XOTC:IPRU Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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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 June 30, 2012 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 (IRS Employer incorporation or organization) Identification No.) 28 Argonaut, Suite 140, Aliso Viejo, California 92656 --------------------------------------------------------- (Address of principal executive offices) (347) 789-7131 --------------------- (Registrant's telephone number, including area code) Not Applicable --------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the 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 (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ] <PAGE> Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filed, a non-accelerated filed, or a small reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act. Large Accelerated filer [ ] Accelerated filer [ ] Non-Accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] As of August 14, 2012 the Issuer had 208,000,000 shares of common stock issued and outstanding, par value $0.0001 per share. <PAGE> INNOVATIVE PRODUCT OPPORTUNITIES INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2012 (A Development Stage Enterprise) TABLE OF CONTENTS Page PART I - FINANCIAL INFORMATION Item 1 - Consolidated Balance Sheets (Unaudited) as of June 30, 2012 and December 31, 2011 ...........................................F1 Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2012 and 2011 and from inception (April 3, 2009) to June 30, 2012..................................F2 Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2012 and 2011 and from inception (April 3, 2009) to June 30, 2012.................................F3 Notes to Consolidated Financial Statements (Unaudited)........F4-F10 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations..............................................4 Item 3 - Quantitative and Qualitative Disclosures About Market Risk.........8 Item 4T - Controls and Procedures............................................9 PART II - OTHER INFORMATION Item 1 - Legal Proceedings..................................................9 Item 1A - Risk Factors.......................................................9 Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds.......14 Item 3 - Defaults Upon Senior Securities...................................15 Item 4 - Mine Safety Disclosures...........................................15 Item 5 - Other Information ................................................15 Item 6 - Exhibits..........................................................15 <PAGE> PART I - FINANCIAL INFORMATION Item 1. Financial Statements. Innovative Product Opportunities Inc. (A Development Stage Enterprise) BALANCE SHEETS (Unaudited) June 30, December 31, 2012 2011 ------------- ------------ ASSETS Current assets Cash $ 3,815 $ 6,642 Prepaid expenses 47,667 -- ------------- ------------ Total current assets 51,482 6,642 ------------- ------------ Total assets $ 51,482 $ 6,642 ============= ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable and accrued liabilities $ 11,064 $ 621 Notes payable 117,850 -- Due to related party 69,353 61,649 ------------- ------------ Total current liabilities 198,267 62,270 ------------- ------------ Total liabilities 198,267 62,270 ------------- ------------ Stockholders' deficit Preferred stock; $0.001 par value; 1,000,000 shares authorized, -0- issued and outstanding -- -- Common stock; $0.0001 par value; 500,000,000 shares authorized, 208,000,000 and 118,000,0000 shares issued and outstanding as of June 30,2012 and December 31,2011, respectively 20,800 11,800 Additional paid-in capital 5,523,200 5,335,200 ------------- ------------ Accumulated deficit during development stage (5,640,645) (5,402,628) ------------- ------------ (96,645) (55,628) Non-controlling interest (50,140) -- ------------- ------------ Total stockholders' deficit (146,785) (55,628) ------------- ------------ Total liabilities and stockholders' deficit $ 51,482 $ 6,642 ============= ============ The accompanying footnotes are an integral part of these consolidated financial statements. F1 <PAGE> Innovative Product Opportunities Inc. (A Development Stage Enterprise) STATEMENTS OF OPERATIONS (Unaudited) For the For the For the For the from inception three months three months six months six months (April 3, 2009) ended June 30, ended June 30 ended June 30 ended June 30 through 2012 2011 2012 2011 June 30 2012 =============== ============== ============== ============== ================ <S> <C> <C> <C> <C> <C> Sales $ 32,789 $ -- $ 44,644 $ -- $ 65,644 Cost of sales 615 -- 3,678 -- 3,678 -------------- ------------- ------------- ------------- --------------- Gross profit 32,174 -- 40,966 -- 61,966 -------------- ------------- ------------- ------------- --------------- Operating expenses Bad debts -- -- -- 21,000 21,000 General and administrative 115,777 15,941 163,242 45,207 250,870 Stock-based compensation 149,333 -- 149,333 -- 5,464,333 -------------- ------------- ------------- ------------- --------------- Total expenses 265,110 15,941 312,575 66,207 5,736,203 -------------- ------------- ------------- ------------- --------------- Net operating loss (232,936) (15,941) (271,609) (66,207) (5,674,237) -------------- ------------- ------------- ------------- --------------- Other income (expense) Gain on settlement of accounts receivable -- -- -- -- 336,000 Other-than-temporary impairment loss on securities -- -- -- -- (124,950) Loss on cancelation of securities -- -- -- -- (211,050) -------------- ------------- ------------- ------------- --------------- -- -- -- -- -- -------------- ------------- ------------- ------------- --------------- Net loss for the period (232,936) (15,941) (271,609) (66,207) (5,674,237) Net