UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
[X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended March 31, 2015
OR
[
] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _________ to __________
Commission
File Number: 333-167667
INNOVATIVE
PRODUCT OPPORTUNITIES INC.
(Exact
name of registrant as specified in its charter)
|
Delaware |
|
42-1770123 |
|
|
(State
or Other Jurisdiction of |
|
(I.R.S.
Employer |
|
|
Incorporation
or Organization) |
|
Identification
No.) |
|
|
33
Davies Ave, Level 1 Toronto, Ontario Canada M4M 2A9
(Address
of Principal Executive Offices) |
|
M4N
2A9
(Zip
Code)
|
|
|
|
|
|
|
(347)
789-7131
(Registrant's
telephone number, including area code)
N/A
(Former
name, former address and former fiscal year, if changed since last report)
Indicate
by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [x] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) 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.
Large
accelerated filer |
[ ] |
Accelerated
filer |
[ ] |
Non-accelerated
filer |
[ ] |
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]
State
the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As
of May 15, 2015, the issuer had 741,793,090 shares of its common stock issued and outstanding, par value $0.0001 per share.
INNOVATIVE
PRODUCT OPPORTUNITIES INC.
QUARTERLY
REPORT ON FORM 10-Q
FOR
THE QUARTER ENDED MARCH 31, 2015
TABLE
OF CONTENTS
PART
I |
|
PAGE |
Item
1. |
Financial
Statements |
2 |
Item
2. |
Management’s
Discussion and Analysis of Financial Condition and Results of Operations |
10 |
Item
3. |
Quantitative
and Qualitative Disclosures About Market Risk |
12 |
Item
4. |
Controls
and Procedures |
12 |
PART
II |
|
|
Item
1. |
Legal
Proceedings |
13 |
Item
1A. |
Risk
Factors |
13 |
Item
2. |
Unregistered
Sales of Equity Securities and Use of Proceeds |
13 |
Item
3. |
Defaults
Upon Senior Securities |
13 |
Item
4. |
Mining
Safety Disclosures |
13 |
Item
5. |
Other
Information |
13 |
Item
6. |
Exhibits |
14 |
|
Signatures |
15 |
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements.
Innovative Product Opportunities Inc. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Unaudited) |
| |
March 31, 2015 | |
December 31, 2014 |
| |
| |
|
| |
| |
|
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current assets | |
| | | |
| | |
Cash | |
$ | 51 | | |
$ | — | |
Accounts and sundry receivable | |
| 1,446 | | |
| 9,300 | |
Prepaid expenses | |
| — | | |
| 2,000 | |
Total current assets | |
| 1,497 | | |
| 11,300 | |
| |
| | | |
| | |
Property and equipment, net | |
| 318 | | |
| 376 | |
| |
| | | |
| | |
Total assets | |
$ | 1,815 | | |
$ | 11,676 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Bank indebtedness | |
$ | — | | |
$ | 14 | |
Accounts payable and accrued liabilities | |
| 8,406 | | |
| 10,365 | |
Convertible notes, net of unamortized debt discount of $51,690 and $0, respectively | |
| 333,442 | | |
| 343,026 | |
Notes payable | |
| 25,689 | | |
| 17,767 | |
Due to related party | |
| 21,038 | | |
| 14,681 | |
Total current liabilities | |
| 388,575 | | |
| 385,853 | |
| |
| | | |
| | |
Total liabilities | |
| 388,575 | | |
| 385,853 | |
| |
| | | |
| | |
Stockholders’ deficit | |
| | | |
| | |
Preferred stock; $0.001 par value; 1,000,000 shares authorized, -0- issued and outstanding | |
| — | | |
| — | |
Common stock; $0.0001 par value; 3,000,000,000 shares authorized, 741,793,090 and 255,453,090 shares issued and outstanding, respectively | |
| 74,179 | | |
| 25,545 | |
Additional paid-in capital | |
| 21,898,413 | | |
| 21,743,475 | |
Accumulated deficit | |
| (22,359,352 | ) | |
| (22,143,197 | ) |
Total stockholders’ deficit | |
| (386,760 | ) | |
| (374,177 | ) |
| |
| | | |
| | |
Total liabilities and stockholders’ deficit | |
$ | 1,815 | | |
$ | 11,676 | |
The accompanying
footnotes are an integral part of these financial statements.
