UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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INNOVATIA, INC.
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(Name of small business issuer in its charter)
(Primary Standard Industrial
Colorado 7310 84-1581975
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(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation Classification Code Number) Identification No.)
or organization)
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5655 S. Yosemite Street, Suite 109
Greenwood Village, Colorado 80111; (303) 468-1111
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(Address and telephone number of principal executive offices)
5655 S. Yosemite, Suite 109
Greenwood Village, Colorado 80111
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(Address of principal place of business or
intended principal place of business)
Mark A. Bogani
5655 S. Yosemite Street, Suite 109
Greenwood Village, Colorado 80111; (303) 468-1111
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(Name, address and telephone number of agent for service)
Please send copies of all correspondence to:
Randall Lanham, ESQ.
28562 Oso Parkway, Unit D
Rancho Santa Margarita, CA 92688
Telephone: (949) 858-6773
Approximate date of proposed sale to the public: From time to time after this
registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
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Common Stock 200,000 $.25 $50,000.00 $4.60
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The offering price per share for the selling security holders was estimated
solely for the purpose of calculating the registration fee pursuant to Rule
457(a) of Regulation C.
(begin boldface)
The Registrant shall amend this registration statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
(end boldface)
Preliminary Prospectus Dated June 28, 2002
SUBJECT TO COMPLETION
The information in this preliminary prospectus is not complete and may be
changed. We may complete or amend this preliminary prospectus without notice.
These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary prospectus is
not an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
INNOVATIA, INC.
200,000 Shares of Common Stock
$.25 per share
Per Total
share
Public Price. $0.25 $50,000
Commissions. $0 $0
Proceeds to INNOVATIA, INC. $0.25 $50,000
We are offering to the public 200,000 shares of common stock on a "best
efforts," "all-or-none," basis through our officers and directors. If we do not
sell all 200,000 shares within 180 days after commencement of this offering, the
offering will terminate and all money paid for shares will be promptly returned
to the purchasers, without interest and without deduction.
This is our initial public offering, and no public market currently exists for
our shares. The offering price may not reflect the market price of our shares
after the offering. There is no minimum purchase requirement and no arrangement
to place funds in an escrow, trust, or similar account.
An investment in our common stock involves a high degree of risk. You should
purchase our common stock only if you can afford a complete loss of your
purchase.
See "Risk Factors" beginning on page 3 for a discussion of material risks that
you should consider prior to purchasing any of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
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criminal offense.
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The information contained in this prospectus is subject to completion or
amendment. We have filed a registration statement with the Securities and
Exchange Commission relating to the securities offered in this prospectus. We
may not sell these securities nor may we accept any offers to buy the securities
prior to the time the registration statement becomes effective. This prospectus
is not an offer to sell or a solicitation of an offer to buy any securities. We
shall not sell these securities in any state where such offer, solicitation or
sale would be unlawful before we register or qualify the securities for sale in
any such State.
THE DATE OF THIS PROSPECTUS IS JUNE 28, 2002.
Innovatia, Inc. SB-2 1
PROSPECTUS SUMMARY
Innovatia, Inc. was organized on March 12, 2001, and is in the process of
commencing operations, but has not generated any revenue and is still a
development stage corporation. Innovatia is in the business of producing the
"Broadcast Art Show", consisting of digital images of artworks, collected from
numerous sources, combined into `shows', disseminated via various methods to
distant venues and displayed to the public there. Innovatia has only begun to
pursue the Broadcast Art Show concept, by contacting a limited number of artists
for their reactions and by filing a US patent application now being processed.
While the business does appear to be unique, there can be no assurance that the
market will accept and reward this new concept or that the business will be able
to generate any revenues. To date there has been no award of patent rights and
no indication that such rights are forthcoming.
Innovatia's address is: 5655 S. Yosemite St. #109, Greenwood Village, CO 80111.
Innovatia's telephone number is: 303-468-1111, and the facsimile number is:
303-468-1115.
The Offering
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Securities Offered...............................200,000 shares of common stock
Price Per Share...........................................................$0.25
Minimum Purchase...........................................................NONE
Duration of Offering...................................................180 Days
Innovatia, Inc. SB-2 2
Selected Financial Information
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We were only recently organized. Accordingly, we only recently commenced
operations and are now starting to develop relationships with artists and have
just begun collecting artwork for our Broadcast Art Show. After completing this
phase of our business plan, we will initiate the next phase, which will be to
find suitable commercial venues in which to broadcast. We cannot be certain that
we will ever generate earnings from our business.
Summary Balance Sheet Data:
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As of April 30, 2002
Working Capital $ 1,855
Total Assets $ 3,752
Total Liabilities $ 1,897
Total Shareholders' Equity $ 1,855
Summary Operating Data:
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Inception
(March 12, 2001) Three Months
to Ended
April 30, 2002 April 30, 2002
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Revenues $ --0-- $ --0--
Net Income (Loss) $ (7,095) $ (1,586)
Net Income (Loss) Per Share $ (.002365) $ (.0005286)
Weighted Average Number of Shares
of Common Stock Outstanding 3,000,000 3,000,000
Innovatia, Inc. SB-2 3
RISK FACTORS
The purchase of the shares of common stock being offered pursuant to this
prospectus is speculative and involves a high degree of risk. Before making an
investment decision, prospective investors should carefully consider, along with
other matters referred to in this prospectus, the following risk factors, which
have set forth all of the material risks inherent in and affecting our business
and this offering:
Risk Factors Related to This Offering
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We are a development-stage company with limited prior business operations and,
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accordingly, it is difficult to evaluate our business and prospects. Our
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prospects must be considered in light of the risks, expenses, delays and
difficulties frequently encountered in establishing a new business in a wholly
new industry. You should be aware of the increased risks, uncertainties,
difficulties and expenses we face as a new business with limited operating
history. Our marketing program may be expected to encounter problems,
complications, expenses and delays. Further, we will be subject to many of the
risks common to development-stage enterprises, including undercapitalization,
cash shortages, limitations with respect to personnel, technological, financial
and other resources and lack of a customer base and market recognition, most of
which are beyond our control. However, we can continue in operation for the next
twelve months if we receive the proceeds from the shares being offered. We
anticipate that we will need at least $50,000 of additional capital to continue
in operation for a period of approximately one year following the next twelve
months.
We have realized no revenue and no earnings, and we may not be able to achieve
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profitable operations in the future. We cannot be certain that we will achieve
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profitable operations in the future. See "Plan of Operation - Financial
Condition, Liquidity and Capital Resources" and "Certain Transactions" for a
more detailed description of our capitalization and financial condition. During
the development stage of our operations, the revenues generated from operations
can be expected to be insufficient to cover expenses.
We expect significant increases in our costs and expenses that may result in
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continuing losses for at least the next year, which, in turn, may cause a
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dramatic change in our business plan or the sale, merger or bankruptcy of our
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business. We cannot be certain that we will obtain enough venues or a high
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enough volume of advertisers to generate sufficient revenue and achieve
profitability. We believe that we will continue to incur operating and net
losses for at least the next year, and possibly longer, and that the rate at
which we incur these losses will increase significantly from current levels. We
intend to increase our costs and expenses substantially as we: Purchase the
equipment necessary to deliver the most technologically advanced digital picture
capture, distribution and display; Retain qualified consultants and/or employ
additional personnel; Increase our marketing and advertising activities; and
Increase our general and administrative functions to support our growing
operations. We may find that these efforts will be more expensive than we
currently anticipate or that these efforts may not result in proportional
increases in our revenues, which would further increase our losses.
Innovatia, Inc. SB-2 4
The continuation of business strongly depends on the two officers of the
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company. Our business is dependent upon Bruce Penrod and Mark Bogani, who are
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the current officers and directors of Innovatia. If Mr. Penrod or Mr. Bogani is
forced to leave office or resign, there will be no management to run our
business. In addition, both Mr. Bogani and Mr. Penrod will not be devoting full
time to the development of the company's business, since they have commitments
elsewhere.
Because our executive officers and directors are our only two employees and have
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limited experience, we may not be able to achieve profitability or maintain our
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operations with the limited experience of these individuals. Mr. Mark Bogani,
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our President/Chief Executive Officer and a director of Innovatia, and Mr. Bruce
Penrod, the Secretary/Treasurer and a director of Innovatia, are our only two
employees. We have no plans to retain any other personnel except one part-time,
administrative employee for the foreseeable future. Both Mr. Penrod and Mr.
Bogani have limited prior experience in our business. See "MANAGEMENT - Business
Experience" for a description of their previous business experience. We may not
be able to achieve profitability or maintain our operations with the limited
experience of our executive officers and directors. We do not have "key person"
life insurance policies covering either of these individuals.