loss attributable to non-controlling interest 27,219 -- 33,592 -- 33,592 -------------- ------------- ------------- ------------- --------------- Net loss attributable to Innovative Products Opportunities Inc. $ (205,717) $ (15,941) $ (238,017) $ (66,207) $ (5,640,645) =============== ============== ============== ============== ================ Net loss attributed to Innovative Products Opportunities Inc. per common share - basic $ 0.00 $ 0.00 $ 0.00 $ 0.00 =============== ============== ============== ============== Weighted average number of common shares outstanding - basic 170,417,581 60,065,935 144,208,789 45,613,259 The accompanying footnotes are an integral part of these consolidated financial statements. F2 <PAGE> Innovative Product Opportunities Inc. (A Development Stage Enterprise) STATEMENTS OF CASH FLOWS (Unaudited) From Inception (April 3 For the six For the six 2009) months ended months ended through June 30, 2012 June 30, 2011 June 30,2012 Cash flows from ------------- ------------- ------------ operating activities attributable to Innovative Product Opportunities Inc. $ (271,609) $ (66,207) $ (5,674,237) Adjustments to reconcile net loss to cash used in operating activities Shares issued to founder -- -- 2,000 Stock issued for services 149,333 5,000 5,464,333 Change in operating assets and liabilities (Increase)decrease in accounts receivable -- 21,000 -- Increase in due from related party (2,446) -- (2,446) Increase in accounts payable and accrued liabilities 10,444 (47) 11,065 ------------- ------------- ------------ Net cash used in operating activities (114,278) (40,254) (199,285) ------------- ------------- ------------ Cash flow from investing activities Cash received on acquisition of Szar International, Inc. 696 -- 696 Proceeds from issuance of common shares by Szar International, Inc. 252 -- 252 ------------- ------------- ------------ Net cash provided by investing activities 948 -- 948 ------------- ------------- ------------ Cash flow from financing activities Advances by related party 24,244 48,688 330,893 Repayment of advances to related party (16,541) (20,000) (231,541) Advance on notes payable 117,800 -- 117,800 Repayment of notes payable (15,000) -- (15,000) ------------- ------------- ------------ Net cash provided by financing activities 110,503 28,688 202,152 ------------- ------------- ------------ Net change in cash (2,827) (11,566) 3,815 Cash, beginning of the period 6,642 15,775 -- ------------- ------------- ------------ Cash, end of the period $ 3,815 $ 4,209 $ 3,815 ============= ============= ============ Supplemental disclosure of non-cash investing and financing activities Prepayment of compensation in stock $ 47,667 $ - $ 47,667 ============= ============= ============ Conversion of due to related party for common stock $ -- $ 30,000 $ 30,000 ============= ============= ============ Notes payable on acquisition of Szar International, Inc. $ 15,050 $ -- $ 15,050 ============= ============= ============ Due to related party on acquisition of Szar International, Inc. $ 2,446 $ -- $ 2,446 ============= ============= ============ The accompanying footnotes are an integral part of these consolidated financial statements. F3 <PAGE> Innovative Product Opportunities Inc. (A Development Stage Enterprise) (Unaudited) 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. The Company is a development stage enterprise organized to provide product development. The Company is currently in the development stage as defined in Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 915. All activities of the Company to February 29, 2012 relate to its organization and share issuances for services. 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 is no specific rent terms included in the license agreement, but verbally they have agreed to allow IPRU to use their office on an on-going basis free of additional charge. The Company has determined that Cigar & Spirits is a Variable Interest Entity and that Innovative Products Opportunities Inc. is the primary beneficiary. As such, Cigar & Spirits has been consolidated into the Company's financial statements. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited consolidated 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 consolidated financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2011 of Innovative Product Opportunities Inc. in our Form 10-K filed on March 30, 2012 The interim consolidated 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 June 30, 2012 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. F4 <PAGE> NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) GOING CONCERN The Company's consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have significant operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The Company has an accumulated deficit during development stage at June 30, 2012 and December 31, 2011 of $(5,640,645) and $(5,402,628), respectively. The Company will be dependent upon the raising of additional capital through placement of its common stock in order to implement its business plan. There can be no assurance that the Company will be successful in this situation. Accordingly, these factors raise substantial doubt as to the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might result from this uncertainty. The Company is funding its initial operations by way of loans from its Chief Executive Officer. The Company's officers and directors have committed to advancing certain operating costs of the Company. CONSOLIDATION The consolidated financial statements include the accounts of the Company and its variable interest entity ("VIE") in which the Company is the primary beneficiary. The Company has adopted the accounting standards for non-controlling interests and reclassified the equity attributable to its non-controlling interests as a component of equity in the accompanying consolidated balance sheets. All significant intercompany balances and transactions have been eliminated in consolidation. Management's determination of the appropriate accounting method with respect to the Company's variable interests is based on accounting standards for VIEs issued by the Financial Accounting Standards Board ("FASB"). The Company consolidates any VIEs in which it is the primary beneficiary and discloses significant variable interests in VIEs of which it is not the primary beneficiary, if any. 