price of $0.0002 per share. The consolidated statement of operations includes interest expense of $54,408 and $272,038 for the year ended December 31, 2015 and 2014, respectively.
23
On June 15, 2014, the Company agreed to amend and add certain terms to unsecured, non-interest bearing promissory notes payable on demand issued to Al Kau in a period from March 2012 to February 2013 with a total carrying value $36,000. Under the terms of the Side Letter Agreement, the issue price of the Note is $36,000 with a face value of $45,500 and interest rate 20% per year. The terms of the Note include a fixed conversion price of $0.008 per share of Companys common stock and a maturity date of December 31, 2015. The amendment of the terms of the Note resulted in a beneficial conversion feature of $36,000. The beneficial conversion feature of $36,000 is included in additional paid-in capital. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the note. On June 16, 2014 the Company elected to convert $45,500 of principal into 5,699,000 shares of the Company's common stock. The statement of operations included expense of $45,500 for amortization of debt discount for the year ended December 31, 2014.
On June 15, 2014, the Company agreed to amend add certain terms to unsecured, non-interest bearing promissory notes payable on demand issued to Aaron Shrira in a period from February to November 2012 with a total carrying value $42,917. Under the terms of the Side Letter Agreement, the issue price of the Note is $42,917 with a face value of $46,320 and interest rate 20% per year. The terms of the Note include a fixed conversion price of $0.008 per share of Companys common stock and a maturity date of December 31, 2015. The amendment of the terms of the Note resulted in a beneficial conversion feature of $42,917. The beneficial conversion feature of $42,917 is included in additional paid-in capital. The Note allows for the lender to secure a portion of the Company assets up to 200% of the face value of the note. On June 16, 2014 the Company elected to convert $46,320 of principal into 5,790,000 shares of the Company's common stock. The statement of operations included expense of $46,320 for amortization of debt discount for the year ended December 31, 2014.
NOTE 5 - NOTES PAYABLE
On January 17, 2014, the Company issued a promissory note in the amount of $2,743 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On January 20, 2014, the Company issued a promissory note in the amount of $2,737 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On January 31, 2014, the Company issued a promissory note in the amount of $2,684 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On February 20, 2014, the Company issued a promissory note in the amount of $1,822 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On March 25, 2014, the Company issued a promissory note in the amount of $1,325 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On March 28, 2014, the Company issued a promissory note in the amount of $2,000 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On June 5, 2014, the Company issued a promissory note in the amount of $16,260 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On June 10, 2014, The Cellular Connection Ltd. agreed to amend the terms of notes payable with principal of $42,189. See Note 5 Convertible Notes.
On June 15, 2014, Aaron Shrira agreed to amend the terms of notes payable with principal of $42,917. See Note 5 Convertible Notes.
On June 15, 2014, Al Kau agreed to amend the terms of notes payable with principal of $36,000. See Note 5 Convertible Notes.
On June 19, 2014, the Company issued a promissory note in the amount of $3,500 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On July 28, 2014, the Company issued a promissory note in the amount of $3,000 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
24
On August 26, 2014, the Company issued a promissory note in the amount of $2,736 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On September 11, 2014, the Company issued a promissory note in the amount of $1,025 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On September 29, 2014, the Company issued a promissory note in the amount of $1,344 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On November 12, 2014, the Company issued a promissory note in the amount of $442 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On November 20, 2014, the Company issued a promissory note in the amount of $1,147 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On November 25, 2014, the Company issued a promissory note in the amount of $2,560 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On December 15, 2014, the Company issued a promissory note in the amount of $2,014 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On January 14, 2015, the Company issued a promissory note in the amount of $2,512 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On January 29, 2015, the Company issued a promissory note in the amount of $2,379 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On February 6, 2015, the Company issued a promissory note in the amount of $2,396 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On March 20, 2015, the Company issued a promissory note in the amount of $1,660 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On April 17, 2015, the Company issued a promissory note in the amount of $5,000 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On May 6, 2015, the Company issued a promissory note in the amount of $1,162 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On May 15, 2015, the Company issued a promissory note in the amount of $2,490 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On May 22, 2015, the Company issued a promissory note in the amount of $747 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On July 15, 2015, the Company issued a promissory note in the amount of $1,525 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On August 19, 2015, the Company issued a promissory note in the amount of $2,305 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On August 24, 2015, the Company issued a promissory note in the amount of $1,152 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On September 10, 2015, the Company issued a promissory note in the amount of $2,093 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
25
On November 16, 2015, the Company issued a promissory note in the amount of $4,100 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
On November 23, 2015, the Company issued a promissory note in the amount of $1,705 to The Cellular Connection Limited. This note is unsecured, bears no interest and is payable on demand by the note holder.