Innovative Product Opportunities Inc. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
| |
Three months ended March 31, 2015 | |
Three months ended March 31, 2014 |
| |
| |
|
Sales | |
$ | — | | |
$ | — | |
Cost of sales | |
| — | | |
| — | |
Gross profit | |
| — | | |
| — | |
| |
| | | |
| | |
Operating expenses | |
| | | |
| | |
Bad debt | |
| 8,250 | | |
| — | |
General and administrative | |
| 13,918 | | |
| 26,333 | |
Stock-based compensation - services | |
| 177,072 | | |
| 321,100 | |
Total expenses | |
| 199,240 | | |
| 347,433 | |
Loss from operations | |
| (199,240 | ) | |
| (347,433 | ) |
| |
| | | |
| | |
Other income (loss) | |
| | | |
| | |
Loss on issuance of stock-based compensation | |
| — | | |
| (26,500 | ) |
Accretion of debt discount | |
| (16,916 | ) | |
| (5,192 | ) |
Interest | |
| — | | |
| (3 | ) |
| |
| (16,916 | ) | |
| (31,695 | ) |
| |
| | | |
| | |
Net loss for the period | |
$ | (216,156 | ) | |
$ | (379,128 | ) |
| |
| | | |
| | |
Net loss per common share - basic | |
$ | 0 | | |
$ | (0.14 | ) |
| |
| | | |
| | |
Weighted average number of common shares outstanding – basic | |
| 631,114,425 | | |
| 2,624,192 | |
The accompanying
footnotes are an integral part of these financial statements.
Innovative Product Opportunities Inc. |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(Unaudited) |
|
| |
For the three months ended March 31, 2015 | |
For the three months ended March 31, 2014 |
Cash flows from operating activities | |
| | | |
| | |
Net loss for the period | |
$ | (216,156 | ) | |
$ | (379,128 | ) |
Adjustments to reconcile net loss to cash used in operating activities | |
| | | |
| | |
Depreciation and amortization | |
| 58 | | |
| 57 | |
Bad debt | |
| 8,250 | | |
| | |
Stock issued for services | |
| 177,072 | | |
| 321,100 | |
Loss on issuance of stock-based compensation | |
| — | | |
| 26,500 | |
Accretion of debt discount | |
| 16,916 | | |
| 5,192 | |
Change in operating assets and liabilities | |
| | | |
| | |
Increase in accounts receivable | |
| (397 | ) | |
| — | |
Decrease in prepaid expenses | |
| 2,000 | | |
| — | |
Increase in accounts payable and accrued liabilities | |
| (1,957 | ) | |
| 11,696 | |
Net cash (used in) operating activities | |
| (14,214 | ) | |
| (14,583 | ) |
| |
| | | |
| | |
Cash flow from financing activities | |
| | | |
| | |
Advances | |
| 8,947 | | |
| — | |
Repayment of advances | |
| (1,039 | ) | |
| — | |
Advances by related party | |
| 13,458 | | |
| — | |
Repayment of advances by related party | |
| (7,101 | ) | |
| — | |
Proceeds from notes payable | |
| — | | |
| 13,311 | |
Net cash provided by financing activities | |
| 14,265 | | |
| 13,311 | |
| |
| | | |
| | |
Net change in cash | |
| 51 | | |
| (1,272 | ) |
| |
| | | |
| | |
Cash, beginning of the period | |
| — | | |
| 1,994 | |
| |
| | | |
| | |
Cash, end of the period | |
$ | 51 | | |
$ | 772 | |
| |
| | | |
| | |
Supplement disclosure of cash flow information: | |
| | | |
| | |
Interest paid | |
$ | — | | |
$ | — | |
Taxes paid | |
$ | — | | |
$ | — | |
The accompanying
footnotes are an integral part of these financial statements.
Innovative
Product Opportunities Inc.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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.
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
accompanying unaudited financial statements of Innovative Product Opportunities Inc. have been prepared without audit pursuant
to the rules and regulations of the Securities and Exchange Commission requirements for interim financial statements. Therefore,
they do not include all of the information and footnotes required by accounting principles generally accepted in the United States
for complete financial statements. The financial statements should be read in conjunction with the annual financial statements
for the year ended December 31, 2014 of Innovative Product Opportunities Inc. in our Form 10-K filed on April 15, 2015.
The
interim financial statements present the balance sheets, statements of operations and cash flows of Innovative Product Opportunities
Inc. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States.
The
interim financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial
position as of March 31, 2015 and the results of operations and cash flows presented herein have been included in the financial
statements. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results
of operations for the full year.
GOING CONCERN
The
Company's 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 March 31, 2015 of $22,359,352. 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.
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 Company’s 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.
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
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
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
August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an
Entity’s 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 entity’s 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
entity’s 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 Company’s financial statement presentation and
disclosures.
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 – ADVANCES
Advances
are non-interest bearing, unsecured and due on demand.