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. F5 <PAGE> NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 statements 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 loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities basic and dilutive earnings per share are equal in the accompanying financial statement presentation. FOREIGN CURRENCY TRANSLATION The financial statements are presented in 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. F6 <PAGE> NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) STOCK-BASED COMPENSATION The Company measures stock-based compensation at the grant date based on the fair value of the award and recognizes stock-based compensation expense over the requisite service period. The Company also grants awards to non-employees and determines the fair value of such stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is completed. The Company adopted a stock option plan on August 30, 2011, but has not granted any stock options. FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with the requirements of FASB ASC 820, Fair Value Measurements and Disclosures, and FASB ASC 825, Financial Instruments, the Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The statement establishes market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The statement requires fair value measurements be classified and disclosed in one of the following categories: Level 1 - Quoted prices in active markets for identical assets and liabilities. Level 2 - Quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 - Significant inputs to the valuation model are unobservable. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The fair values of financial instruments, other than Investment securities, are classified as current assets or liabilities and approximate their carrying value due to the short-term maturity of the instruments. RECENT ACCOUNTING PRONOUNCEMENTS There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the quarter ended June 30, 2012 or which are expected to impact future periods, that were not already adopted and disclosed in prior periods. F7 <PAGE> 3. VARIABLE INTEREST ENTITY Following is a description of our financial interests in a variable interest entity that we consider significant, those for which we have determined that we are the primary beneficiary of the entity and, therefore, have consolidated the entity into our financial statements. Szar International, Inc. (dba Cigar & Spirits Magazine) ('Cigar & Spirits') - On March 1, 2012, we entered into a License Agreement with Cigar & Spirits. Under the terms of the Agreement, we have the right to market the products of Cigar & Spirits including but not limited to the sales, promotion and advertising vehicles. We have agreed to pay a fee of 1.5% of all sales generated plus a management fee of 1.5% based on the total monies paid for employee salaries, benefits and commissions. The Company is responsible for all expenses that relate to sales generated under the License Agreement. Cigar & Spirits may at any time in its sole discretion, with sixty days prior notice, terminate the agreement and revoke the license granted for any reason whatsoever and upon such termination we will immediately stop using the Cigar & Spirits trade names. We have determined that we are the primary beneficiary of Cigar & Spirits as our interest in the entity is subject to variability based on results from operations and changes in the fair value. After February 29, 2012, all operations of Cigar & Spirits are included in the License Agreement. The results of operations for Cigar & Spirits have been included in the financial statements of the Company. The Company did not pay consideration to enter into the License Agreement. The acquisition has been accounted for using the purchase method as follows: Cash $ 696 Due to related party (2,446) Notes payable (15,050) Non-controlling interest 16,800 --------- $ - ========= At June 30, 2012 our consolidated balance sheet recognizes current assets of $2,856 and current liabilities of $52,995 related to our interests in Cigar & Spirits. Our statement of operations recognizes sales of $44,644, cost of sales of $3,678 and selling, general and administrative expenses of $74,558 related to our interest in Cigar & Spirits for the period from March 1, 2012 to June 30, 2012. Additionally during the period from March 1, 2012 to June 30, 2012, the Company received $252 in proceeds from issuance of common shares by Szar International, Inc. F8 <PAGE> NOTE 4 - NOTES PAYABLE On February 22, 2012, the company issued two promissory notes in the value of $11,250 each for value received. These notes bear no interest and are payable on demand by the note holders. On March 6, 2012, the company issued two promissory notes in the value of $2,500 each for value received. These notes bear no interest and are payable on demand by the note holders. On May 1, 2012, the company issued a promissory note in the value of $12,500 for value received. These notes bear no interest and are payable on demand by the note holder. On May 10, 2012, the company issued a promissory note in the value of $12,500 for value received. These notes bear no interest and are payable on demand by the note holder. On