We have limited assets and working capital and minimal shareholders' equity and,
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if our financial condition does not improve, we will cease operations and our
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shareholders will lose their entire investment. As of April 30, 2002, we had
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total assets of $ 3,752, including $3,752 in cash and cash equivalents, a
working capital of $1,855 and total shareholders' equity of $1,855. Our two
executive officers contributed funds that total $7,000 for all 3,000,000 of our
outstanding shares of common stock. Accordingly, we have only very limited
assets and financial resources. We cannot be certain that our financial
condition will improve. We will cease operations and our shareholders will lose
their entire investment if our financial condition does not improve.
We may not succeed in procuring the right venues, enough venues, participating
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artists, artworks which serve to entertain the public, or sufficient advertising
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revenues to support the venture. Since this venture is the first of its kind,
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there is no comparison available to similar ventures which might serve as a
guide to strategy.
Acceptance by Venues. Our business depends on acceptance by venues willing to
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offer the Art Show to their patrons. We have no agreements with any venue and
cannot be sure we will reach agreements with any venue in the future.
Reliance on Advertising revenues. Revenues from operations are anticipated to
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come predominantly from advertising sales. The medium of a digital art show is
new and unproven, and there can be no assurance that potential advertisers will
view it as viable and choose to purchase advertising. The medium is mute, which
precludes most conventional advertising, which combines audio with video.
Innovatia, Inc. SB-2 5
Dependence on Artists. Our business expects the cooperation and participation of
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artists to contribute pictures of their art works for display in the Show. While
we are hopeful that artists will view the Broadcast Art Show as a good outlet
giving them increased exposure, we have no assurance that artists will
contribute such works on an ongoing basis. Furthermore, it is unclear what types
of art will be available to the Show and how much appeal these will have to the
audience.
Our lack of a marketing organization and limited marketing capability may
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adversely affect customer acceptance and our revenues. Ultimately, we will need
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to expend funds to attract and train customer service personnel to help build
our brand and attract advertisers. We anticipate that our very limited finances
and other resources may be a determinative factor in the decision of any
prospective marketing or customer support personnel as to whether to become
employed by Innovatia. We will rely upon the judgment and conclusions of our
management, based solely upon their knowledge and prior limited business
experience, relative to our needs for marketing expertise, until such time, if
ever, as we are successful in attracting and employing capable marketing and
customer support personnel. As a result, we may not be able to achieve
profitability when we expect, or at all.
There is no public market for our common stock and, if a public market fails to
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develop or be sustained, then investors may be unable to sell, and therefore
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lose their investments in, the shares of common stock. There is no public market
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for our common stock and there is no assurance that a public market will develop
as a result of this offering or, if developed, that it will be sustained. Many
brokerage firms may not effect transactions in the securities and many lending
institutions may not permit their use as collateral for loans. The common stock
will be traded, if at all, in the "pink sheets" maintained by members of the
National Association of Securities Dealers, Inc., and possibly on the electronic
Bulletin Board. We will not satisfy the requirements either for being quoted on
the National Association of Securities Dealers' Automated Quotations System or
for listing on any national securities exchange. Accordingly, until we qualify
for NASDAQ or listing on an exchange, any trading market that may develop for
the common stock is not expected to qualify as an "established trading market"
as that term is defined in Securities and Exchange Commission regulations, and
is expected to be substantially illiquid.
Because our management will continue to control Innovatia, they will be able to
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determine the outcome of all matters requiring approval of our shareholders. Mr.
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Mark Bogani, our President /Chief Executive Officer and Mr. Bruce Penrod, our
Secretary/Treasurer, respectively, and owners together of all 3,000,000 shares
of our outstanding common stock, are parents and controlling persons of
Innovatia because of their positions and share ownership. Even following the
completion of this offering, Mr. Bogani and Mr. Penrod will together own 93.75%
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of our outstanding shares of common stock. Therefore, our two management
members, together, will be able to determine the outcome of all matters
requiring approval by our shareholders, including the election of directors and
the approval of mergers or other business combination transactions. See
"Principal Shareholders" for a description of management's share ownership and
"Management" for background on Mr. Bogani and Mr. Penrod.
Innovatia, Inc. SB-2 6
Our stock price will fluctuate after this offering, which may result in
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substantial losses for investors. The offering price for the shares of common
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stock being offered by this prospectus was arbitrarily selected and the trading
price will fluctuate after this offering once trading commences, if ever. The
fluctuation of the stock price could result in substantial losses for investors.
The market price of our common stock may fluctuate significantly in response to
a number of factors, some of which will be beyond our control. These factors
include: Quarterly variations in operating results; Announcements by us or our
competitors of new product and service offerings, significant contracts,
acquisitions or strategic relationships; Publicity about our company, our
products and services; Additions or departures of key personnel; Any future
sales of our common stock; and Stock market price and volume fluctuations of
publicly-traded companies in general. The trading prices of many public
companies have been especially volatile and many are at or near historical lows.
Investors may be unable to resell their shares of common stock at or above the
offering price.
The Penny Stock Rules will cover our stock, which may make it difficult for a
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broker to sell. Our common stock is a penny stock, which means that SEC rules
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require broker dealers who make transactions in the stock to comply with
additional suitability assessments and disclosures than they would in stock that
were not penny stocks.
This offering is a direct participation offering, and there may be less due
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diligence performed. In an underwritten offering, the underwriter and
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broker-dealers involved in the offering must make certain due diligence
inquiries to comply with rules imposed upon them by law and procedures imposed
upon them by the National Association of Securities Dealers. Since this is a
self-underwritten offering, no brokers will be involved to make those inquiries,
and there may be less due diligence performed, because our officers and
directors will sell shares.
New shareholders will incur substantial dilution of approximately $.233795 per
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share as a result of this offering. The current shareholders of Innovatia have
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acquired their shares of common stock at an average cost of $.0023333 per share,
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which is substantially less than the price of $.25 per share to be paid by the
investors in this offering. Accordingly, the offering price is substantially
higher than the book value per share of our outstanding common stock. As a
result, an investor who acquires shares of common stock in this offering will
incur immediate substantial dilution of approximately $.2321875 per share. See
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"Dilution" for a more detailed description of how new shareholders will incur
dilution.
Sales of substantial amounts of our shares may depress our stock price. A total
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of 200,000 shares being offered by Innovatia in this offering will be available
for resale immediately after the effectiveness of this offering. The balance of
3,000,000 shares of common stock held by our current shareholders, including an
aggregate of 1,500,000 shares held by each of our executive officers, becomes
eligible for resale pursuant to Rule 144 commencing in March 2003. Sales of a
substantial number of shares of our common stock could cause our stock price to
fall. In addition, the sale of these shares could impair our ability to raise
capital through the sale of additional stock. After this offering, we will have
3,200,000 shares of common stock outstanding, including 200,000 shares that we
are selling in this offering that may be resold immediately in the public
market. The remaining 3,000,000 shares will be eligible for resale in the public
market pursuant to Rule 144 commencing in March 2003.
Innovatia, Inc. SB-2 7
There is no guarantee that we will be able to raise the necessary funds in this
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offering or that additional funds will be available to us when we need them and,
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if financing is unavailable, we may need to dramatically change our business
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plan, sell or merge our business or face bankruptcy. Based on our current
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projections, we will need to raise funds after the expiration of one year from
the closing of this offering through the issuance of equity, equity-related or
debt securities in addition to the funds we are raising in this offering.
However, there is no guarantee that we will be able to raise the funds in this
offering that are necessary to maintain our business for the following year. We
cannot be certain that additional capital will be available to us on favorable
terms when required, or at all. If this additional financing is not available to
us, we may need to dramatically change our business plan, sell or merge our
business or face bankruptcy. In addition, our issuance of equity or
equity-related securities will dilute the ownership interest of existing
shareholders and our issuance of debt securities could increase the risk or
perceived risk of our company. Any of these actions could cause our stock price
to fall.
DETERMINATION OF OFFERING PRICE
We have arbitrarily determined the initial public offering price of the shares.
We considered several factors in such determination. Including the following:
our start up status; prevailing market conditions, including the history and
prospects for the industry in which we compete; our future prospects; and our
capital structure.
Therefore, the public offering price of the shares does not necessarily bear any
relationship to established valuation criteria and may not be indicative of
prices that may prevail at any time or from time to time in the public market
for the common stock. You cannot be sure that a public market for any of our
securities will develop and continue or that the securities will ever trade at a
price at or higher than the offering price in this offering.
ADDITIONAL INFORMATION
We have not authorized any person to give any information or to make any
representations other than those contained in this prospectus. You should not
rely on any information or representations not contained in this prospectus, if
given or made, as having been authorized by Innovatia. This prospectus does not
constitute an offer or solicitation in any jurisdiction in which the offer or
solicitation would be unlawful.
We intend to furnish to our stockholders annual reports containing financial
statements audited by our independent certified public accountants and quarterly
reports containing reviewed unaudited interim financial statements for the first
three-quarters of each fiscal year. You may contact the Securities and Exchange
Commission at 1-(800) SEC-0330 or you may read and copy any reports, statements
or other information that Innovatia, Inc. files with the Securities and Exchange
Commission at the Securities and Exchange Commission's public reference room at
the following location: Public Reference Room 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, Telephone 1(800)-SEC-0330. The Securities and Exchange
Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of the
site is http://www.sec.gov.