As of December 31, 2015 and December 31, 2014 notes payable totaling $47,969 and $17,767, respectively, were outstanding. The balances are non-interest bearing, unsecured and have no specified terms of repayment.
NOTE 6 DUE TO RELATED PARTY
As of December 31, 2015 and December 31, 2014 advances of $4,390 were due to Doug Clark, the Company's former Chief Executive Officer. The balance are non-interest bearing, unsecured and have no specified terms of repayment.
As of December 31, 2015 and December 31, 2014 advances of $11,781 and $6,774, respectively, were due to Nadav Elituv, the Company's Chief Executive Officer. The balance is non-interest bearing, unsecured and have no specified terms of repayment.
As of December 31, 2015 and December 31, 2014 advances of $3,517 were due to Doug Clark, the Company's former Chief Executive Officer. The balance are non-interest bearing, unsecured and have no specified terms of repayment.
On July 1, 2015, the Company executed an employment agreement (Agreement) with Nadav Elituv, the Chief Executive Officer of the Company whereby the Company shall pay 50,000,000 shares of Common Stock of the Company and an annual salary of $360,000 payable monthly on the first day of each month from available funds. Pursuant to this Agreement, at December 31, 2015, salary payable of $169,078 is included in accounts payable and accrued liabilities and stock-based compensation of $5,000 is included in stock payable.
NOTE 7 - INCOME TAXES
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
Net loss before taxes
|
|
$
|
(663,511)
|
|
$
|
(16,010,604)
|
|
|
|
|
|
|
|
|
|
Income tax expense (recovery)
|
|
$
|
--
|
|
$
|
--
|
|
A reconciliation of the expected income tax expense, computed by applying a 35% U.S. Federal corporate income tax rate to income before taxes to income tax expense is as follows:
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
Expected income tax expense (recovery)
|
|
$
|
(228,800)
|
|
$
|
(5,603,700)
|
|
|
Share-based payments
|
|
|
129,400
|
|
|
5,396,300
|
|
|
Interest
|
|
|
24,000
|
|
|
156,700
|
|
|
Loss on debt settlement
|
|
|
--
|
|
|
4,200
|
|
|
Change in valuation allowance
|
|
|
75,400
|
|
|
46,500
|
|
|
|
|
$
|
--
|
|
$
|
--
|
|
|
At December 31, 2015 and 2014, the Company had available a net-operating loss carry-forward for Federal tax purposes of approximately $666,200 and $450,600, respectively, which may be applied against future taxable income, if any, at various times through 2035. Certain significant changes in ownership of the Company may restrict the future utilization of these tax loss carry-forwards. At December 31, 2015, the Company has a deferred tax asset of $233,800 representing the benefit of its net operating loss carry-forward. The Company has not recognized the tax benefit because realization of the tax benefit is uncertain and thus a valuation allowance has been fully provided against the deferred tax asset.
The Company recognizes interest and penalties, if any, related to uncertain tax positions in general and administrative expenses. No interest and penalties related to uncertain tax positions were accrued at December 31, 2015 and 2014.
The tax years 2015, 2014, 2013, remain open to examination by the major taxing jurisdictions in which the Company operates. The Company expects no material changes to unrecognized tax positions within the next twelve months.
26
NOTE 8 - STOCKHOLDERS' EQUITY
The Company is authorized to issue an aggregate of 3,000,000,000 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.
On May 27, 2014, Board of Directors and stockholders of the Company approved a reverse stock split of the Companys outstanding common stock in the ratio 1 for 1,000. The reverse stock split has been accounted for retroactively in these financial statements.