NOTE
4 – 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 Company’s
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 March 31, 2015, the Company elected to convert $26,500 of principal
and interest of a convertible note due to The Cellular Connection Ltd. into 265,000,000 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 $2,401
for the three months ended March 31, 2015.
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 Company’s 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 $1,099 for the three months ended
March 31, 2015.
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 Company’s 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.
The consolidated statement of operations includes interest expense of $13,416 for the three months ended March 31, 2015.
NOTE
5 – NOTES PAYABLE
As
of March 31, 2015 and December 31, 2014 notes payable totaling $25,689 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 March 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 March 31, 2015 and December 31, 2014 advances of $13,131 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 March 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.
NOTE
7 – 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
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 to March 31, 2015, the Company elected to convert $26,500 of principal and interest of a convertible note due to The
Cellular Connection Ltd. into 265,000,000 shares of common stock of the Company at a fixed conversion price of $0.0001 per share.
NOTE
8 – SUBSEQUENT EVENTS
In
accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to March 31, 2015 to the date these financial
statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial
statements.
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
report on Form 10-Q contains "forward-looking statements" that involve risks and uncertainties. You should not place
undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking
statements for many reasons, including the risks described in our Form 10-K filed on April 15, 2015, and other filings we make
with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements
are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of
the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our
expectations, except as required by law.
The
following discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction
with our audited financial statements and related notes thereto included elsewhere in this report, and in our Form 10-K filed
on April 15, 2015.
BUSINESS
OVERVIEW
We
incorporated on April 3, 2009 as Innovative Product Opportunities Inc. under the laws of the State of Delaware. We expect to incur
losses in the foreseeable future due to significant costs associated with our business start-up, developing our business and costs
associated with on-going operations. 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.
MANAGEMENT'S
STRATEGIC VISION
Our
business is a research and product development firm specializing in computer vision and gesture recognition technologies targeted
at the staging and lighting industry.
As
we secure funds, we plan to attract new clients and assist them in their automating stage lighting and add interactivity to video
projection. We do not know when we will be profitable in the staging and lighting business and as a result, when, if ever, we
will generate profits. In addition to increasing our staging and lighting offerings, we intend to introduce distribution channels
and increase our products for sale. This strategic vision will evolve as necessitated by the clients we are able to attract.
RESULTS
OF OPERATIONS
COMPARISON
OF RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014.
REVENUES
Our
revenue for the three months ended March 31, 2015 was $0, compared to $0 for the three months ended March 31, 2014. We are completely
dependent upon the willingness of our management to fund our initial operations by way of loans from our Chief Executive Officer
and shareholders.
COSTS
OF GOODS SOLD
We
did not incur cost of sales for the three months ended March 31, 2015 and 2014.
OPERATING
EXPENSES
Our
general and administrative expense for the three months ended March 31, 2015 and 2014 was $13,918 and $26,333, respectively. The
expenses can be primarily attributed to our need to pay for professional fees, our transfer agent and investment relations. Our
bad debt expenses for the period ended March 31, 2015 and 2014 was $8,250 and $0, respectively. During the three months ended
March 31, 2015, we issued 221,340,000 shares of common stock of the Company valued at $177,072 for consulting services. During
the three months ended March 31, 2014, we issued 1,738,000 shares of common stock of the Company valued at $347,600 for consulting
services.
OTHER
INCOME (EXPENSE)
During
the three months ended March 31, 2015 and 2014, the Company incurred $0 and $26,500, respectively, for loss of issuance of stock-based
compensation. Interest expense for the three months ended March 31, 2015 and 2014, was $0 and $3, respectively. Accretion of debt
discount for the three months ended March 31, 2015 was $16,916 compared to $5,192 for the three months ended March 31, 2014.
NET
INCOME/LOSS
Our
net loss for the three months ended March 31, 2015 and 2014 was $216,156 and $379,128, respectively. Our losses during the three
months ended March 31, 2015 and 2014 are due to costs associated with professional fees, our transfer agent, investor relations,
bad debt and stock-based compensation for services.
LIQUIDITY
AND CAPITAL RESOURCES
LIQUIDITY
As
of March 31, 2015, we had total current assets of $1,497 and total current liabilities of $388,575, resulting in a working capital
deficit of $387,078. At March 31, 2015, we had cash of $51. Our cash flows used in operating activities for the three months ended
March 31, 2015 was $14,214. Our current cash balance and cash flow from operating activities will not be sufficient to fund our
operations. Our cash flow from financing activities for the three months ended March 31, 2015 was $14,265. Our cash flows used
in investing activities for the three months ended March 31, 2015 was $0. The Company has an accumulated deficit at March 31,
2015 of $22,359,352. The deficit reported at March 31, 2015 is largely a result of operating expenses for professional fees, our
transfer agent, investor relations, bad debt, stock-based compensation and loss on issuance of stock-based compensation for services.