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Innovatia, Inc. SB-2 8
We have filed with the Commission a registration statement on Form SB-2 under
the Securities Act of 1933, as amended with respect to the securities offered in
this prospectus. This prospectus does not contain all the information set forth
in the registration statement, certain parts of which are omitted in accordance
with the rules and regulations of the SEC. For further information with respect
to us and the common stock offered in this prospectus, reference is made to such
registration statement, exhibits and schedules. Statements contained in this
prospectus as to the contents of any contract or other document referred to are
not necessarily complete and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference. A copy of the registration statement, including the exhibits and
schedules can be reviewed through EDGAR.
USE OF PROCEEDS
The amounts and timing of expenditures described in the table for each purpose
may vary significantly depending on numerous factors, including, without
limitation, the progress of our marketing, development of our services, our
ability to establish collaborative arrangements with artists and venues, the
initiation of commercialization activities, and the availability of other
financing. We anticipate, based on currently proposed plans and assumptions
relating to our operations, that our available cash of approximately $3,752, the
proceeds of this offering $50,000 and cash flow from operations, if any, will be
adequate to satisfy our capital needs for approximately 12 months following
consummation of this offering.
The proceeds from the sale of the shares of common stock offered hereby are
estimated to be approximately $50,000. We intend to utilize the estimated net
proceeds following the offering for the following purposes:
Application of Net Proceeds Amount Per Cent
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Professional fees............................... $4,000 8.0 %
Lease of Office Space (1)....................... $7,200 14.4 %
Purchase of equipment (2)....................... $20,000 40.0 %
Rental of Equipment and Services (3)............ $4,000 8.0 %
Additional Website Development (4).............. $3,000 6.0 %
Marketing/Advertising (5)....................... $6,000 12.0 %
Working capital(6).............................. $5,800 11.6 %
Total Net Proceeds $50,000 100.00%
(1) Lease of office space. Commencing Sept. 1, 2002, Innovatia be obligated to
pay rent for the office space it occupies at 5655 S. Yosemite Street, Suite 109,
Greenwood Village, CO 80111 at the rate of $2,000 per month.
(2) Purchase of equipment. Purchase video projection equipment and all necessary
hardware to install five Broadcast Art Show test locations. Each projector costs
approximately $3000 and the additional broadcast equipment and mounting hardware
costs an additional $1000.
(3) Equipment Rental. Rental of required video "toaster" equipment to compile
actual art show.
(4) Website Development. Although our websites are functional at this time, we
Innovatia, Inc. SB-2 9
anticipate utilizing the website development fund to enhance the website, making
the website more user friendly, and implementing additional functionality on the
artist upload site. This enhancement of the site will be paid for through this
allocation.
(5) Marketing/Advertising. Marketing/Advertising includes expenditures for
advertising in art-related informational material such as artist magazines in
order to form collaborative relationships with artists.
(6) Working Capital. We intend to apply the balance of the proceeds of the
offering to working capital. Our management will have broad discretion with
respect to the use of proceeds retained as working capital. Such proceeds may be
used to defray overhead expenses, purchase capital equipment, fund expansion and
negative cash flow positions and for future opportunities and contingencies that
may arise. We anticipate utilizing some of the working capital for such items as
letterhead, postage, telephone expenses, and general office administrative
purposes.
Innovatia, Inc. SB-2 10
DILUTION
The difference between our initial public offering price per share of common
stock and the pro forma net tangible book value per share of common stock after
this offering constitutes the dilution to investors in this offering. Our net
tangible book value per share is determined by dividing our net tangible book
value (total tangible assets less total liabilities) by the number of
outstanding shares of common stock.
At April 30, 2002 our common stock had a pro forma net tangible book value of
approximately $1,855 or $.0006183 per share. After giving effect to the receipt
of the net proceeds from this offering offered in this prospectus at an assumed
initial offering price of $.25 per share, our pro forma net tangible book value
at offering conclusion will be $51,855 or $.0162046 per share, representing an
immediate increase in net tangible book value of $.0155863 per share to our
present stockholders, and immediate dilution of $.2344137 per share to
investors, or 93.765%. The following table illustrates dilution to investors on
a per share basis:
Offering price per share $ .25
Net tangible book value per share before offering $ .0006183
Increase per share attributable to investors $ .0155863
Pro forma net tangible book value per share after offering $ .0162046
Dilution per share to investors $ .2344137
BUSINESS
General
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Innovatia, Inc. was organized on March 12, 2001, and commenced operations in
early May of 2001. To date the company has filed for a U.S. patent for the
business process entailed in the Broadcast Art Show. Innovatia is engaged in the
business of producing the "Broadcast Art Show". Broadcast Art Show entails the
collection, distribution and display of digital images of art works in a variety
of commercial venues. As a routine course of conduct, artists take photographs
of their completed artworks for purposes of self-promotion and archiving. These
photographs have always been useful in showing artworks to prospective buyers.
Broadcast Art Show will seek the cooperation of artists to collect digital
images (photographs) of contemporary artworks from a broad spectrum of artists
from throughout the United States and possibly foreign countries, sort the
images into "shows", transmit these images by a variety of methods, and display
these images using digital projectors or other high-definition display media in
a variety of public, commercial venues, such as restaurants, lounges, waiting
rooms and similar venues where people congregate. Innovatia, Inc., believes that
these images of artworks will prove highly entertaining to the audience and
hopes that it will be able to secure Sponsors to purchase advertising on the
show to create revenues.
Innovatia, Inc. SB-2 11
Services
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To date the activities of Innovatia have consisted of conceptualization of a
digital art show in public venues, research and investigation into the
technologies and techniques involved, a patent filing as of May 14, 2001 (filing
no. 09/855867), the purchase of electronic equipment (projector, laptop computer
with DVD), and the commencement of a web site designed to solicit artists' works
for use in the show. One of the principals, Bruce Penrod, has attended three
conventions concerning electronics and one seminar on advertising sales in
preparation for the beginning of operations.
The principals of Innovatia believe that several challenges exist and must be
met successfully before the Art Show can be broadly deployed. The first
challenge is technical. Much of the past eight months has been spent discussing
the anticipated collection, modification, sorting, sending and displaying of
digital image files in public venues. The distribution of digital files may
consist of Internet connectivity or the physical delivery of storage media to
the venue. While it is our opinion that no insurmountable hurdles exist, this is
a complicated task and there may be unforeseen difficulties which preclude some
venues altogether.
Internet Websites
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Innovatia, dba Broadcast Art Show, will utilize Internet connectivity in several
ways. First, it may be the most efficient means to distribute digital image
files to the various venues. Second, it will be a necessity for the collection
of digital image files from artists, who are far-flung. Third, the venture will
have a general purpose web site for public use which will perform numerous
functions, including holding `thumbnail' images of all art displayed publicly, a
search facility to identify artists with their works, general information
suitable for venues and potential sponsors.
Innovatia depends greatly on advertising support for most, if not all, the
anticipated revenues from the Broadcast Art Show. Since the Art Show is expected
to be mute, at least initially, such advertising will not be conventional
audio/video advertising most companies are familiar with, and thus there is a
significant question as to the value and salability of such advertising. The
advertising should be viewed as similar in nature to 'billboard' advertising. To
date, Innovatia has not contacted any prospective advertisers and therefore has
no experience as to the marketability of such advertising. It is hoped that the
upscale audience will be attractive to potential advertisers and thus will lead
to significant advertising sales.
Marketing
- ---------
Innovatia, Inc., plans to offer a digital art show to a variety of public venues
for no cost to the venue. The belief is that the entertainment of its patrons
will be a sufficient inducement for the venue to allow the show to be displayed.
At present there is no plan to split advertising revenues with venues, but the
possibility exists that it may be necessary in some cases to secure the
participation of the venue. Innovatia will also require the participation of
artists in contributing their digital images (or slides which we will convert to
digital images) and agreeing to public display. Over the last half of year 2001,
Innovatia has contacted a number of artists and surveyed their reactions to this
concept. Approximately half the artists contacted have agreed to participate.
Innovatia believes that the supply of interesting, contemporary artworks for
Innovatia, Inc. SB-2 12
display at no cost to Broadcast Art Show is likely. Artists seem to view the
venture as a good outlet for them to show their works, however briefly, and a
method of exposure to potential buyers of their works.
Patents
- -------
On May 14, 2001, Messrs. Penrod and Bogani filed for a U.S. patent, filing
number 09/855867, covering the processes of collecting, sorting, distributing
and displaying digital images of art works in public venues. The U.S. Patent and
Trademark Office has not acted upon the application. At the time of filing,
Penrod and Bogani assigned any and all patent rights to Innovatia, Inc. There
can be no certainty that any patent will be awarded, and a patent could be
awarded recognizing far less than what has been claimed in the application.
Therefore, no investor should rely on any protection from a potential patent
award.
Government Regulation
- ---------------------
Government approval is not necessary for Innovatia's business, and government
regulations have no effect or a negligible effect on its business.