On January 1, 2014, the Company agreed to issue 210,000 shares of common stock valued at $42,000 to Doug Clark, the former Chief Executive Officer of the Company, as stock-based compensation. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On January 1, 2014, the Company agreed to issue 265,000 shares of common stock valued at $53,000 to Nadav Elituv, the Chief Executive Officer of the Company, as stock-based compensation for software development services related to interactive displays. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On January 1, 2014, the Company agreed to issue 210,000 shares of common stock valued at $42,000 to Al Kau, consultant, investor and customer of the Company, as stock-based compensation for development, implementation and maintenance of sound business strategies including identification of suitable merger and acquisition candidates. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On January 1, 2014, the Company agreed to issue 210,000 shares of common stock valued at $42,000 to Aaron Shrira, consultant, investor and customer of the Company, as stock-based compensation for introducing us to potential customers. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On January 1, 2014, the Company agreed to issue 192,000 shares of common stock valued at $38,400 to William Reil as stock-based compensation for development, implementation and maintenance of sound business strategies including identification of suitable merger and acquisition candidates. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On January 1, 2014, the Company agreed to issue 193,000 shares of common stock valued at $38,600 to Robert McLean, the Chief Financial Officer of the Company, as stock-based compensation. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On January 1, 2014, the Company agreed to issue 193,000 shares of common stock valued at $38,600 to Grant Stummer, a director of the Company, as stock-based compensation. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On January 28, 2014, the Company was agreed to issue 265,000 shares of common stock valued at $53,000 to Stuart Turk as stock-based compensation development, implementation and maintenance of sound business strategies including identification of suitable merger and acquisition candidates. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On June 2, 2014, the Company elected to convert $9,100 of principal and interest of a convertible note due to Al Kau into 91,000 shares of common stock of the Company at a fixed conversion price of $0.10 per share.
On June 17, 2014, the Company agreed to issue 16,000,000 shares of common stock valued at $1,600,000 to Robert McLean, the Chief Financial Officer of the Company, as stock-based compensation. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On June 17, 2014, the Company agreed to issue 16,000,000 shares of common stock valued at $1,600,000 to Grant Stummer, the Director of the Company, as stock-based compensation. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
27
On June 17, 2014, the Company agreed to issue 15,000,000 shares of common stock valued at $1,500,000 to Nadav Elituv, the Chief Executive Officer of the Company, as stock-based compensation. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On June 17, 2014, the Company agreed to issue 66,000,000 shares of common stock valued at $6,600,000 to consultants as stock-based compensation for development, implementation and maintenance of sound business strategies. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On June 17, 2014, the Company elected to convert $45,500 of principal and interest of a convertible note due to Al Kau into 5,699,000 shares of common stock of the Company at a fixed conversion price of $0.008 per share.
On June 17, 2014, the Company elected to convert $46,320 of principal and interest of a convertible note due to Aaron Shrira into 5,790,000 shares of common stock of the Company at a fixed conversion price of $0.008 per share.
On June 23, 2014, the Company agreed to issue 81,000,000 shares of common stock valued at $2,430,000 to consultants as stock-based compensation for development, implementation and maintenance of sound business strategies. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On June 20, 2014, the Company elected to convert $1,500 of principal and interest of a convertible note due to The Cellular Connection Ltd. into 7,500,000 shares of common stock of the Company at a fixed conversion price of $0.0002 per share.
On June 26, 2014, the Company elected to convert $4,000 of principal and interest of a convertible note due to The Cellular Connection Ltd. into 20,000,000 shares of common stock of the Company at a fixed conversion price of $0.0002 per share.
On June 27, 2014, the Company agreed to issue 10,000,000 shares of common stock valued at $400,000 to consultant as stock-based compensation for development, implementation and maintenance of sound business strategies. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On August 25, 2014, the Company agreed to issue 9,500,000 shares of common stock valued at $940,500 to Doug Clark, former Chief Executive Officer as stock-based compensation for development, implementation and maintenance of sound business strategies. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
On August 25, 2014, the Company agreed to issue 150,000 shares of common stock valued at $14,850 to settle debt in the amount of $2,823. The statement of operations includes $12,027 for loss on debt settlement for the year ended December 31, 2015.
On January 12, 2015, the Company agreed to issue 221,340,000 shares of common stock valued at $177,072 to consultants as stock-based compensation for development, implementation and maintenance of sound business strategies. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services.
