UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: January 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________
Commission file number 0-32823
INNOVATIVE TECHNOLOGY ACQUISITIONS CORP
(Exact name of small business issuer as specified in its charter)
Delaware 98-0348407
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
144 King Street East, Toronto Ontario Canada M5C 1G8
(Address of principal executive offices)
(416) 594-4441
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,854,086
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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PART I -- FINANCIAL INFORMATION
INNOVATIVE TECHNOLOGY ACQUISITION cORPORATION
(A DEVELOPMENT STAGE COMPANY)
Financial Statements
January 31, 2002 and 2001
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Financial Statements
January 31, 2002 and 2001
BALANCE SHEETS
January 31,
--------------------------
2002 2001
----------- -----------
ASSETS
INTANGIBLES (net of accumulated amortization) $ -- $ --
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Loans payable - stockholder $ 120,400 $ 120,400
Note payable - affiliate 100,000 100,000
Due to stockholders 230,747 64,949
Accrued interest 118,149 97,189
Other accrued expenses 30,565 30,565
----------- -----------
Total current liabilities 599,861 413,103
LONG TERM LIABILITIES:
Other 5,830 5,830
----------- -----------
Total liabilities 605,691 418,933
----------- -----------
STOCKHOLDERS' DEFICIT:
Common stock, $0.01 par value; 100,000,000 shares authorized
4,854,086 and 4,801,086 shares issued and outstanding at
January 31, 2002 and 2001, respectively 48,541 48,011
Additional paid-in capital 1,355,545 1,343,075
Deficit accumulated during development stage (2,009,777) (1,810,019)
----------- -----------
Total stockholders' deficit (605,691) (418,933)
----------- -----------
Total liabilities and stockholders' deficit $ -- $ --
=========== ===========
The accompanying notes are an integral part of these financial statements.
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Financial Statements
January 31, 2002 and 2001
STATEMENTS OF OPERATIONS
Cumulative from
For the quarter ended February 8, 1996
January 31, (inception)
------------------------------ through January
2002 2001 31, 2002
------------- ------------- -------------
REVENUE $ -- $ -- $ --
------------- ------------- -------------
GENERAL AND ADMINISTRATIVE:
Administrative 750 -- 3,750
Development costs -- -- 657,822
Professional fees 5,000 -- 177,805
Promotion -- -- 41,176
Consulting 40,000 -- 222,250
Amortization of intangibles -- -- 750,000
Other -- -- 43,390
------------- ------------- -------------
Total general and administrative expenses 45,750 -- 1,896,193
------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest expense (5,240) (5,240) (118,149)
Other income -- -- 4,565
------------- ------------- -------------
Total other income (expense) (5,240) (5,240) (113,584)
------------- ------------- -------------
Net loss $ (50,990) $ (5,240) $ (2,009,777)
============= ============= =============
Loss per share $ (0.01) $ (0.00)
------------- -------------
Weighted average number of shares outstanding 4,802,586 4,801,086
============= =============
The accompanying notes are an integral part of these financial statements
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Financial Statements
January 31, 2002 and 2001
STATEMENTS OF STOCKHOLDERS' DEFICIT
Deficit
Accumulated
Common Stock Additional During
------------------------ Paid-In Development Total
Shares Amount Capital Stage Deficit
---------- ---------- ---------- ---------- ----------
Initial capitalization for cash,
at $0.02 per share 4,500,000 $ 45,000 $ 45,000 $ -- $ 90,000
Common stock issued to
acquire distribution license
at $1.00 per share 500,000 5,000 495,000 -- 500,000
Net loss, nine months ended
October, 11, 1996 -- -- -- (106,497) (106,497)
---------- ---------- ---------- ---------- ----------
Balance at October 31, 1996 5,000,000 50,000 540,000 (106,497) 483,503
Net loss -- -- -- (70,904) (70,904)
---------- ---------- ---------- ---------- ----------
Balance at October 31, 1997 5,000,000 50,000 540,000 (177,401) 412,599
Common stock issued for cash,
at $1.00 per share 151,500 1,515 149,985 -- 151,500
Less: subscription receivable for
shares issued -- (1,515) (149,985) -- (151,500)
Net loss -- -- -- (116,022) (116,022)
---------- ---------- ---------- ---------- ----------
Balance at October 31, 1998 as
previously reported 5,151,500 50,000 540,000 (293,423) 296,577
Adjustment in connection with
agreement that was not consummated (1,000,000) (10,000) 10,000 -- --
---------- ---------- ---------- ---------- ----------
Balance at October 31, 1998, as