Employees and Consultants
- -------------------------
Currently the only employees of Innovatia are Mr. Mark Bogani and Mr. Bruce
Penrod. Upon commencement of active operations, in which the company is
soliciting artists, venues and advertisers, it is anticipated the company will
hire sales, marketing, operations and possibly installation personnel. We
anticipate that many venues will require us to install some type of high
definition video display which will be dedicated solely to the presentation of
the Art Show. In most cases, we expect that to consist of a ceiling-mounted
digital projector, receiving signal via in-house wiring connected to a local
source or the Internet, and projecting onto a light-colored wall or screen. The
company may elect to outsource these installations, or it may elect to perform
them `in-house', in which case technical personnel will be required. In
addition, personnel in the home office to receive, sort, collate and send
content to the various venues will require at least one and possibly more
employees.
Marketing needs will require personnel to solicit venues and coordinate
installations, solicit artists and review submissions from such artists, and to
sell advertising to a variety of potential sponsors. During the aggressive
build-up phase, the company expects to require all such personnel largely prior
to the receipt of significant revenues from advertising, and will thus need to
expend considerable capital from cash reserves. The company expects to hire all
such personnel under conventional work contracts, necessitating payment of
travel expenses, payroll taxes and competitive employee benefits as of that
date.
Facilities
- ----------
The company currently occupies space at 5655 S. Yosemite St. Ste. 109, Greenwood
Village, Co. 80111 in a commercial office building in the middle of the Denver
Technological Center, southeast of Denver proper. It shares this space with
several other companies, and to date has not been obligated to pay rent. Upon
funding through this offering, it is anticipated that the company will either
Innovatia, Inc. SB-2 13
assume a significant share of the current rent or seek other, comparable space
suitable for operations.
Legal Proceedings
- -----------------
We know of no legal proceedings to which we are a party or to which any of our
property is the subject, which are pending, threatened or contemplated or any
unsatisfied judgments against us.
PLAN OF OPERATION
General
- -------
Upon securing the necessary funding, Innovatia expects to begin implementing its
business plan, which entails three separate and major areas. First, we will
contact and solicit artists for their contribution of digital files of suitable
artwork. A small-scale test of this effort during the summer and fall of 2001
proved encouraging, and we believe we can depend on the cooperation of many
artists, who will receive exposure for their works in return. Second, we will
offer the show at no charge to suitable venues. We will look for upscale
locations such as hotel lounges where the art show will not interfere with
normal conversation. Since we believe the entertainment value to patrons
compensates for our presence and advertising, we expect the relationship with
the venue to be neutral, whereby neither party receives additional
consideration. However, it must be stressed that no venues have been approached
to date and the arrangement by which the Art Show is offered is subject to the
rules of the marketplace. Thus, there can be no assurance that the Broadcast Art
Show will be welcomed by the most attractive venues without some type of
remuneration, and therefore there is a high degree of uncertainty as to the
budget needs of the venture. The third area of focus will be solicitation of
advertisers. This is the primary, and possibly exclusive source of revenue to
the venture. As discussed elsewhere, no advertisers have been approached and the
venture will need to install and run the show with no revenue for some period of
time in order to familiarize potential advertisers with the product.
The numerous variables make it impossible to pinpoint the exact cost of our plan
of operation over the next twelve months. In some cases venues will have their
own high definition displays in place available to us for the Art Show, while
other venues will require us to purchase and install the equipment. If, as
expected, the major means of distribution of the art show is via the Internet,
then significant costs may be incurred bringing broadband Internet connectivity
to the venue and installing it with our equipment. Equipment purchase and
installation is projected as the bulk of the necessary expenditure for the Art
Show to proceed, but those projections are necessarily imprecise.
The full implementation of our business plan, including the employment or
retention of experts as consultants, is dependent upon our ability to raise
significant additional capital from equity and/or debt financing in addition to
that anticipated from this offering and/or achieve significant profits from
operations. We believe that we may not realize significant profits from
operations in the next year and that it will be necessary to raise additional
funds after the expiration of one year following the closing of this offering.
We have no organized plan to raise capital in addition to that anticipated from
this offering. However, we intend to increase our efforts to raise capital,
Innovatia, Inc. SB-2 14
exploring all available alternatives for debt and/or equity financing,
including, but not limited to, private and public securities offerings. We
cannot be certain that these efforts will be successful. In the event that only
limited additional financing is received, we expect our ability to execute our
development plan to be limited. Further, even if we succeed in obtaining the
level of funding necessary to fully implement our business plan and proposed
integrated marketing campaign and employ or retain the necessary employees in
the various specialized areas, this will not ensure the realization by us of
profits from operations.
Milestones
- ----------
The steps needed to make Innovatia operational and successful are the following:
Innovatia will seek to raise $50,000 from this offering in order to implement
its plan of operations for the first twelve months of operations. This amount of
capital must be raised in order to properly commence operations. If we do not
raise at least $50,000 from this offering, then we will seek funding by
borrowing from our principal stockholders. This first influx of capital is
budgeted for promotional expenses in announcing Broadcast Art Show, soliciting
artists to participate, and seeking venture capital to commence operations.
Upon successful pilot deployment(s), we will begin contacting prospective
advertisers to sponsor the Art Show on a broad basis. Since virtually all
anticipated revenue will come from advertising sales, this phase is both
critical to the ongoing viability of the venture and necessary before any
large-scale expansion can be launched. While advertising solicitation will be
ongoing indefinitely, a minimum commitment from advertisers will be necessary
before the venture can proceed.
Innovatia is still considered to be a development stage company, with no
significant revenue, and is dependent upon the raising of capital through
placement of its common stock. Innovatia may never be successful in raising the
capital it requires through the sale of its common stock.
Results of Operations
- ---------------------
We realized revenues of $0 and incurred a net loss of $7,095 for the period from
inception (March 12, 2001) to April 30, 2002. Our operating expenses of $7,095
consisted of general and administrative expenses. We realized additional revenue
of $0 and net income (loss) of $(1,586) for the quarter ended April 30, 2002.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
As of April 30, 2002, we had total assets of $3,752, consisting of current
assets, including cash and cash equivalents of $3,752, accounts receivable of
$0, office equipment of $0 and a deferred tax asset of $0. We had no working
capital deficit at April 30, 2002, because of current assets totaling $3,752 and
accounts payable of $1,897. Until the successful completion of this offering,
Innovatia, Inc. SB-2 15
which is not assured, we expect to experience working capital shortages from
time-to-time. Our total shareholders' equity was $1,855 as of April 30, 2002,
including an accumulated deficit of $(7,095). Our future success will be
dependent upon:
o Our ability to develop relationships with artists; and
o Our ability to to secure commercial venues for our Broadcast Art Show.
Should our efforts to raise additional capital through equity and/or debt
financing fail, management is expected to provide the necessary working capital
so as to permit us to continue as a going concern.
Net cash used in operating activities was $(3,248) for the period from inception
(March 12, 2001) to April 30, 2002, because of the net loss of $(7,095)
incurred, and the adjustments to reconcile net loss to net cash flows from
operating activities totaling $3,847, during the period. For the period from
inception to April 30, 2002, net cash flows from investing activities was $-0-.
Net cash flows from financing activities was $7,000 due to the sale of shares of
common stock. Cash increased by $3,752, from $-0- at the beginning of the period
to $3,752 at the end of the period, because of the above-described factors.
Inflation
- ---------
We believe that inflation has not had a material impact on our business.
Seasonality
- -----------
We do not believe that our business is seasonal.
Innovatia, Inc. SB-2 16
MANAGEMENT
Executive Officers and Directors
- --------------------------------
Our executive officers and directors are as follows:
Name Age Title
- ---- --- ------
Mark A. Bogani 37 President, CEO
Bruce H. Penrod 52 Vice President, Secretary & Treasurer
General
- -------
The individuals named in the table above may be deemed to be our "parents" and
"promoters," as those terms are defined in the General Rules and Regulations
under the Securities Act of 1933. Our directors are elected to hold office until
the next annual meeting of shareholders and until their respective successors
have been elected and qualified. Our executive officers are elected by the Board
of Directors and hold office until resignation or removal by the Board of
Directors. Set forth below under "Business Experience" is a description of the
business experience of our executive officers and directors. All organizations
with which each executive officer and director is or has been previously
employed are not affiliated with us.
Family Relationships
- --------------------
There is no family relationship between our executive officers and directors.
Business Experience
- -------------------
Since attending college from 1983-1987, Univ. of Colorado--Denver and
Metropolitan State College, majoring in Computer Information Systems, Mr. Bogani
has both worked for and founded a variety of firms in the areas of securities,
precious metals, collectibles and rare coins, with a particular emphasis on
computer system management. During 1988-90 he co-founded the Inverness Financial
Publications, Inc., a financial public relations firm that specialized in
producing corporate profiles and investor relations media for public companies.
From 1990-98 he was Marketing Manager, Systems Administrator and IT Manager for
London Coin Galleries, with locations throughout the Southern California area.