From January 1, 2015 to December 31, 2015, the Company elected to convert $31,932 of principal and interest of a convertible note due to The Cellular Connection Ltd. into 319,320,000 shares of common stock of the Company at a fixed conversion price of $0.0001 per share.
On April 30, 2015, the Company elected to convert $14,688 of principal and interest of a convertible note due to Doug Clark into 73,437,515 shares of common stock of the Company at a fixed conversion price of $0.0002 per share.
On June 15, 2015, the Company agreed to issue 200,000,000 shares of common stock valued at $60,000 to consultants as stock-based compensation for development, implementation and maintenance of sound business strategies. The services are valued based on the closing price of the Company's common stock on the date of the agreement.
On June 15, 2015, the Company agreed to issue 50,000,000 shares of common stock valued at $15,000 to Nadav Elituv, the Chief Executive Officer of the Company, as stock-based compensation for salary. The salary is valued based on the closing price of the Company's common stock on the date of the agreement.
On August 31, 2015, the Company agreed to issue 50,000,000 shares of common stock valued at $5,000 to consultants as stock-based compensation for development, implementation and maintenance of sound business strategies.
28
On November 25, 2015, the Company agreed to issue 1,100,000,000 shares of common stock valued at $110,000 to Nadav Elituv, the Chief Executive Officer of the Company, as stock-based compensation for development, implementation and maintenance of sound business strategies.
NOTE 9 - SUBSEQUENT EVENTS
On March 22, 2016, the Company agreed to issue 50,000,000 shares of common stock valued at $70,000 ($0.0014 per share) to a consultant as stock-based compensation for development, implementation and maintenance of sound business strategies.
On March 22, 2016, the Company and Nadav Elituv, the Chief Executive Officer of the Company, agreed to cancel 153,500,000 shares of common stock of the Company held by Nadav Elituv.
29
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
We have had no changes in or disagreements with our accountants. None of our principal independent accountants have resigned or declined to stand for re-election.
ITEM 9A(T). CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being December 31, 2015. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our companys reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2015 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of June 30, 2013, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2016: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There was no change in our internal control over financial reporting, which are included within disclosure controls and procedures, that occurred during our fiscal quarter ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
30
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth the name, age, positions and offices that each director and officer have held for the past five years as of December 31, 2015. Members of the Board are elected and serve for one year terms or until their successors are elected and qualify. Our executive officers are elected by and serve at the pleasure of our Board of Directors. There are no family relationships among our directors and executive officers.
|
|
|
|
|
Name
|
Age
|
Position
|
|
Nadav Elituv
|
52
|
President, Chairman, Chief Executive Officer and Director
|
|
Grant Stummer
|
49
|
Director
|
|
|
|
|
BOARD OF DIRECTORS
Our board of directors consists of only one director. Directors serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal.
The following is information on the business experience of our directors and executive officers:
BIOGRAPHIES OF EXECUTIVE OFFICERS AND DIRECTORS
Nadav Elituv has been our President, Chief Executive Officer and Director since June 2014. Mr. Elituv devotes a minimum of 40% of his working time to the affairs of our Company. Since August 2008, Mr. Elituv has serviced as the President and Founder of Imagin8. Imagin8 is a startup and leading developer of hand and body motion-based interactive digital technologies that are designed to enhance new consumer experiences from touch-screens to floor-screens. Mr. Elituv is the results-driven leader of an innovative digital technology enterprise, for over twenty years. With a track record for building, developing and motivating high-performance teams and is an expert in high-tech systems. This includes the design and implementation of computer-vision and gesture-recognition software. Mr. Elituv has solid career experience driving strategic initiatives and meeting critical business mandates.
Grant Stummer, has been our director since April 2009. Mr. Stummer is CEO of a private plastic injection tool and part manufacturer. Since 1992 he has worked his way to co-owner of the Mississauga based company. This niche ISO9001 certified plastics company produces complex components that are used worldwide in many industries. In the last 15 years he has tripled his sales and has implemented systems that have increased his profitability as a lean manufacturer. Mr. Stummer's knowledge and contacts in the plastic industry offer our company insight and direction from the industry.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
We are not aware of any material legal proceedings that have occurred within the past five years concerning any director, director nominee, or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We do not have any securities registered under Section 12 of the Exchange Act, as amended. Accordingly, our directors, executive officers, and stockholders beneficially owning more than 10% of our common stock are not required to comply with the reporting requirements of Section 16(a) of the Exchange Act.