May 31, 2012, the company issued a promissory note in the value of $32,000 for value received. In May 2012, a total of $15,000 was paid back. These notes bear no interest and are payable on demand by the note holder. During the period from April 1, 2012 to June 30, 2012, Cigar & Spirits received advances of $33,300. The balances are non-interest bearing, unsecured and have no specified terms of repayment. As of June 30, 2012 and December 31, 2011 notes payable of $117,850 and $0, respectively, were outstanding. The balances are non-interest bearing, unsecured and have no specified terms of repayment. NOTE 5 - RELATED PARTY TRANSACTIONS As of June 30, 2012 and December 31, 2011 advances of $69,352 and $61,649, respectively, were due to the Company's Chief Executive Officer and majority shareholder. The balances are non-interest bearing, unsecured and have no specified terms of repayment. NOTE 6 - STOCKHOLDERS' EQUITY The Company is authorized to issue an aggregate of 500,000,000 common shares with a par value of $0.0001 per share and 1,000,000 shares of preferred stock with a par value of $0.001 per share. No preferred shares have been issued. On April 3, 2009, the Company issued 20,000,000 shares of its common stock to its founder and Chief Executive Officer at $0.0001 per share to reimburse $459 of incorporation costs and to pay $1,541 in exchange for services rendered to the Company. Total incorporation costs and services of $2,000 are recorded as general and administrative expenses in the statement of operations. The fair value of the shares was determined by management of the Company on the date of issue of the stock grant. On April 3, 2009, the shares of the Company were not trading and there were no arm's length transactions in the Company shares with an independent party. As such, a quoted market price or a recent transaction in the Company shares was not available to estimate fair value. On the date of issue of the stock grant, the Company was recently formed or in the process of being formed and possessed no assets. The fair value of the Company shares was estimated to be equal to the par value of $0.0001 per share of the Company's common stock. F9 <PAGE> The tax years 2011, 2010 and 2009 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. On April 16, 2012, the Company issued 60,000,000 shares of common stock valued at $150,000 with $116,667 expensed during the three months ended June 30, 2012 and $33,333 included in prepaid expenses at June 30, 2012 for compensation for business development, consulting, design and technical services. The services are valued based on the closing price of $0.0038 per share for the shares of common stock exchanged for the services. On June 21, 2012, the Company issued 30,000,000 shares of common stock valued at $54,000 as compensation for business development and consulting services. The services are valued based on the closing price of $0.0018 per share for the shares of common stock exchanged for the services. F10 <PAGE> 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 March 30, 2012 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 March 30, 2012. BUSINESS OVERVIEW We incorporated on April 3, 2009 as Innovative Product Opportunities Inc. under the laws of the State of Delaware. We are currently in the development stage. Additionally, we have not completed development of any product. We expect to incur losses in the foreseeable future due to significant costs associated with our business startup, developing our business and costs associated with on-going operations. Our business is to be a service only product development firm to meet the needs of new and emerging product ideas available for sale today and in the future. Our Certified Engineering Technicians can participate in the creation of products, from hand sketches and design through prototyping and construction. We offer project management to assist our client to produce finished parts ready to market in numerous industries including, but not limited to, consumer and household goods, office products, furniture, and toys. We believe that we will be able to deliver a complete solution to startup and development stage companies. On March 1, 2012, we entered into a License Agreement with Szar International, Inc. (dba Cigar & Spirits Magazine) ('Cigar & Spirits'). Under the terms of the Agreement, we have the right to market the products of Cigar & Spirits including but not limited to the sales, promotion and advertising vehicles. We have agreed to pay a fee of 1.5% of all sales generated plus a management fee of 1.5% based on the total monies paid for employee salaries, benefits and commissions. The Company is responsible for all expenses that relate to sales generated under the License Agreement. Cigar & Spirits may at any time in its sole discretion, with sixty days prior notice, terminate the agreement and revoke the license granted for any reason whatsoever and upon such termination we will immediately stop using the Cigar & Spirits trade names. 