During the same period, 1994-7 he co-founded the World Mint Agency, Inc.,
compiling catalogs on collectibles, precious metals and rare coins to
international clientele. From 1997 to 2000, Mr. Bogani founded and ran Web
Ventures Group, LLC., an Internet consulting firm. During that time he has
designed, implemented and maintained more than 40 web sites both for personal
business use and for other clients. From April 2000 through April 2002, Mr.
Bogani was Secretary and Treasurer of Relevant Links, Inc., a publicly traded
web portal software development company.
Mr. Bogani's expertise extends to numerous computer programming languages
including HTML, XML, DHTML, PERL, PHP and CGI. His initial role within Innovatia
Innovatia, Inc. SB-2 17
will be to develop relationships with local and national artists and collecting
material for the Broadcast Art Show. As Innovatia moves into the next phase of
its business model, the functionality will be in place automating the collection
of content for the art shows enabling Mr. Bogani to spend more time on the
compilation and actual functionality of the art show itself.
Bruce Penrod is the current president and partial owner of Birch Street
Communications, Inc., a Denver-based telecommunications firm with interests in
International Telephony and broadband wireless projects. He also consults
various Internet-related companies on marketing strategies. Prior to his
involvement with Birch Street Communications, Mr. Penrod was a principal in the
oil and gas business. Companies run by Mr. Penrod pioneered a new technology for
oil recovery - the mobile swab method, and those companies ultimately owned and
operated over 800 wells in Texas and New Mexico, making them among the largest
in well bore ownership in each state. Mr. Penrod oversaw the manufacture of
seven mobile swab units of proprietary design and the companies set records for
footage, depth, and volume of production. Mr. Penrod's initial role at Innovatia
will be securing venues for the Broadcast Art Show and soliciting advertising
sales.
Executive Compensation
- ----------------------
Since May, 2002, Mr. Penrod and Mr. Bogani, our executive officers and
directors, have been employed part time in pursuit of the Broadcast Art Show for
Innovatia. They have received no compensation for their efforts to date. The
proceeds of this offering will be used to further the enterprise by producing
sample shows in several test venues, and will not be used to pay any salaries to
any officer or director. Both Mr. Bogani and Mr. Penrod agree to serve without
cash compensation until such time as either revenues permit or additional
capital of at least $100,000 is raised.
Stock Option Grants. We have granted no stock options as of the date of this
prospectus. In the future, we may offer stock options to prospective employees,
non-employee members of the Board of Directors and/or consultants.
Long-Term Incentive Plans. We do not provide our officers or employees with
pension, stock appreciation rights, long-term incentive or other plans and have
no intention of implementing any of these plans for the foreseeable future. Our
Board of Directors will have discretion over the provisions of these plans.
Indemnification. Under Colorado law and pursuant to our Articles of
Incorporation, we may indemnify our officers and directors for various expenses
and damages resulting from their acting in these capacities. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to our officers or directors pursuant to those provisions, we have
been informed by our counsel that, in the opinion of the U.S. Securities and
Exchange Commission, the indemnification is against public policy as expressed
in the Securities Act of 1933, and is therefore unenforceable.
Compensation of Directors. Our directors receive no compensation pursuant to any
standard arrangement for their services as directors.
Innovatia, Inc. SB-2 18
Employment Agreements. We have no employment agreement with either Mr. Bogani,
the President, the Chief Executive Officer and a director of Innovatia, or Mr.
Penrod, the Secretary, the Treasurer and a director of Innovatia. We may enter
into employment agreements with the foregoing after the completion of this
offering.
Conflicts of Interest
- ---------------------
Our officers and directors are subject to the doctrine of corporate
opportunities insofar as business opportunities in which we have expressed an
interest as evidenced by resolutions appearing in our records and minutes from
time to time. All business opportunities within these designated areas of
interest that come to the attention of our officers and directors are required
to be promptly disclosed and made available to us. Any officer or director may
avail himself or herself of any of these opportunities only after the
opportunity has been considered and rejected by Innovatia or is determined by
the Board of Directors to be beyond the scope of the company's area of interest.
However, any officer or director is not prohibited from maintaining a business
existing prior to the time that it is designated as an area of interest to which
the corporate opportunity doctrine applies.
Innovatia, Inc. SB-2 19
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the ownership of
our common stock as of the date of this prospectus and as adjusted to reflect
the sale of the shares of common stock offered by this prospectus, by each
shareholder known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock, each director and executive officer and all
directors and executive officers as a group. Each of our shareholders has sole
voting and investment power with respect to the shares he or she beneficially
owns.
Shares Percent of Class
Name and Address of Beneficially ---------------------------------
Beneficial Owner Owned Before Offering After Offering
Mark Bogani 1,500,000 50.0% 46.875%
4451 South Xeric Way
Denver, Colorado 80237
Bruce H. Penrod 1,500,000 50.0% 46.875%
1625 S. Birch St. #801
Denver, Co. 80222
All Directors and Executive
Officers of Innovatia 3,000,000 100.0% 93.75%
as a Group (two persons)
The information in the above table regarding the ownership of our common stock
by each of the named individuals and group, as of the date of this prospectus
and as adjusted to reflect the offering, is based upon 3,000,000 shares of our
common stock issued and outstanding as of the date of this prospectus. Mr.
Bogani and Mr. Penrod serve as our executive officers and members of our Board
of Directors.
CERTAIN TRANSACTIONS
On March 12, 2001, we issued 1,500,000 newly-issued, restricted shares of common
stock to each of Mr. Mark Bogani, our President/Chief Executive Officer, and Mr.
Bruce H. Penrod, our Secretary/Treasurer, in consideration of their payment of
$1,500 each (total $3,000) into the corporation. Additional paid in capital of
$4,000 was contributed by these parties (or assigns) for a total capital
contribution of $7,000. The other $1,950 of additional paid in capital is $150
per month non-cash contribution of donated rent for office space.
Because of their present management positions with, organizational efforts on
behalf of and percentage share ownership in, Innovatia, Mr. Bogani, and Mr.
Penrod may be deemed to be our "parents" and "promoters," as those terms are
defined in the Securities Act of 1933 and the applicable Rules and Regulations
under the Securities Act of 1933. Because of these relationships, future
transactions between and among Innovatia, Mr. Bogani and/or Mr. Penrod could not
be considered to have occurred at arm's-length.
Innovatia, Inc. SB-2 20
PLAN OF DISTRIBUTION AND TERMS OF THE OFFERING
This is a "direct public" offering. We will not receive any proceeds of the
offering unless we sell all of the 200,000 shares offered in this prospectus. If
all of the shares are not sold, subscribers will lose the use of their funds for
the offering period of up to 180 days; the funds invested by them will be
promptly returned to the subscribers at the end of the offering without interest
and without deduction.
We are offering two hundred thousand (200,000) shares at twenty five cents
($0.25) per share. We can give no assurance that the shares will be sold. If
subscriptions are received for fewer than 200,000 shares, no shares will be
sold.
Funds received prior to reaching the 200,000 shares will be held in a
non-interest bearing segregated account and will not be used until the offering
is completed. The segregated account is an account separated from our existing
operations account set up for the sole purpose of receiving the proceeds of this
offering. If we do not sell 200,000 shares within 180 days after commencement of
this offering, the offering will terminate and all money paid for shares will be
returned to the purchasers, without interest and without deduction within 24
hours of the termination of the offering if not fully subscribed within the 180
days.
If we are unsuccessful in achieving the offering, funds will be redistributed to
all investors who have purchased the shares offered in this prospectus. Upon
achieving the offering and the acceptance of a subscription for shares, our
transfer agent will issue the shares to the purchasers. We may continue to offer
shares for a period of 180 days after commencement of this offering or until we
have sold all of the shares offered in this prospectus. During the offering
period, no subscriber will be entitled to any refund of any subscription.
We will sell the shares on a "best efforts", "all-or-none," basis through our
officers and directors, Messrs. Bogani and Penrod, who will not receive any
compensation in connection with the sale of shares, although we will reimburse
them for expenses incurred in connection with the offer and sale of the shares.
Messrs. Bogani and Penrod will be relying on, and complying with, Rule 3a4-1 of
the Exchange Act as a "safe harbor" from registration as a broker-dealer in
connection with the offer and sales of the shares. In order to rely on such
"safe harbor" provisions provided by Rule 3a4-1, they must be in compliance with
all of the following: they must not be subject to a statutory disqualification;
they must not be compensated in connection with such selling participation by
payment of commissions or other payments based either directly or indirectly on
such transactions; they must not be an associated person of a broker-dealer;
they must restrict participation to transactions involving offers and sale of
the shares; they must perform substantial duties for the issuer after the close
of the offering not connected with transactions in securities, and not have been
associated with a broker or dealer for the preceding 12 months, and not
participate in selling an offering of securities for any issuer more than once
every 12 months; and they must restrict participation to written communications
or responses to inquiries of potential purchasers.