CODE OF ETHICS
We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We will provide a copy of our Code of Ethics to any person, free of charge, upon written request to Nadav Elituv at Innovative Product Opportunities Inc., 28 Argonaut, Suite 140, Aliso Viejo, California 92656
31
PROCEDURE FOR NOMINATING DIRECTORS
There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors.
The Board of Directors will consider candidates for director positions that are recommended by any of our stockholders. The recommended candidate should be submitted to us in writing addressed to 33 Davies Ave., Level 1, Toronto, Ontario, Canada M4N 2A9. The recommendation shall include the following information: name of candidate; address, phone, and fax number of candidate; a statement
signed by the candidate certifying that the candidate wishes to be considered for nomination to our Board of Directors and stating why the candidate believes that he or she meets the director qualification criteria and would otherwise be a valuable addition to our Board of Directors; a summary of the candidate's work experience for the prior five years and the number of shares of our stock beneficially owned by the candidate.
The Board will evaluate the recommended candidate and will determine whether or not to proceed with the candidate in accordance with our procedures. We reserve the right to change our procedures at any time to comply with the requirements of applicable laws.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad corporate policies and reviewing our overall performance rather than day-to-day operations. The Board's primary responsibility is to oversee management of our company and, in so doing, serve the best interests of our company and our stockholders. Our full Board of Directors performs all of the functions normally designated to an Audit Committee, Compensation Committee and Nominating Committee.
Although our Board does not have a separately-designated standing Audit Committee, our full Board of Directors performs the functions usually designated to an Audit Committee. As of December 31, 2015 Mr. McLean has been designated as the Board's "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K. We have determined that Mr. McLean is "independent" as independence for audit committee members is defined in Rule 5605 of the Nasdaq Marketplace Rules and Rule 10A-3 of the Securities Exchange Act of 1934. Mr. McLean's experience and background has provided him with an understanding of accounting principles generally accepted in the United States of America and financial statements prepared thereon. Mr. McLean has experience preparing, auditing, analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues comparable to the issues that can reasonably be expected to be raised by our financial statements. Mr. McLean has an understanding of audit committee functions.
32
ITEM 11. EXECUTIVE COMPENSATION.
EXECUTIVE COMPENSATION
Summary Compensation Table
On January 1, 2014, the Company agreed to issue 210,000 shares of common stock valued at $42,000 to Doug Clark, the former Chief Executive Officer of the Company, as stock-based compensation.
On January 1, 2014, the Company agreed to issue 265,000 shares of common stock valued at $53,000 to Nadav Elituv, the Chief Executive Officer of the Company, as stock-based compensation
On January 1, 2014, the Company agreed to issue 193,000 shares of common stock valued at $38,600 to Robert McLean, the Chief Financial Officer of the Company, as stock-based compensation.
33
On January 1, 2014, the Company agreed to issue 193,000 shares of common stock valued at $38,600 to Grant Stummer, a director of the Company, as stock-based compensation.
On June 17, 2014, the Company agreed to issue 15,000,000 shares of common stock valued at $1,500,000 to Nadav Elituv, the Chief Executive Officer of the Company, as stock-based compensation.
On June 17, 2014, the Company agreed to issue 16,000,000 shares of common stock valued at $1,600,000 to Grant Stummer, the Director of the Company, as stock-based compensation.
On June 17, 2014, the Company agreed to issue 16,000,000 shares of common stock valued at $1,600,000 to Robert McLean, the Chief Financial Officer of the Company, as stock-based compensation.
On June 23, 2014, the Company agreed to issue 15,000,000 shares of common stock valued at $450,000 to Doug Clark, the former Chief Executive Officer of the Company, as stock-based compensation for services of $3,000. The services are valued based on the closing price of the Company's common stock on the date of the agreement exchanged for the services. $447,000 was included as a loss on stock-based compensation for the year ended December 31, 2015.
On June 15, 2015, the Company agreed to issue 50,000,000 shares of common stock valued at $15,000 to Nadav Elituv, the Chief Executive Officer of the Company, as stock-based compensation for salary. The salary is valued based on the closing price of the Company's common stock on the date of the agreement.