4 <PAGE> CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying notes. Estimates are used for, but not limited to, the accounting for the allowance for doubtful accounts, impairment of long-term assets, stock-based compensation, income taxes and loss contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies, among others, may be impacted significantly by judgment, assumptions and estimates used in the preparation of the Financial Statements. CONSOLIDATION The consolidated financial statements include the accounts of the Company and its variable interest entity ("VIE") in which the Company is the primary beneficiary. The Company has adopted the accounting standards for non-controlling interests and reclassified the equity attributable to its non-controlling interests as a component of equity in the accompanying consolidated balance sheets. All significant intercompany balances and transactions have been eliminated in consolidation. Management's determination of the appropriate accounting method with respect to the Company's variable interests is based on accounting standards for VIEs issued by the Financial Accounting Standards Board ("FASB"). The Company consolidates any VIEs in which it is the primary beneficiary and discloses significant variable interests in VIEs of which it is not the primary beneficiary, if any. INVESTMENT SECURITIES Equity securities are classified as available for sale and are stated at fair value with unrealized gains and losses excluded from earnings and reported in other comprehensive income, net of tax. All available for sale securities are classified as current assets as they are available to support the Company's current operating needs in the next 12 months. Realized gains and losses on the sale of investment securities are recognized at the settlement date using the specific identification method and are included in the statements of operations. In accordance with ASC 320-10, "Investments-Debt and Equity Securities," the Company evaluates its securities portfolio for other-than-temporary impairment ("OTTI") throughout the year. Each investment that has a fair value less than the book value is reviewed on a quarterly basis by Management. Management considers at a minimum the following factors that, both individually or in combination, could indicate that the decline is other-than-temporary: (a) the Company has the intent to sell the security; (b) it is more likely than not that it will be required to sell the security before recovery; and (c) the Company does not expect to recover the entire amortized cost basis of the security. Among the factors that are considered in determining intent is a review of capital adequacy, interest rate risk profile and liquidity at the Corporation. An impairment charge is recorded against individual securities if the review described above concludes that the decline in value is other-than-temporary. 5 <PAGE> STOCK-BASED COMPENSATION The Company measures stock-based compensation at the grant date based on the fair value of the award and recognizes stock-based compensation expense over the requisite service period. The Company also grants awards to non-employees and determines the fair value of such stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is completed. The Company adopted a stock option plan on August 30, 2011, but has not granted any stock options. FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with the requirements of FASB ASC 820, Fair Value Measurements and Disclosures, and FASB ASC 825, Financial Instruments, the Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The statement establishes market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The statement requires fair value measurements be classified and disclosed in one of the following categories: Level 1 - Quoted prices in active markets for identical assets and liabilities. Level 2 - Quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 - Significant inputs to the valuation model are unobservable. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the quarter ended June 30, 2012 or which are expected to impact future periods, that were not already adopted and disclosed in prior periods. 6 <PAGE> RESULTS OF OPERATIONS COMPARISON OF RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011 AND FROM INCEPTION (APRIL 3, 2009) THROUGH JUNE 30, 2012. REVENUES Our revenue for the three and six months ended June 30, 2012 was $32,789 and $44,644, respectively, compared to $0 and $0 for the three and six months ended June 30, 2011. Our revenue from inception (April 3, 2009) through June 30, 2012 was $65,644. The increase in revenues was a result of the License Agreement with Szar International, Inc. (dba Cigar & Spirits Magazine) ('Cigar & Spirits') on March 1, 2012. As a result of the License Agreement, the Company has determined that it is the primary beneficiary of Cigar & Spirits, a Variable Interest Entity, and Cigar & Spirits has been fully consolidated in our financial statements. COSTS OF GOODS SOLD Our cost of sales for the three and six months ended June 30, 2012 was $615 and $3,678, respectively, compared to $0 and $0 for the three and six months ended June 30, 2011. Our revenue from inception (April 3, 2009) through June 30, 2012 was $3,678. The increase in cost of sales was directly related to the sales associated with the License Agreement with Cigar & Spirits. GENERAL AND ADMINISTRATIVE EXPENSES Our general and administrative expense for the three and six months ended June 30, 2012 was $115,777 and $163,242, respectively, compared to $15,941 and $45,207 for the three and six months ended June 30, 2011. The expenses can be primarily attributed to our need to pay for professional fees and our transfer agent and for the operations of Cigar & Spirits. The increase in general and administration expenses was primarily the result of the additional expenses incurred through Cigar & Spirits. During the three months ended June 30, 2012, we issued 90,000,000 shares of common stock of the Company valued at $197,000 for business development, consulting, design and technical services, of which $47,667 was recorded as prepaid for the services rendered in July 2012. In addition, we incurred bad debt expense of $21,000 for the three month period ended March 31, 2011. NET INCOME/LOSS Our net loss for the three and six months ended June 30, 2012 was $232,936 and $271,609, respectively, compared to $15,941 and $66,207 for the three and six months ended June 30, 2011. Our losses during the periods ended June 30, 2012 is due to costs associated with professional fees, our transfer agent and the operation of Cigar and