restated 4,151,500 40,000 550,000 (293,423) 296,577
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Deficit
Accumulated
Additional During
Paid-In Development Total
Shares Amount Capital Stage Deficit
----------- ----------- ----------- ----------- -----------
Common stock issued at $1.00
per share 649,586 6,496 643,090 -- 649,586
Collection of subscription receivable -- 1,515 149,985 -- 151,500
Net loss -- -- -- (1,471,449) (1,471,449)
----------- ----------- ----------- ----------- -----------
Balance at October 31, 1999 4,801,086 48,011 1,343,075 (1,764,872) (373,786)
Net loss -- -- -- (39,907) (39,907)
----------- ----------- ----------- ----------- -----------
Balance at October 31, 2000 4,801,086 48,011 1,343,075 (1,804,779) (413,693)
Common stock issued for services at
$1.00 per share 3,000 30 2,970 -- 3,000
Net loss -- -- -- (154,008) (154,008)
----------- ----------- ----------- ----------- -----------
Balance at October 31, 2001 4,804,086 $ 48,041 $ 1,346,045 $(1,958,787) $ (564,701)
Common Stock issued for services at
$.20 per share 50,000 500 9,500 -- 10,000
Net Loss -- -- -- (50,990) (50,990)
=========== =========== =========== =========== ===========
Balance at January 31, 2002 4,854,086 $ 48,541 $ 1,355,545 $(2,009,777) $ (605,691)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Cumulative from
For the quarter ended February 8, 1996
January 31, (inception)
-------------------------- through
2002 2001 January 31, 2002
----------- ----------- ----------------
Operating activities:
Net loss $ (50,990) $ (5,240) $ (2,009,777)
Adjustments to reconcile net loss to
Net cash used in operating activities:
Amortization -- -- 750,000
Development costs -- -- 649,586
Non-Cash Items 40,000 -- 40,000
Changes in assets and liabilities:
Increase in accrued interest 5,240 5,240 118,149
Decrease in subscription receivables -- -- 151,500
Increase in other accrued expenses -- -- 30,565
----------- ----------- ---------------
Net cash used in operating activities (5,750) 0 (269,977)
Cash flows from investing activities:
Acquisition of distribution license -- -- (750,000)
----------- ----------- ---------------
Net cash used in investing activities -- -- (750,000)
Cash flows from financing activities:
Loans and advances - shareholders 5,750 -- 321,147
Increase in notes payable - other -- 5,240 105,830
Proceeds from sales of common stock -- -- 593,000
----------- ----------- ---------------
Net cash provided by financing activities 5,750 5,240 1,019,977
Net increase (decrease) in cash -- -- --
Cash at beginning of the year -- -- --
----------- ----------- ---------------
Cash at the end of the year $ -- $ -- $ --
=========== =========== ===============
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Supplemental disclosures of non-cash financing activities:
In November 1998, the Company issued 649,586 shares of common stock at $1.00
per share to reimburse an affiliated company for costs incurred in developing a
product.
In May 2001, the Company issued 3,000 shares of common stock at $1.00 per
share to pay a consultant for services related to the maintenance of the
Company's website.
In December 2001, the Company issued 50,000 shares of common stock at $.20
per share to pay for investment banking services.
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Financial Statements
January 31, 2002 and 2001
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------
Organization and Business Activity
----------------------------------
Innovative Technology Acquisition Corporation, formerly known as
Virilite Neutracutical Corporation (the "Company") was incorporated in
the state of Delaware in February 1996. It was formed with the purpose
of developing a sophisticated line of nutraceutical, functional food
and beverage products, using a proprietary formula, which utilized
LIBIDO as a base component. In February 1996, the Company acquired the
exclusive distribution rights to LIBIDO for the United States and
Mexico. Because of prior registration of the name LIBIDO as a trademark
for an unrelated product, and other marketing considerations, the
Company refers to the component as VIRILITE (Note 4).
The Company is considered to be in the development stage, and the
accompanying financial statements, represent those of a development
stage enterprise.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
Intangibles
-----------
Intangible assets consist of a distribution license, which is carried
at cost less accumulated amortization.
Net Loss Per Common Share
-------------------------
The Company applies SFAS No. 128, Earnings Per Share. In accordance
with SFAS No. 128, basic net loss per share has been computed based on
the weighted average of common shares outstanding during the period.