On July 1, 2015, the Company executed an employment agreement (Agreement) with Nadav Elituv, the Chief Executive Officer of the Company whereby the Company shall pay 50,000,000 shares of Common Stock of the Company and an annual salary of $360,000 payable monthly on the first day of each month from available funds. Pursuant to this Agreement, at December 31, 2015, salary payable of $169,078 is included in accounts payable and accrued liabilities and stock-based compensation of $2,500 is included in stock payable.
On November 25, 2015, the Company agreed to issue 1,100,000,000 shares of common stock valued at $110,000 to Nadav Elituv, the Chief Executive Officer of the Company, as stock-based compensation for development, implementation and maintenance of sound business strategies.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
At December 31, 2015, there were no unexercised options, no stock that has not vested and no equity incentive plan ward for each name executive officer.
We do not have any qualified or non-qualified defined benefit plans or nonqualified defined contribution plans or other deferred compensation plans. There are no contracts, agreements, plans or arrangements that provide for payment to our named executive officer following or in connection with the resignation, retirement or termination of the named executive officer, a change in control of our Company, or a change in the named executive officer's responsibilities following a change in control.
DIRECTOR COMPENSATION
On July 1, 2015, the Company executed an employment agreement (Agreement) with Nadav Elituv, the Chief Executive Officer of the Company whereby the Company shall pay 50,000,000 shares of Common Stock of the Company and an annual salary of $360,000 payable monthly on the first day of each month from available funds. Pursuant to this Agreement, at December 31, 2015, salary payable of $169,078 is included in accounts payable and accrued liabilities and stock-based compensation of $2,500 is included in stock payable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 2015, Nadav Elituv served as our director. We do not have a separately standing compensation committee and our board of directors did not perform similar functions as there was no executive compensation paid from our inception on April 3, 2009 through the end of our most recently completed fiscal year ended December 31, 2015. Our board of directors performs the functions of a compensation committee, however as of March 24, 2016, the board of directors has not set any compensation.
34
During the fiscal year ended December 31, 2015, none of our executive officers:
·
served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire the board of directors) of another entity, one of whose executive officers served as a member of our board of directors;
·
served as a director of another entity, one of whose executive officers served as a member of our board of directors; or
·
served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire the board of directors) of another entity, one of whose executive officers served as a member of our board of directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 24, 2016, as to shares of our common stock beneficially owned by: (1) each person who is known by us to own beneficially more than 5% of our common stock, (2) our named executive officer listed in the summary compensation table, (3) each of our directors and (4) all of our directors and executive officers as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
|
|
|
|
|
Number of Shares Beneficially Owned
|
|
Percentage of Class
(2)
|
Name and Address
(1)
|
Class
|
Nadav Elituv
|
1,004,100,000
|
Common
|
46.36%
|
Grant Stummer
|
6,193,000
|
Common
|
*
|
All directors and executive
officers (1 person)
|
1,010,293,000
|
Common
|
46.64%
|
*Denotes less than 1%
|
(1) The address of all individual directors and executive officers is c/o Innovative Product Opportunities Inc., 33 Davies Ave., Level 1, Toronto, Ontario, Canada M4M 2A9
(2) The number of shares of common stock issued and outstanding on March 24, 2016 was 2,166,050,605 shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 2015 and 2014 advances of $10,232 and $3,418, respectively, were due to Nadav Elituv, the Company's Chief Executive Officer and at December 31, 2015 and 2014, advances of $1,549 and $3,526, respectively were due to 2130555 Ontario Limited, a company controlled by Nadav Elituv. The advances are non-interest bearing, unsecured and have no specified terms of repayment. The advances were used to pay for operational costs and services.
Our policy with regard to transactions with related persons or entities is that such transactions must be on terms no less favorable than could be obtained from non-related persons. The above-described transactions were conducted at arms length and on terms no less favorable than those that could be obtained from non-related person.
The above related party transactions are not necessarily indicative of the amounts that would have been incurred had a comparable transaction been entered into with an independent party. The terms of these transactions were more favorable than would have been attained if the transactions were negotiated at arm's length.