Messrs. Bogani and Penrod intend to comply with the guidelines enumerated in
Rule 3a4. Messrs. Bogani and Penrod, nor any affiliates will be purchasing
shares in the offering.
Innovatia, Inc. SB-2 21
You may purchase shares by completing and manually executing a subscription
agreement and delivering it with your payment in full for all shares which you
wish to purchase to our offices. Your subscription shall not become effective
until accepted by us and approved by our counsel.
DESCRIPTION OF SECURITIES
Description of Capital Stock
- ----------------------------
Our authorized capital stock consists of 50,000,000 shares of common stock.
There are presently two shareholders of record of our 3,000,000 outstanding
shares of common stock.
Description of Common Stock
- ---------------------------
Common Stock
- ------------
Our Articles of Incorporation authorizes the issuance of 50,000,000 shares of
common stock, $0.001 par value per share, of which 3,000,000 shares were
outstanding as of the date of this prospectus. Upon sale of the 200,000 shares,
we will have outstanding 3,200,000 shares of common stock. Holders of shares of
common stock are entitled to one vote for each share on all matters to be voted
on by the stockholders. Holders of common stock have no cumulative voting
rights. Holders of shares of common stock are entitled to share ratably in
dividends, if any, as may be declared, from time to time by the Board of
Directors in its discretion, from funds legally available to be distributed. In
the event of a liquidation, dissolution or winding up of Innovatia the holders
of shares of common stock are entitled to share pro rata all assets remaining
after payment in full of all liabilities and the prior payment to the preferred
stockholders if any. Holders of common stock have no preemptive rights to
purchase our common stock. There are no conversion rights or redemption or
sinking fund provisions with respect to the common stock.
Transfer Agent
- --------------
First American Stock Transfer, Inc., 610 East Bell Road, Suite #2-155, Phoenix,
Arizona 85022, is the transfer agent and registrar for our common stock.
LEGAL MATTERS
The Law Offices of Randall J. Lanham, 28562 Oso Parkway, Unit D, Rancho Santa
Margarita, CA 92688, will pass upon certain legal matters in connection with the
validity of the issuance of the shares of common stock.
EXPERTS
Comiskey & Company, P.C., independent certified public accountants, has audited
the Financial Statements of Innovatia, for the periods and to the extent set
forth in its report, which are included herein in reliance upon the authority of
said firm as experts in accounting and auditing.
Innovatia, Inc. SB-2 22
Innovatia, Inc.
(A Development Stage Company)
FINANCIAL STATEMENTS
April 30, 2002
F-1
CONTENTS
Page
BALANCE SHEET F-3
STATEMENT OF OPERATIONS F-4
STATEMENT OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6
F-2
Innovatia, Inc.
(A Development Stage Company)
BALANCE SHEET
April 30, 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,752
--------------
Total current assets 3,752
--------------
TOTAL ASSETS $ 3,752
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 800
Credit card payable 1,097
--------------
Total current liabilities 1,897
--------------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 50,000,000
shares authorized; 3,000,000 shares issued and
outstanding 3,000
Additional paid in capital 5,950
Deficit accumulated during the development stage (7,095)
--------------
1,855
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,752
==============
The accompanying notes are an integral part of the financial statements.
F-3
Innovatia, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Inception
Three months (March 12, 2001)
ended to
April 30, 2002 April 30, 2002
--------------------------------------
Revenues $ - $ -
General and administrative expenses 1,586 7,095
------------------ ------------------
NET LOSS (1,586) (7,095)
Deficit accumulated during the development stage
Balance, beginning of period (5,509) -
------------------ ------------------
Balance, end of period $ (7,095) $ (7,095)
================== ==================
NET LOSS PER SHARE $ (NIL) $ (NIL)
================== ==================
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING 3,000,000 3,000,000
================== ==================
The accompanying notes are an integral part of the financial statements.
F-4
Innovatia, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Inception
Three months (March 12, 2001)
ended to
April 30, 2002 April 30, 2002
-------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,586) $ (7,095)
Adjustments to reconcile net loss to
net cash flows from operating activities:
Contributed rent 450 1,950
Increase in accounts payable 811 1,897
-------------------- --------------------
Net cash flows from operating activities (325) (3,248)
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issue - 7,000
-------------------- --------------------
Net cash flows from financing activities - 7,000
-------------------- --------------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (325) 3,752
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 4,077 -
-------------------- --------------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 3,752 $ 3,752
==================== ===================
The accompanying notes are an integral part of the financial statements.
F-5
Innovatia, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
April 30, 2002
1. Management's Representation of Interim Financial Information
- -----------------------------------------------------------------
The accompanying financial statements have been prepared by Innovatia, Inc.
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted as allowed by
such rules and regulations, and management believes that the disclosures
are adequate to make the information presented not misleading. These
financial statements include all of the adjustments which, in the opinion
of management, are necessary to a fair presentation of financial position
and results of operations. All such adjustments are of a normal and
recurring nature. These financial statements should be read in conjunction
with the audited financial statements at January 31, 2002.
2. Financial Presentation
- ---------------------------
The Company elects to omit financial statements for the comparative period
ended April 30, 2001. Such omission is permitted by Securities and Exchange
Commission rules during the first two years that a company is in the
development stage.
F-6
Innovatia, Inc.
(A Development Stage Company)
FINANCIAL STATEMENTS
January 31, 2002
F-7
CONTENTS
Page
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-9
BALANCE SHEET F-10
STATEMENT OF OPERATIONS F-11
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) F-12
STATEMENT OF CASH FLOWS F-13
NOTES TO FINANCIAL STATEMENTS F-14 to F-15
F-8
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders of
Innovatia, Inc.
We have audited the accompanying balance sheet of Innovatia, Inc. (a development
stage company) as of January 31, 2002, and the related statements of operations,
stockholders' equity (deficit), and cash flows for the period from inception
(March 12, 2001) to January 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Innovatia, Inc. as of January
31, 2002, and the results of its operations and cash flows for the period from
inception (March 12, 2001) to January 31, 2002 in conformity with accounting
principles generally accepted in the United States of America.
Denver, Colorado
March 18, 2002
/s/ Comiskey & Company
PROFESSIONAL CORPORATION
F-9
Innovatia, Inc.
(A Development Stage Company)
BALANCE SHEET
January 31, 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,077
-----------
Total current assets 4,077
-----------
TOTAL ASSETS $ 4,077
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Credit card payable $ 1,086
-----------
Total current liabilities 1,086
-----------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 50,000,000
shares authorized; 3,000,000 shares issued and
outstanding 3,000
Additional paid in capital 5,500
Deficit accumulated during the development stage (5,509)
-----------
2,991
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,077
===========
The accompanying notes are an integral part of the financial statements.
F-10
Innovatia, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period from inception (March 12, 2001) to January 31, 2002
Revenues $ -
-------------
General and administrative expenses 5,509
-------------
NET LOSS (5,509)
Deficit accumulated during the development stage
Balance, beginning of period -
-------------
Balance, end of period $ (5,509)
=============
NET LOSS PER SHARE $ (NIL)
=============
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK AND COMMON STOCK
EQUIVALENTS OUTSTANDING 3,000,000
=============
The accompanying notes are an integral part of the financial statements.
F-11
Innovatia, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the period from inception (March 12, 2001) to January 31, 2002
Deficit
Common stock accumulated Total
-------------------------------- Additional during the stockholders'
Number of paid-in development equity
shares Amount capital stage (deficit)
-------------- -------------- -------------- -------------- --------------
Common stock issued for
cash, March 2001,
$0.001 per share 3,000,000 $ 3,000 $ 4,000 $ - $ 7,000
Contributed rent - - 1,500 - 1,500
Net loss, January 31, 2002 - - - (5,509) (5,509)
-------------- -------------- -------------- -------------- --------------
Balance, January 31, 2002 3,000,000 $ 3,000 $ 5,500 $ (5,509) $ 2,991
============== ============== ============== ============== ==============
The accompanying notes are an integral part of the financial statements.
F-12
Innovatia, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period from inception (March 12, 2001) to January 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,509)
Adjustments to reconcile net loss to
net cash flows from operating activities:
Contributed rent 1,500
Increase in accounts payable 1,086
--------------
Net cash flows from operating activities (2,923)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issue 7,000
--------------
Net cash flows from financing activities 7,000
--------------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 4,077
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD -
--------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 4,077
==============
The accompanying notes are an integral part of the financial statements.
F-13
Innovatia, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
January 31, 2002
1. Summary of Significant Accounting Policies
- -----------------------------------------------
Description
- -----------
Innovatia, Inc. (the "Company") was incorporated under the laws of the State of
Colorado on March 12, 2001. The principal office of the corporation is 5655 S.
Yosemite Street, Suite 109, Greenwood Village, Colorado 80111.
The Company has a patent pending on a business process that is expected to
generate future revenues.
The Company is a Corporation.
Accounting Method
- -----------------
The Company records income and expenses on the accrual method.
Loss per Share
- --------------
Loss per share was computed using the weighted average number of shares of
common stock and common stock equivalents outstanding during the period.
