Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2013, for IIM Global Corporation (formerly Silverwood Acquisition Corporation). The company is a Delaware corporation classified as a "development stage company" and a shell company. Its primary purpose is to serve as a vehicle for a business combination with a private entity. On December 20, 2012, the company underwent a change in control, name change, and significant share redemption, reducing outstanding shares from 20,000,000 to 1,500,000.
Key Financial Metrics
| Metric | Q1 2013 | Q1 2012 | Inception to Mar 31, 2013 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating Expenses | $70 | $750 | $3,263 |
| Net Loss | $(70) | $(750) | $(3,263) |
| Cash Balance (End of Period) | $74,730 | $2,000 | $74,730 |
| Total Assets | $74,730 | $150 | $74,730 |
| Total Liabilities | $75,000 | $350 | $75,000 |
| Stockholders' Deficit | $(270) | $(200) | $(270) |
Liquidity Note: The significant increase in cash ($74,580 net increase) and liabilities ($74,650 increase in accrued liabilities) is driven by a $75,000 deposit received on March 29, 2013, from an unrelated party intended for a future stock purchase. No formal subscription agreement was signed as of the reporting date.
Material Changes vs. Prior Period
- Share Structure: Outstanding common stock decreased from 20,000,000 shares in Q1 2012 to 1,500,000 shares in Q1 2013 following a redemption of 19,500,000 shares in December 2012.
- Liabilities: Accrued liabilities surged from $350 (Dec 31, 2012) to $75,000 (Mar 31, 2013) due to the aforementioned deposit.
- Expenses: Operating expenses for the quarter dropped to $70 compared to $750 in the prior year quarter, reflecting minimal operational activity.
Outlook, Risks, and Management Commentary
Business Combination: The company signed a term sheet on January 23, 2013, with Innovation in Motion, Inc., a private company in the handheld identification and mobile payment sectors. A definitive merger agreement is targeted for execution by June 2013. If consummated, Innovation in Motion shareholders will own a majority of the combined entity, and Innovation in Motion will likely be deemed the accounting acquirer.
Going Concern: The company has sustained losses since inception and has no revenue. Continuation as a going concern is dependent on obtaining additional financing or successfully completing a business combination. Management plans to use personal funds to pay 2013 expenses.
Internal Controls: Management concluded that disclosure controls and procedures were not effective as of March 31, 2013. Material weaknesses include a lack of segregation of duties and insufficient accounting personnel. Remediation plans involve hiring additional staff or consultants once revenue or capital increases.
Investor Verification Checklist
- Verify the status of the term sheet with Innovation in Motion, Inc., and whether a definitive merger agreement was executed by the June 2013 deadline.
- Confirm the nature of the $75,000 deposit recorded as a liability; determine if it converts to equity or is refundable if the merger fails.
- Assess the company's ability to fund operations beyond management's personal contributions given the lack of revenue.
- Review the progress on remediation of internal control weaknesses, specifically regarding segregation of duties.
- Confirm the current ownership structure, noting that the new officer holds 67% of the 1,500,000 outstanding shares.