Spirits as described above. LIQUIDITY AND CAPITAL RESOURCES LIQUIDITY As of June 30, 2012, we had total current assets of $51,482 and total current liabilities of $198,267, resulting in a working capital deficit of $(146,785). At the end of the quarterly period ending June 30, 2012, we had cash of $3,815. Our cash flows from operating activities for the six months ended June 30, 2012 resulted in cash used of $114,278. Our current cash balance and cash flow from operating activities will not be sufficient to fund our operations. Our cash flow from investing activities for the six months end June 30, 2012 was $948 and our cash flow from financing activities for the six months ended June 30, 2012 was $110,503. The Company has an accumulated deficit during development stage at June 30, 2012 and December 31, 2011 of $(5,640,645) and $(5,402,628), respectively. These conditions led to our auditor reporting substantial doubt about our ability to continue as a going concern. 7 <PAGE> Over the next 12 months we expect to expend approximately $25,000 in cash for legal, accounting and related services. Cash used for other expenditures is expected to be minimal. 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 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. 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. Our Chief Executive Officer has committed to advancing us an additional $25,000 for certain operating costs in order to start implementing our business plan. 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. The loans from our Chief Executive Officer 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. 8 <PAGE> ITEM 4T. CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are not effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures include components of our internal control over financial reporting. Management's assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's objectives will be met. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2012 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 WE ARE A DEVELOPMENT STAGE ENTERPRISE THAT LACKS ANY OPERATING HISTORY AND WE MAY NEVER BECOME PROFITABLE. We are a development stage enterprise without financial resources and an operating history on which an investor can base its assessment of our business plan. We expect to incur losses in the foreseeable future due to significant costs associated with our business startup and development, including costs associated with our on-going operations. Our operations may never generate sufficient revenues to fund our continuing operations and we may never generate positive cash flow from our operations. Further, we may not attain or sustain profitability in any future period. If we do not successfully develop our business, you may lose all or part of your investment. 9 <PAGE> IF WE FAIL TO SUCCESSFULLY MANAGE OUR NEW PRODUCT DEVELOPMENT OR NEW PRODUCT MARKET EXPANSION, OR IF WE FAIL TO ANTICIPATE THE ISSUES ASSOCIATED WITH SUCH DEVELOPMENT OR EXPANSION, OUR BUSINESS MAY SUFFER. We have not completed development on any product. Our ability to anticipate and manage a variety of issues associated with any new product development or market expansion, such as: * difficulties faced in manufacturing; * market acceptance; * effective management of inventory levels in line with anticipated product demand; and * quality problems or other defects in the early stages of product introduction that were not anticipated in the design of those products. Our business may suffer if we fail to successfully anticipate and manage these issues associated with product development and market expansion and you may lose all or part of your investment. OUR INDEPENDENT AUDITORS HAVE EXPRESSED DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN. Currently, we do not have any material assets, nor do we have operations or a source of revenue sufficient to cover our operational costs and allow us to continue as a going concern. Since our inception on April 3, 2009 through June 30, 2012, we have an accumulated deficit during the development stage of $(5,640,645). The Company will be dependent upon the raising of additional capital through placement of its common stock in order to implement our business plan. We are currently funding our initial operations by way of loans from our Chief Executive Officer and through the issuance of common stock in exchange for services. Accordingly, these factors raise substantial doubt as to our ability to continue as a going concern. CURRENT DECLINING GENERAL ECONOMIC OR BUSINESS CONDITIONS MAY HAVE A NEGATIVE IMPACT ON OUR BUSINESS. Our current and future business plans depend, in large part, on the overall state of the economy. Concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage market and a declining real estate market in the U.S. have contributed to increased volatility and diminished expectations for the global economy and expectations of slower global economic growth going forward. These factors, combined with volatile oil prices, declining business and consumer confidence and increased unemployment, have precipitated a global economic slowdown. If the economic climate does not improve or continues to deteriorate, it could have a material adverse effect on our ability to implement our business plan. 10 <PAGE> IF WE ARE UNABLE TO OBTAIN ADDITIONAL FINANCING, WE MAY NOT BE ABLE TO FULFILL OUR BUSINESS PLAN. We require substantial funds to further develop and implement our business plan . Over the next 12 months we expect to expend approximately $25,000 in cash for legal, accounting and related services. To meet our future obligations, from time to time, we may need to issue debt or shares of our common stock or other equity instruments such as warrants. However, we may not be able to obtain additional financing when needed, or