SEC Filing Summary: Innovative Acquisitions Corp. (10-K)
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2010. The registrant is Innovative Acquisitions Corp., a Delaware corporation organized in 2007. The company is classified as a "shell company" and a "blank check" company with no specific business plan other than to seek a business combination, merger, or acquisition with an unidentified target. The company has no active operations, no employees other than management, and utilizes office space provided by management at no cost.
Key Financial Metrics
| Metric | 2010 | 2009 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(15,976) | $(16,836) |
| Cash and Cash Equivalents | $462 | $2,408 |
| Total Assets | $462 | $2,408 |
| Total Liabilities | $0 | $2,270 |
| Stockholders' Equity | $462 | $138 |
| Net Cash Used in Operating Activities | $(18,246) | $(16,815) |
| Net Cash Provided by Financing Activities | $16,300 | $19,150 |
Note: The company has generated no revenue since inception (April 27, 2007). Expenses consist exclusively of legal, accounting, and audit fees related to regulatory filings.
Material Changes vs. Prior Period
- Liquidity Decline: Cash on hand decreased by approximately 81% from $2,408 in 2009 to $462 in 2010.
- Liability Reduction: The company eliminated all liabilities (accounts payable of $2,270) by year-end 2010, resulting in a balance sheet with zero liabilities.
- Capital Contributions: The company received $16,300 in cash capital contributions from directors during 2010 to fund operations, as no shares were issued for these contributions.
- Net Loss: The net loss for 2010 ($15,976) was slightly lower than the 2009 net loss ($16,836), reflecting consistent operational costs for maintaining public reporting status.
Outlook, Risks, and Management Commentary
- Going Concern: The independent auditors have issued a report raising "substantial doubt" about the company's ability to continue as a going concern. The company has no revenue and relies entirely on capital contributions from directors or future financing to meet obligations.
- Business Plan: The primary objective for the next 12 months is to locate a suitable acquisition candidate. The company anticipates incurring costs for filing reports and investigating targets.
- Financing Needs: Management states there are no assurances that additional funding will be available. The company's ability to continue operations is dependent on obtaining equity financing through a reverse merger or related party advances.
- Risks: Risks include the inability to find a target, intense competition from other shell companies, potential dilution of existing shareholders in a merger, and the financial instability of potential target companies.
Investor Verification Checklist
- Capital Adequacy: Verify if the directors have committed to further capital contributions given the cash balance of only $462.
- Target Identification: Confirm if any definitive agreements or letters of intent regarding a business combination have been signed since the filing date.
- Related Party Transactions: Review the nature of the $16,300 capital contribution from directors to ensure no hidden obligations or repayment terms exist.
- Shell Status: Acknowledge that the company is a shell with no assets other than cash and no operations, making the investment purely speculative based on a future merger.
- Management Compensation: Note that officers and directors receive no compensation until a business combination is consummated.