Repairs and Maintenance
- -----------------------
Repairs and maintenance of a routine nature are charged as incurred, while those
which extend or improve the life of existing assets are capitalized.
Financial Instruments
- ---------------------
Unless otherwise indicated, the fair value of all reported assets and
liabilities which represent financial instruments (none of which are held for
trading purposes) approximate the carrying values of such amounts.
Statement of Cash Flows
- -----------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents.
There was no cash paid during the period ended January 31, 2002 related to
interest or income taxes.
Use of Estimates
- ----------------
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management to
make estimates and assumptions that effect the amounts reported in these
financial statements and accompanying notes. Actual results could differ from
those estimates.
F-14
Innovatia, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
January 31, 2002
Consideration of Comprehensive Income Items
- -------------------------------------------
For the period ended January 31, 2002, the Company's financial statements do not
contain any changes that are required to be reported separately in comprehensive
income.
2. Stockholders' Equity
- -------------------------
As of January 31, 2002, 3,000,000 shares of the Company's $0.001 par value
common stock were issued and outstanding. Of these, all shares had been issued
for cash.
3. Related Party Transactions
- -------------------------------
One stockholder provides office space in his home at no charge to the Company.
Rent expense for this space has been estimated at $150 per month and has been
recorded as a contribution to capital.
4. Income Taxes
- -----------------
The Company computes and records taxes payable based upon determination of
taxable income which is different from pre-tax financial statement income. Such
differences arise from the reporting of financial statement amounts in different
periods for tax purposes. The timing differences are a result of different
accounting methods being used for financial and tax reporting.
The Company has Federal net operating loss carryforwards of approximately $4,000
expiring during the year 2022. The tax benefit of these net operating losses is
approximately $1,000 and has been offset by a full allowance for realization.
For the year ended January 31, 2002 the allowance increased by $1,000. This
carryforward may be limited upon consummation of a business combination under
IRC Section 381.
F-15
(OUTSIDE BACK COVER PAGE OF PROSPECTUS)
TABLE OF CONTENTS INNOVATIA, INC.
Item Page
- ---- ----
PROSPECTUS SUMMARY.............................. 2
The Company................................... 2
The Offering.................................. 2 200,000 Shares of
Selected Financial Information................ 3 Common Stock
------------------
RISK FACTORS.................................... 4
Risk Factors Related to This Offering........... 4
We are a development-stage company with
limited prior business operations and,
accordingly, it is difficult to evaluate
our business and prospects.................... 4
We have realized no revenue and no earnings,
and we may not be able to achieve
profitable operations in the future .......... 4
We expect significant increases in our costs
and expenses that may result in continuing
losses for at least the next year, which,
in turn, may cause a dramatic change in our
business plan or the sale, merger or
bankruptcy of our business.................... 4
The continuation of business strongly
depends on the two officers
of the company................................ 5
Because our executive officers and directors
are our only two employees and have limited
experience, we may not be able to achieve
profitability or maintain..................... 5
We have limited assets and working capital
and minimal shareholders' equity and, if
our financial condition does not improve,
we will cease operations and our
shareholders will lose their entire
investment.................................... 5
We may not succeed in procuring the right
venues, enough venues, participating
artists, artworks, which serve to entertain
the public.................................... 5
Acceptance by Venues............................ 5
Reliance on Advertising revenues................ 5
Dependence on Artists........................... 6
Innovatia, Inc. SB-2 23
Our lack of a marketing organization
and limited marketing capability may
adversely affect customer acceptance
and our revenues.............................. 6
There is no public market for our common
stock and, if a public market fails to
develop or be sustained, then investors
may be unable to sell, and therefore lose
their investments in, the shares of
common stock.................................. 6
Because our management will continue to
control Innovatia, they will be able to
determine the outcome of all matters
requiring approval of our shareholders....... 6
Our stock price will fluctuate after this
offering, which may result in substantial
losses for investors.......................... 7
The Penny Stock Rules will cover our
stock, which may make it difficult for
a broker to sell.............................. 7
This offering is a direct participation
offering, and there may be less due
diligence performed........................... 7
New shareholders will incur substantial
dilution of approximately $.2344137 per
share as a result of this offering............ 7
Sales of substantial amounts of our shares
may depress our stock price................... 7
There is no guarantee that we will be able
to raise the necessary funds in this
offering or that additional funds will
be available to us when we need them and,
if financing is unavailable, we may need
to dramatically change our business plan..... 8
Innovatia, Inc. SB-2 24
DETERMINATION OF OFFERING PRICE................. 8
ADDITIONAL INFORMATION.......................... 8
USE OF PROCEEDS................................. 9
DILUTION........................................ 11
BUSINESS........................................ 11
General....................................... 11
Services...................................... 12
Internet Websites............................. 12
Marketing..................................... 12
Patents....................................... 13
Government Regulation......................... 13
Employees and Consultants..................... 13
Facilities.................................... 13
Legal Proceedings............................. 14
PLAN OF OPERATION............................... 14
General....................................... 14
Milestones.................................... 15
Results of Operations......................... 15
Financial Condition, Liquidity and
Capital Resources........................... 15
Inflation..................................... 16
Seasonality................................... 16
MANAGEMENT...................................... 17
Executive Officers and Directors.............. 17
General....................................... 17
Family Relationships.......................... 17
Business Experience........................... 17
Executive Compensation........................ 18
Conflicts of Interest......................... 19
PRINCIPAL SHAREHOLDER........................... 20
CERTAIN TRANSACTIONS............................ 20
PLAN OF DISTRIBUTION AND TERMS OF THE
OFFERING...................................... 21
Innovatia, Inc. SB-2 25
DESCRIPTION OF SECURITIES....................... 22 __________________
Description of Capital Stock.................... 22
Description of Common Stock..................... 22 PROSPECTUS
Transfer Agent.................................. 22 __________________
LEGAL MATTERS................................... 22
EXPERTS......................................... 22
FINANCIAL STATEMENTS............................ F-1
Until ____________, 2002 (90 days after the date of this prospectus), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
Innovatia, Inc. SB-2 26
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
- ---------------------------------------------------
Sections 7-109-101 through 7-109-110 of the Colorado Business Corporation
Act provide for the indemnification of the officers, directors and controlling
persons of a corporation as follows:
Section 7-109-101 Definitions. As used in this article:
-----------------------------
(1) "Corporation" includes any domestic or foreign entity that is a
predecessor of a corporation by reason of a merger or other transaction in which
the predecessor's existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is or was
serving at the corporation's request as a director, an officer, an agent, an
associate, an employee, a fiduciary, a manager, a member, a partner, a promoter,
or a trustee of, or to hold any similar position with, another domestic or
foreign corporation or other person or of an employee benefit plan. A director
is considered to be serving an employee benefit plan at the corporation's
request if the director's duties to the corporation also impose duties on, or
otherwise involve services by, the director to the plan or to participants in or
beneficiaries of the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a proceeding
to pay a judgment, settlement, penalty, fine, including an excise tax assessed
with respect to an employee benefit plan, or reasonable expenses.
(5) "Official capacity" means, when used with respect to a director, the
office of director in a corporation and, when used with respect to a person
other than a director as contemplated in section 7-109-107, the office in a
corporation held by the officer or the employment, fiduciary, or agency
relationship undertaken by the employee, fiduciary, or agent on behalf of the
corporation. "Official capacity" does not include service for any other domestic
or foreign corporation or other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
(7) "Proceeding" means and threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal.
Innovatia, Inc. SB-2 27
7-109-102. Authority to indemnify directors.
----------------------------------------------
(1) Except as provided in subsection (4) of this section, a corporation
may indemnify a person made a party to a proceeding because the person is or was
a director against liability incurred in the proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonably believed:
(I) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's best
interests; and
(II) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is conduct that satisfies the
requirement of subparagraph (II) of paragraph (b) of subsection (1) of this
section. A director's conduct with respect to an employee benefit plan for a
purpose that the director did not reasonably believe to be in the interests of
the participants in or beneficiaries of the plan shall be deemed not to satisfy
the requirements of paragraph (a) of subsection (1) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation;
or
(b) In connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not involving
action in an official capacity, in which proceeding the director was
adjudged liable on the basis that he or she derived an improper personal
benefit.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
Innovatia, Inc. SB-2 28
7-109-103. Mandatory indemnification of directors. Unless limited by its
----------------------------------------------------
articles of incorporation, a corporation shall indemnify a person who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which the person was a party because the person is or was a director, against
reasonable expenses incurred by him or her in connection with the proceeding.
7-109-104. Advance of expenses to directors.
----------------------------------------------
(1) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
(a) The director furnishes to the corporation a written affirmation
of the director's good faith belief that he or she has met the standard of
conduct described in section 7-109-102;
(b) The director furnishes to the corporation a written undertaking,
executed personally or on the director's behalf, to repay the advance if it
is ultimately determined that he or she did not meet the standard of
conduct; and
(c) A determination is made that the facts then known to those making
the determination would not preclude indemnification under this article.