35
DIRECTOR INDEPENDENCE
As of March 24, 2015, Nadav Elituv and Grant Stummer serve as our directors. Mr. Elituv is not an independent director. Mr. Stummer is an "independent" director, as defined under the standards of independence set forth in the NASDAQ Marketplace Rules. We have our common stock quoted on the Over-the-Counter Bulletin Board, or OTCBB. The OTCBB does not require that a majority of our board of directors be independent.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Fees related to services performed by KLJ & Associates, LLP and our former auditors, Silberstein Ungar, for the years ended December 31, 2015 and 2014 were as follows:
|
|
|
|
|
2015
|
|
2014
|
Audit Fees
|
$ 18,900
|
|
$ 25,500
|
Audit-Related Fees
|
0
|
|
0
|
Tax Fees
|
0
|
|
0
|
All Other Fees
|
0
|
|
0
|
Total
|
$18,900
|
|
$ 25,500
|
Pre-Approval Policies
The Board's policy is to pre-approve all audit services and all non-audit services before they commence, including the fees and terms thereof, to be provided by our independent auditor. All of the services provided during the fiscal year ended December 31, 2015 were pre-approved. No audit, review or attest services were approved in accordance with Section 2-01(c)(7)(i)(C) of Regulation S-X during the fiscal year ended December 31, 2015.
During the approval process, the Board considered the impact of the types of services and the related fees on the independence of the independent registered public accounting firm. The services and fees were deemed compatible with the maintenance of that firm's independence, including compliance with rules and regulations of the SEC. Throughout the year, the Board will review any revisions to the estimates of audit fees initially estimated for the engagement.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
a. The following documents are filed as part of this annual report on Form 10-K:
1. FINANCIAL STATEMENTS
The following documents are filed in Part II, Item 8 of this annual report on Form 10-K:
Report of Independent Registered Public Accounting Firm
Balance Sheets at December 31, 2015 and 2014
Statements of Operations for the years ended December 31, 2015 and 2014
Statement of Stockholders' Equity (Deficit) for the years ended December 31, 2015 and 2014
Statements of Cash Flows for the years ended December 31, 2015 and 2014
Notes to Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
All financial statement schedules have been omitted as they are not required, not applicable, or the required information is otherwise included.
36
3. EXHIBITS
The exhibits listed below are filed with or incorporated by reference in this annual report on Form 10-K.
|
|
|
|
|
|
|
|
|
|
Incorporated by reference
|
Exhibit
|
Exhibit Description
|
Filed herewith
|
Form
|
Period ending
|
Exhibit
|
Filing date
|
3.1
|
Certificate of Incorporation, dated April 3, 2009
|
(i)
|
S-1
|
|
3.1
|
6/22/2010
|
3.2
|
Bylaws, dated April 3, 2009
|
(ii)
|
S-1
|
|
3.2
|
6/22/2010
|
3.3
|
Certificate of Amendment to the Certificate of Incorporation, dated August 8, 2013
|
(iii)
|
10-Q
|
|
3.3
|
8/14/2013
|
4.1
|
Specimen Stock Certificate
|
(iv)
|
S-1
|
|
4.1
|
6/22/2010
|
4.2
|
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, dated August 6, 2013
|
|
10-Q
|
|
4.2
|
8/14/2013
|
10.1
|
Innovative Product Opportunities Inc. Trust Agreement
|
|
S-1
|
|
10.1
|
6/22/2010
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
|
|
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
|
|
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
|
|
|
|
32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
|
|
|
|
101.INS*
|
XBRL Instance Document
|
X
|
|
|
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
X
|
|
|
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
X
|
|
|
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
X
|
|
|
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
X
|
|
|
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Definition
|
X
|
|
|
|
|
37
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
|
INNOVATIVE PRODUCTS OPPORTUNITIES INC.
|
|
|
March 29, 2016
|
By:
/s/ Nadav Elituv
Nadav Elituv, President (Principal Executive Officer), Principal Financial Officer and Director
|
|
|
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
|
|
|
SIGNATURE
|
TITLE
|
DATE
|
|
|
|
|
|
|
By:
/s/ Nadav Elituv
Nadav Elituv
|
President (Principal Executive Officer), Principal Financial Officer and Director
|
March 29, 2016
|
|
|
|
|
|
|
38