if available, such financing may not be on commercially reasonable terms. If we are unable to obtain financing when needed, we may be forced to curtail our planned development, which would negatively affect the value of your investment. WE CURRENTLY DO NOT HAVE ANY CUSTOMERS AND IF WE CANNOT ATTRACT CUSTOMERS WE WILL NOT GENERATE REVENUES AND OUR BUSINESS WILL FAIL. Up to February 29, 2012, we have had only one customer. On March 1, 2012, we entered into a License Agreement with Szar International, Inc. (dba Cigar & Spirits Magazine), a variable interest entity that we consider significant, for which we have determined that we are the primary beneficiary of the entity and, therefore, have consolidated the entity into our financial statements. As a result of the License Agreement, we recorded $44,644 of revenue for the four month period ended June 30, 2012. We may not be able to successfully attract other customers and in the event that we do attract customers, we may not be able to maintain such customers and as a result, we will not generate revenues and our business will fail. If our business fails, you will lose all or part of your investment. OUR ORIGINAL SHAREHOLDERS HAVE CONTROL OVER OUR POLICIES AND AFFAIRS AND THEY MAY TAKE CORPORATE ACTIONS THAT COULD NEGATIVELY IMPACT OUR BUSINESS AND STOCK PRICE. Our original shareholder on August 14, 2012 owned approximately 24% of our voting securities. The original shareholders will control our policies and affairs and all corporate actions requiring shareholder approval, including the election of directors. Additionally, these holdings may delay, deter or prevent transactions, such as mergers or tender offers, that would otherwise benefit investors. WE MAY ENCOUNTER DIFFICULTIES MANAGING OUR PLANNED GROWTH, WHICH WOULD ADVERSELY AFFECT OUR BUSINESS AND COULD RESULT IN INCREASING COSTS AS WELL AS A DECREASE IN OUR STOCK PRICE. We intend to establish a customer base and develop new products for them. To manage our anticipated growth, we must continue to improve our operational and financial systems and expand, train, retain and manage our employee base to meet new opportunities. Because of the registration of our securities, we are subject to reporting and disclosure obligations, and we anticipate that we will hire additional finance and administrative personnel to address these obligations. In addition, the anticipated growth of our business will place a significant strain on our existing managerial and financial resources. If we cannot effectively manage our growth, our business may be harmed. 11 <PAGE> IF WE LOSE THE RESEARCH AND DEVELOPMENT SKILLS AND MANUFACTURING CAPABILITIES OF OUR FOUNDER, OUR ABILITY TO ATTAIN PROFITABILITY MAY BE IMPEDED AND IF WE DO NOT ATTAIN PROFITABILITY, OUR STOCK PRICE MAY DECREASE AND YOU COULD LOSE PART OR ALL OF YOUR INVESTMENT. Doug Clark founded our Company. He invested the necessary start-up costs from his personal finances and he is our Certified Engineering Technician. In addition, Mr. Clark has relationships with key suppliers. These relationships with suppliers afford us access to valuable resources that help ensure product availability on time that is competitively priced. Our success depends in large part upon Mr. Clark 's contacts in this industry. If we were to lose the benefit of his services, our ability to obtain materials at an affordable price would be adversely affected which would have a negative impact on our operations. We presently have no employment agreement with Mr. Clark. WE WILL INCUR INCREASED COSTS AND DEMANDS UPON MANAGEMENT AS A RESULT OF COMPLYING WITH THE LAWS AND REGULATIONS AFFECTING PUBLIC COMPANIES, WHICH COULD HARM OUR OPERATING RESULTS. As a public company, we will incur significant additional legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements. We also will incur costs associated with corporate governance requirements, including requirements under Section 404 and other provisions of the Sarbanes-Oxley Act, as well as rules implemented by the Securities and Exchange Commission ("SEC"). The expenses incurred by reporting companies for reporting and corporate governance purposes have increased dramatically in recent years. We expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We are unable to currently estimate these costs with any degree of certainty. We also expect these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage previously available. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as our executive officers. Currently we do not have a system of checks and balances in place covering our financial operations and investors will bear the economic risk associated with the lack of such oversight. BECAUSE WE DO NOT HAVE AN AUDIT COMMITTEE, SHAREHOLDERS WILL HAVE TO RELY ON THE DIRECTORS, WHO ARE NOT INDEPENDENT, TO PERFORM THESE FUNCTIONS. We do not have an audit or compensation committee comprised of independent directors. These functions are performed by the board of directors as a whole. The members of the Board of Directors are not independent directors. Thus, there is a potential conflict in that the board members are also engaged in management and participate in decisions concerning management compensation and audit issues that may affect management performance. TO DATE WE HAVE GENERATED $65,644 OF REVENUES FROM OPERATIONS SINCE INCEPTION AND WE MAY HAVE ADDITIONAL CAPITAL REQUIREMENTS TO CONTINUE OUR OPERATIONS BUT THEY MIGHT NOT BE AVAILABLE TO US ON FAVORABLE TERMS OR AT ALL, AND IF UNAVAILABLE OUR ABILITY TO RUN OUR BUSINESS WILL BE IMPAIRED. We have limited working capital. As a result, it may be impossible to expand our operations. If we are unable to generate sufficient revenues to cover operating expenses or raise additional funds after the twelve months or during the twelve months should we determine to undertake additional projects, outside of our current business plan, we will be unlikely to expand our business operations. 