Diluted earnings per share include the effects of any outstanding
financial instruments that may be converted into common stock. SFAS No.
128 provides guidance to calculate the equivalent number of common
shares that would be likely issued in the event the holder would elect
to convert the financial instrument into common shares. As per SFAS
No.128, there were no common stock equivalents at January 31, 2002 and
2001.
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (CONTINUED)
- ----------------------------------------------------------
Income Taxes
------------
The Company accounts for income taxes pursuant to the provisions of
FASB No. 109 "Accounting for Income Taxes", which requires, among other
things, a liability approach to calculating deferred income taxes. The
asset and liability approach requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of
assets and liabilities. The Company has had operating losses since
inception and accordingly has not provided for income taxes.
Realization of the benefits related to the net operating loss
carryforward may be limited in any one year due to IRS Code Section
382, change of ownership rules.
New Accounting Pronouncements
-----------------------------
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. The Statement applies to all entities and is effective for all
fiscal quarters of the fiscal years beginning after June 15, 2000. The
Company did not engage in derivative instruments or hedging activities
in any periods presented in the financial statements.
NOTE 2-LOAN PAYABLE-STOCKHOLDER
- -------------------------------
The loan, which was incurred in connection with the acquisition of a
distribution license from a corporate stockholder in August 1996 (Note
4) had an original due date of August 28, 1998. During 1998, the due
date of the loan was extended until August 28, 2001. In 2001, the due
date of the loan was extended to August 28, 2002. The loan bears
interest at prime plus 1% (or 8.25%). There are no installment payments
due under the terms of the agreement. Principal plus all accrued
interest is due on August 28, 2001. Accrued interest at January 31,
2002 was approximately $66,337.
NOTE 3-NOTE PAYABLE-AFFILIATE
- -----------------------------
Note payable affiliate had an original due date of May 24, 1998. During
1998, the due date of the loan was extended until May 24, 2001. In
2001, the due date was extended to May 24, 2002. The note bears
interest at 1% over prime (or 8.25%). There are no installment payments
due under the terms of the agreement. Principal plus all accrued
interest is due on May 24, 2002. Accrued interest at January 31, 2002
and 2001, in connection with this loan, was approximately $51,812 and
$43,562 respectively.
NOTE 4-RELATED PARTY TRANSACTIONS
- ---------------------------------
Distribution License
--------------------
In February 1996, the Company acquired the exclusive distribution
rights, in the United States and Mexico, to Libido, from one of its
stockholders. For marketing purposes and due to the prior registration
of the name Libido as a trademark for an unrelated product, the Company
refers to Libido as "VIRILITE".
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 4-RELATED PARTY TRANSACTIONS (CONTINUED)
- ---------------------------------------------
Distribution License (continued)
--------------------------------
VIRILITE is the base component of the line of nutraceutical food
products the Company plans to develop and market.
The distribution license, which expires on December 31, 2014 (Note 1),
was purchased from one of the Company's shareholders for a total
consideration of $750,000; in the form of $50,000 cash, a note of
$200,000 (Note 2) maturing on August 28, 2002 with interest at prime
plus 1% and 500,000 shares of the Company's stock valued at $1 per
share.
Development Costs
-----------------
The Company, through a subsidiary of its major stockholder, plans to
commence development of a product in the form of an energy bar, which
will be used for test marketing purposes. Through October 31, 1998,
development costs incurred totaled approximately $657,822. No
production has taken place as of January 31, 2002.
Consulting Fees
---------------
In the quarter ended January 31, 2002, the Company accrued $30,000 in
consulting fees relating to the interaction with investment bankers,
acquisition due diligence and registration of the Company as a
reporting over-the counter entity. The fees are payable to Gemini
Integrated Financial Services, the Company's major stockholder.
NOTE 5-GOING CONCERN CONSIDERATION
- ----------------------------------
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The basis of accounting
contemplates the recovery of the Company's assets and the satisfaction
of its liabilities in the normal course of operations. Since inception,
the Company has been involved in the acquisition of the exclusive
distribution rights to LIBIDO for the United States and Mexico, the
prior registration of the trademark and the performance of preliminary
marketing promotional activities. The Company's ultimate ability to
attain profitable operations is dependent upon its main stockholders'
providing additional financing to complete its development activities,
and to achieve a level of sales to support its cost structure. Through
January 31, 2002, the Company has accumulated a deficit totaling
approximately $2,009,777, which raises substantial doubt about the
Company's ability to continue as a going concern.