Over
the next 12 months we expect to expend approximately $50,000 in cash for legal, accounting and related services and an additional
$150,000 in cash to implement our business plan. We hope to be able to compensate our independent contractors with stock-based
compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these
efforts.
We
expect to be able to secure capital through advances from our Chief Executive Officer, note holders, shareholders and others in
order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees. We believe it will be difficult
to secure capital in the future because we have no assets to secure debt and there is currently no trading market for our securities.
We will need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have
to curtail our operations or terminate our business entirely.
The
inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures
for developing products and services, or otherwise curtail or discontinue our operations, which could have a material adverse
effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital
through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing
stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences
and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless
of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services
by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.
OPERATING
CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS
We
are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and
others. We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us
to use our cash, although there can be no assurances that we will be successful in these efforts. We expect that we will be required
to raise an additional $200,000 in cash by issuing new debt or equity for operating costs in order to implement our business plan
in the next twelve months. The funds are loaned to the Company as required to pay amounts owed by the Company. As such, our operating
capital is currently limited to the personal resources of our Chief Executive Officer, note holders, shareholders and others.
The loans from our Chief Executive Officer, note holders, shareholders and others are unsecured and non-interest bearing and have
no set terms of repayment. Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin
Board since February 17, 2011. The stock currently trades under the symbol “IPRU.OB.”
OFF-BALANCE
SHEET TRANSACTIONS
We
currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect
on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As
a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing
scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
ITEM
4T. CONTROLS AND PROCEDURES
EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES
As
required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer
evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934)
as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial
officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective
to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities
Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including
our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The
conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses
in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation
of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting
with respect to the requirements and application of both United States generally accepted accounting principles and Securities
and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective
until the material weaknesses are remediated.
We
plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered
by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate
such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2015, subject to obtaining
additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk
management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation
efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes
required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
Because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.
CHANGES
IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were
no changes in our internal control over financial reporting during the quarter ended March 31, 2015 that have materially affected
or are reasonably likely to materially affect, our internal control over financial reporting.
PART
II - OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS.
We
may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect
on our operations or finances. We are not aware of any pending or threatened litigation against our Company or our officers and
directors in their capacity as such that could have a material impact on our operations or finances.
ITEM
1A. RISK FACTORS
A
smaller reporting company is not required to provide the information required by this Item.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On
January 12, 2015, the Company issued 173,000,000 restricted shares of common stock valued at $138,400 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.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES.
During
the quarter ended March 31, 2015, we did not have any defaults upon senior securities.
ITEM
4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM
5. OTHER INFORMATION.
Not applicable.
ITEM
6. EXHIBITS
|
|
|
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 the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
X |
|
|
|
|
32.1 |
Certification
of the Chief Executive Officer and 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 |
|
|
|
|
*
In accordance with Regulation S-T, the XBRL-related information on Exhibit No. 101 to this Quarterly Report on Form 10-Q shall
be deemed “furnished” herewith and not “filed.”
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
|
|
INNOVATIVE
PRODUCTS OPPORTUNITIES INC. |
|
|
May
15, 2015 |
By:
/s/ Nadav Elituv
Nadav
Elituv, President (Principal Executive Officer), Principal Financial Officer and Director |
EXHIBIT 31.1
INNOVATIVE PRODUCT OPPORTUNITIES, INC.
OFFICER'S CERTIFICATE PURSUANT TO SECTION 302
I, Nadav Elituv, certify
that:
1. I have reviewed this Form 10-Q of INNOVATIVE PRODUCT OPPORTUNITIES, INC.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on
my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal control over financial reporting.
Dated: May 15, 2015
By: /s/ Nadav Elituv
Nadav Elituv
President (Principal Executive Officer), Principal Financial Officer and Director
EXHIBIT 32.1
INNOVATIVE PRODUCT OPPORTUNITIES, INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of INNOVATIVE PRODUCT OPPORTUNITIES,
INC. (the Registrant) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Nadav Elituv, Principal Executive Officer and
Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by
Section 906 has been provided to Nadav Elituv and will be retained by INNOVATIVE PRODUCT OPPORTUNITIES,
INC. and furnished to the Securities and Exchange Commission or its staff upon request.
Dated: May 15, 2015
By: /s/ Nadav Elituv
Nadav Elituv
President (Principal Executive Officer), Principal Financial Officer and Director
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