(2) The undertaking required by paragraph (b) of subsection (1) of this
section shall be an unlimited general obligation of the director but need not be
secured and may be accepted without reference to financial ability to make
repayment.
(3) Determinations and authorizations of payments under this section shall
be made in the manner specified in section 7-109-106.
7-109-105. Court-ordered indemnification of directors.
--------------------------------------------------------
(1) Unless otherwise provided in the articles of incorporation, a director
who is or was a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction. On
receipt of an application, the court, after giving any notice the court
considers necessary, may order indemnification in the following manner:
(a) If it determines that the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order
indemnification, in which case the court shall also order the corporation
to pay the director's reasonable expenses incurred to obtain court-ordered
indemnification.
(b) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances,
whether or not the director met the standard of conduct set forth in
Innovatia, Inc. SB-2 29
section 7-109-102 (1) or was adjudged liable in the circumstances described
in section 7-109-102 (4), the court may order such indemnification as the
court deems proper; except that the indemnification with respect to any
proceeding in which liability shall have been adjudged in the circumstances
described in section 7-109-102 (4) is limited to reasonable expenses
incurred in connection with the proceeding and reasonable expenses incurred
to obtain court-ordered indemnification.
7-109-106. Determination and authorization of indemnification of
---------------------------------------------------------------------------
directors.
- ----------
(1) A corporation may not indemnify a director under section 7-109-102
unless authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because the
director has met the standard of conduct set forth in section 7-109-102. A
corporation shall not advance expenses to a director under section 7-109-104
unless authorized in the specific case after the written affirmation and
undertaking required by section 7-109-104 (1) (a) and (1) (b) are received and
the determination required by section 7-109-104 (1) (c) has been made.
(2) The determinations required by subsection (1) of this section shall be
made:
(a) By the board of directors by a majority vote of those present at
a meeting at which a quorum is present, and only those directors not
parties to the proceeding shall be counted in satisfying the quorum; or
(b) If a quorum cannot be obtained, by a majority vote of a committee
of the board of directors designated by the board of directors, which
committee shall consist of two or more directors not parties to the
proceeding; except that directors who are parties to the proceeding may
participate in the designation of directors for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a) of
subsection (2) of this section, and a committee cannot be established under
paragraph (b) of subsection (2) of this section, or, even if a quorum is
obtained or a committee is designated, if a majority of the directors
constituting the quorum or the committee so directs, the determination required
to be made by subsection (1) of this section shall be made:
(a) By independent legal counsel selected by a vote of the board of
directors or the committee in the manner specified in paragraph (a) or (b)
of subsection (2) of this section or, if a quorum of the full board cannot
be obtained and a committee cannot be established, by independent legal
counsel selected by a majority vote of the full board of directors; or
(b) By the shareholders.
Innovatia, Inc. SB-2 30
(4) Authorization of indemnification and advance of expenses shall be made
in the same manner as the determination that indemnification or advance of
expenses is permissible; except that, if the determination that indemnification
or advance of expenses is permissible is made by independent legal counsel,
authorization of indemnification and advance of expenses shall be made by the
body that selected this counsel.
7-109-107. Indemnification of officers, employees, fiduciaries, and
---------------------------------------------------------------------------
agents.
- -------
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under section
7-109-103, and is entitled to apply for court-ordered indemnification under
section 7-109-105, in each case to the same extent as a director;
(b) A corporation may indemnify and advance expenses to an officer,
employee, fiduciary, or agent of the corporation to the same extent as to a
director; and
(c) A corporation may also indemnify and advance expenses to an
officer, employee, fiduciary, or agent who is not a director to a greater
extent, if not inconsistent with public policy, and if provided for by its
bylaws, general or specific action by its board of directors or
shareholders, or contract.
7-109-108. Insurance. A corporation may purchase and maintain insurance
----------------------
on behalf of a person who is or was a director, officer, employee, fiduciary, or
agent of the corporation, is or was serving at the request of the corporation as
a director, officer, partner, trustee, employee, fiduciary, or agent of another
domestic or foreign corporation or other person or of an employee benefit plan,
against liability asserted against or incurred by the person in that capacity or
arising from his or her status as a director, officer, employee, fiduciary, or
agent, whether or not the corporation would have power to indemnify the person
against the same liability under section 7-109-102, 7-109-103, or 7-109-107. Any
such insurance may be procured from any insurance company designated by the
board of directors, whether such insurance company is formed under the laws of
this state or any other jurisdiction of the United States or elsewhere,
including any insurance company in which the corporation has an equity or any
other interest through stock ownership or otherwise.
7-109-109. Limitation of indemnification of directors.
--------------------------------------------------------
(1) A provision treating a corporation's indemnification of, or advance of
expenses to, directors that is contained in its articles of incorporation or
bylaws, in a resolution of its shareholders or board of directors, or in a
contract, except an insurance policy, or otherwise, is valid only to the extent
the provision is not inconsistent with sections 7-109-101 to 7-109-108. If the
articles of incorporation limit indemnification or advance of expenses,
indemnification and advance of expenses are valid only to the extent not
inconsistent with the articles of incorporation.
Innovatia, Inc. SB-2 31
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's power
to pay or reimburse expenses incurred by a director in connection with an
appearance as a witness in a proceeding at a time when he or she has not been
made a named defendant or respondent in the proceeding.
7-109-110. Notice to shareholders of indemnification of director. If a
---------------------------------------------------------------------
corporation indemnifies or advances expenses to a director under this article in
connection with a proceeding by or in the right of the corporation, the
corporation shall give written notice of the indemnification or advance to the
shareholders with or before the notice of the next shareholders' meeting. If the
next shareholder action is taken without a meeting at the instigation of the
board of directors, such notice shall be given to the shareholders at or before
the time the first shareholder signs a writing consenting to such action.
Item 25. Recent Sales of Unregistered Securities.
- -------------------------------------------------
Since March 12, 2001, the date of our inception, we have sold securities in
transactions summarized in the following subsection (a)
(a)
Number of Shares
Purchaser Date of Sale Consideration of Common stock Sold
- ------------------ ------------ ------------------------------- --------------------
Mark A. Bogani 3/12/2001 Payment in the amount of $3,500 1,500,000
Bruce H. Penrod 3/12/2001 Payment in the amount of $3,500 1,500,000
With respect to the sale described in subsection (a), we relied upon
Section 4(2) of the Securities Act of 1933 for transactions by an issuer not
involving any public offering, as an exemption from the registration
requirements of Section 5 of the Securities Act of 1933. As the then
President/Chief Executive Officer and Treasurer/Secretary, respectively, of
Innovatia, Messrs. Bogani and Penrod had access to information enabling them to
evaluate the merits and risks of the transaction on the date of sale. Messrs.
Bogani and Penrod each represented in writing that he acquired the securities
for investment for his or her own account and not with a view to distribution.
Stop-transfer instructions have been issued to Innovatia's transfer agent with
respect to the securities, and the transfer agent has been instructed to issue
the certificates representing the securities bearing a restrictive investment
legend. Each purchaser signed a written agreement stating that the securities
will not be sold except by registration under the Securities Act of 1933 or
pursuant to an exemption from registration.
Innovatia, Inc. SB-2 32
Item 27. Exhibits.
- ------------------
The following Exhibits are filed as part of this Registration Statement on
Form SB-2.
Item Number Description
- ----------- -----------
(3.1) Articles of Incorporation of Innovatia, Inc., filed March 12,
2001.
(3.2) Bylaws of Innovatia, Inc.
(4.1) Form of stock certificate.
(5.1) Opinion and Consent of Randall J. Lanham, Esq.
(23.1) Consent of Comiskey and Company, P.C.
Item 28. Undertakings.
- ----------------------
(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the small business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
small business issuer will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Innovatia, Inc. SB-2 33
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorizes the registration
statement to be signed on its behalf by the undersigned, in the City of
Greenwood Village, State of Colorado, on June 28, 2002.
INNOVATIA, INC.
(Registrant)
By: /s/ Mark A. Bogani
---------------------------
Mark A. Bogani, President,
Chief Executive Officer
By: /s/ Bruce H. Penrod
---------------------------
Bruce H. Penrod, Secretary,
Treasurer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Date: June 28, 2002 /s/ Mark A. Bogani
---------------------------
Mark A. Bogani, President,
Chief Executive Officer
/s/ Bruce H. Penrod
---------------------------
Bruce H. Penrod, Secretary,
Treasurer
Innovatia, Inc. SB-2 34
EXHIBIT INDEX
The following Exhibits are filed as part of this Registration Statement on
Form SB-2.
Item
Number Description
- ------ -----------
(3.1) Articles of Incorporation of Innovatia, Inc., filed March 12,
2001.
(3.2) Bylaws of Innovatia, Inc.
(4.1) Form of stock certificate.
(5.1) Opinion and Consent of Randall J. Lanham, Esq.
(23.1) Consent of Comiskey and Company, P.C.
Innovatia, Inc. SB-2 35