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Item 2. Plan of Operation
Since inception we have produced no revenues. We continue to need shareholder
financing to maintain our operations. Since the test marketing period we have
not produced or manufactured any additional products. During the next twelve
months it is expected that we will continue to rely on shareholder financing or
the sale of our securities to continue funding our operations.
Plan of Operation
The manufacturer of the Virilite powder, Med-Eq of Norway, has developed a
more concentrated form of the dietary supplement. We are in the process of
determining if any changes will be need to be made to our TERBO Bar recipes.
Until we are able to assess the need to reformulate the TERBO Bar we intend to
import and sell Virilite in tablet form. The tablets are available directly from
the manufacturer
We intend to seek contract manufacturing and distribute the TERBO Bar and
other products based on Virilite. In order to do so we may have to sub-license
the product to the contract manufacturer or distributor or enter into another
type of profit or revenue sharing arrangement
We have been actively seeking contract manufacturers for the TERBO Bars and
are having discussions with a beverage producer capable of bottling an energy
drink that uses Virilite. A beverage product had been previously developed, but
had not been produced. We believe that it is important to have product line
extensions available so as to keep the product line fresh and innovative.
Marketing of the Virilite products and any other products we may acquire,
as described below, will take place mainly on the internet through the use of
web sites, search engine placement, banner ads and opt-in e-mail advertising. We
will sell our products directly and not through retail outlets initially. The
competition for retail space makes it cost prohibitive to seek such placement.
We have developed a brand identity using the name "Virilite" and "TERBO" and
intend to continue using those names. The web site will contain information on
the product, areas where consumers could interact with each other and a secure
e-commerce site where consumers could purchase our products. It is anticipated
that web site development would be paid for based upon a revenue sharing model
or it would require Us to pay for the web site development services through the
issuance of our common stock. We prefer these types of arrangements so as to
preserve cash.
Additional marketing strategies include the use of infomercials on TV or
Radio. Radio infomercials are typically less expensive to produce and radio time
is significantly less expensive than TV time. It is not expected that we would
use this type of marketing until we have established a customer base through our
internet strategy.
Previously we advertised the TERBO Bar in USA Today, Playboy, Men's Health
magazine and on the Howard Stern Show. These advertisements were very expensive
and could not be sustained. Such a national advertising campaign could be
effective if sustained. However, we intend to focus more on internet marketing
as it provides a more cost effective approach and the anonymity that many
consumers seek when purchasing personal health items.
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INNOVATIVE TECHNOLOGY ACQUISTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
We additionally intend to acquire products or the rights to products in
industries other than the nutraceutical industry while not excluding the
addition of other nutraceutical or dietary supplement products. Once we have
obtained the rights to such products, We would seek to find distributors for
them or would distribute them through our web site. We are looking to other
small companies that have innovative and unique products but who are having
difficulty marketing the product or finding satisfactory distribution. Marketing
of these additional items will be almost exclusively through the internet. For
products outside of the nutraceutical industry we intend to register other
domain names that would be appropriate for the products, using the ITAQ.net
domain as a portal to our other sites.
It is probable that our business operations will consume more cash then
they generate over the short-term. Therefore, management believes that it will
be necessary to raise additional capital for the Company through private
placements of the Company's stock or through shareholder loans.
-13-
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended January 31, 2002 we issued 50,000 shares of common
stock to vFinance Investments, Inc. pursuant to an investment banking contract.
We relied on the exemption from registration contained in Section 4(2) of the
Securities Act of 1933. Pursuant to the contract vFinance will provide
investment banking advice.
ITEM 3. DEFAULTS UPON SENIOR NOTES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDIERS
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) 3.1 Articles of Incorporation incorporated by reference from the Company's
filing on Form 10-SB dated June 1, 2001.
3.2 Amendment to Articles of Incorporation (November 1997) incorporated by
reference from the Company's filing on Form 10-SB dated June 1, 2001.
3.3 Amendment to Articles of Incorporation (December 1999) incorporated by
reference from the Company's filing on Form 10-SB dated June 1, 2001.
3.4 Bylaws incorporated by reference from the Company's filing on Form
10-SB dated June 1, 2001.
(b) Reports on Form 8-K. No reports on Form 8-K where filed during the 3 month
period ended January 31. 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
/s/ Randy Lebow
Innovative Technology Acquisition Corp.
Date: April 19, 2002 /s/ Randy Lebow
President
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