12 <PAGE> RISKS RELATED TO OUR STOCK OUR COMMON STOCK MAY BE DIFFICULT OR IMPOSSIBLE TO SELL YOUR SHARES FOR THE FORESEEABLE FUTURE. Our shares are listed on the Over-the-Counter Bulletin Board, trading symbol IPRU. "PENNY STOCK" RULES MAY MAKE BUYING OR SELLING OUR SECURITIES DIFFICULT WHICH MAY MAKE OUR STOCK LESS LIQUID AND MAKE IT HARDER FOR INVESTORS TO BUY AND SELL OUR SHARES. Trading in our securities is subject to the SEC's "penny stock" rules and it is anticipated that trading in our securities will continue to be subject to the penny stock rules for the foreseeable future. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends our securities to persons other than prior customers and accredited investors must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser's written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by these requirements may discourage broker-dealers from recommending transactions in our securities, which could severely limit the liquidity of our securities and consequently adversely affect the market price for our securities. OUR STOCK PRICE MAY BE VOLATILE, AND YOU MAY NOT BE ABLE TO RESELL SHARES OF OUR COMMON STOCK AT OR ABOVE THE PRICE YOU PAID. We cannot predict the extent to which a trading market will remain or how liquid that market might become. The selling stockholders will sell their shares at such prices and such times as they determine. It is possible that they may not sell their shares at all. The selling stockholders will sell at prevailing market prices or privately negotiated prices. The trading price of our common stock is therefore likely to be highly volatile and could be subject to wide fluctuations in price in response to various factors, some of which are beyond our control. These factors include: - Quarterly variations in our results of operations or those of our competitors. - Announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments. - The emergence of new sales channels in which we are unable to compete effectively. - Our ability to develop and market new and enhanced products on a timely basis. 13 <PAGE> - Commencement of, or our involvement in, litigation. - Any major change in our board or management. - General economic conditions and slow or negative growth of related markets. In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of individual companies. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a company's securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources. WE MAY ISSUE ADDITIONAL SHARES OF COMMON STOCK WHICH WOULD REDUCE INVESTORS' PERCENTAGE OF OWNERSHIP, DECREASE THE VALUE OF INVESTORS' INVESTMENT AND MAY DILUTE OUR SHARE VALUE. Our Certificate of Incorporation authorizes the issuance of 500,000,000 shares of common stock and 1,000,000 shares of preferred stock. In the past, we have been able to pay for some of the services we require through the issuance of our common stock. We may continue to compensate our consultants and other staff with common stock in order to preserve our cash for other uses. The future issuance of authorized common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the common stock held by our investors, may decrease the value of our investors' investment and might have an adverse effect on any trading market for our common stock, if one ever exists. WE DO NOT PLAN TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE, AND, AS A RESULT, STOCKHOLDERS WILL NEED TO SELL SHARES TO REALIZE A RETURN ON THEIR INVESTMENT. We have not declared or paid any cash dividends on our capital stock since inception. We intend to retain any future earnings to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. As a result, stockholders will need to sell shares of common stock in order to realize a return on their investment, if any. YOU MAY NOT BE ABLE TO SELL YOUR SHARES IN OUR COMPANY Our securities are subject to the penny stock rules, which apply generally to equity securities with a price of less than $5.00 per share, other than securities registered on certain national exchanges or quoted on the NASDAQ system. The penny stock rules reduce the level of trading activity and the secondary market for a security that becomes subject to the penny stock rules. Therefore, investors may find it more difficult to sell their Shares. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. Not applicable. 14 <PAGE> ITEM 3. DEFAULTS UPON SENIOR SECURITIES. During the quarter ended June 30, 2012, 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 EXHIBIT NO. IDENTIFICATION OF EXHIBIT 3.1 Certificate of Incorporation, dated April 3, 2009 (included as Exhibit 3.1 to the Form S-1 filed June 22, 2010, and incorporated herein by reference). 3.2 Bylaws, dated April 3, 2009 (included as Exhibit 3.2 to the Form S-1 filed June 22, 2010, and incorporated herein by reference). 4.1 Specimen Stock Certificate (included as Exhibit 4.1 to the Form S-1 filed June 22, 2010, and incorporated herein by reference). 10.1 Innovative Product Opportunities Inc. Trust Agreement (included as Exhibit 10.1 to the Form S-1 filed June 22, 2010, and incorporated herein by reference). 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 15 <PAGE> 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. Dated: August 14, 2012 By:/s/ Doug Clark ---------------------------- Doug Clark, Principal Executive Officer President and Chairman of the Board Dated: August 14, 2012 By:/s/ Robert McLean ---------------------------- Robert McLean, Principal Accounting Officer 16 <PAGE>

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XOTC:IPRU Innovative Product Opportunities Inc Quarterly Report 10-Q Filing - 6/30/2012
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