Forward Looking Statements
This quarterly report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management's plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation: ·
the uncertainty of profitability based upon our history of losses;
risks related to failure to obtain adequate financing on a timely basis and on acceptable terms to continue as going concern;
risks related to our international operations and currency exchange fluctuations;
risks related to product liability claims;
other risks and uncertainties related to our business plan and business strategy.
This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Forward looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of
the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in
United Statesdollars and all references to "common stock" refer to the common shares in our capital stock.
As used in this annual report, the terms "we", "us", "our", the "Company" and "Innocent" mean
Our Current Business
Innocent, Inc.("Company") was organized September 27, 2006under the laws of the State of Nevadafor the purpose of selling new food products produced or developed by North American companies to foreign markets. On August 31, 2009, the Company discontinued its involvement in the sales of tea due to a strategic change in business focus by the acquisition of mineral rights as disclosed in the Company's 8-K filed with the SECon September 2, 2009. The Company currently has limited operations or realized revenues from its planned principle business purpose and, in accordance with Statement of Financial Accounting Standard (SFAS) No. 7, "Accounting and Reporting by Development Stage Enterprises," is considered a Development Stage Enterprise. On September 1, 2009the company acquired mining operations in an active working gold mine. The Board of Directors approved the Purchase Agreement from Global Finishing, Inc.(Frankfurt:G8BA) a Nevada Corporation, to purchase its interest in the Maria Olivia Concessions and Miranda PLSA, located in Ecuador, within the prospective gold and silver bearing vein systems. Global Finishing Inc.acquired the concessions from Companis Minera Monte-Verde S.A.Comimontsa in a 100% share exchange for 6,000,000 Global Finishing Inc., Regulation S common shares which represented 22.8% of its shares. 9
April 7, 2010the Company decided to direct that the initial funding of $880,000US held in escrow by Dr. Vicente Sanchez Jaramilloa third party of the initial agreement in Ecuadorbe returned. The company has received such notification that said funds are being returned to the original accounts as received. Global Finishing, Inc.has confirmed in writing that said funds are the property of Innocent Inc.and will be forwarded upon receipt. The company has adjusted the general ledger to reflect said funds as a subscription receivable until received. Innocent Inc.and Global Finishing Inc.agree that the existing agreement on Miranda and as a result of the new mining laws that went into effect on January 1, 2010, it is in the best interest of all parties to renegotiate the contract, whereby Innocent Inc.will be the direct designated benefactor of the Miranda Mineral Rights. On May 31, 2010 Innocent Inc.entered into an agreement with Global Finish Inc., a Nevada Corporation, to acquire 51% of the issued and outstanding shares of Global Finishing Inc.in a share exchange whereby Innocent Inc.will issue .9 shares of Innocent Inc.rule 144 restricted common stock for one share of Global Finishing Inc.The agreement has been approved by an excess of 51% of the shareholders of both Global Finishing Inc.and Innocent Inc.by majority shareholder consent in lieu of a meeting. The agreement was signed on May 31, 2010by the Companies with the approval of the Board of Directors. The agreement provides for 10 working days to administer the share exchange which will result in Global Finishing Inc.to exchange 13,975,208 shares of Global Finishing Inc.27, 402,369 shares issued and outstanding for 12,557,687 shares of Innocent Inc., representing approximately 25.4% ownership of Innocent committed and issued and outstanding shares of common stock. The agreement further provided for the share exchange of the remaining 49% under the same exchange provisions, and that no additional shares of Global Finish Inc.will be issued until such time as the parties execute the 49% exchange or decide that not additional share exchange will take place. The acquisition of the controlling interest in Global Finishing Inc., will allow Innocent Inc.to proceed with its Ecuadormineral interest, although given the time since the initial agreement, the agreement for the Miranda interest must be renegotiated. Global Finishing Inc.currently owns the majority interest in an approved Ecuadorsubsidiary, Globalfinishing Ecuador S A that can legally operate and own mining interest and register new mineral rights and agreements. Innocent will retain the ownership rights in Companis Minera Monte-Verde S.A.Comimontsa and the 10,000,000 shares issued in the September 1, 2009agreement will be offset against the 12,557,687 shares of common stock due to be issued to Global Finish Inc., for the 51% interest, leaving a balance of 2,557,687 additional shares to be issued in the share exchange described above. On August 27, 2010Globalfinishing Ecuador acquired the Murciealagos Vizcaya and Lilly Raimining concessions, located in Ecuador's El Oro Province. Innocent Inc.funded the initial purchase with the assumption of majority ownership of Globalfinishing Ecuador via its acquisition agreement for 51% of Global Finishing Inc.the parent of Globalfinihing Ecuador. Due to the cancellation of the share exchange agreement on October 20, 2010the parties must negotiate the ownership of initial purchase and subsequent funds due. Innocent Inc.has recorded the funds advanced to Global Finishing Inc.as a note receivable until such time as the matter is resolved. Under the terms of the purchase agreement for the mining properties, Globalfinishing Ecuador owes a total sum of $1,200,000for the properties, with the initial down payment of $250,000funded by Innocent Inc.Five additional payments totaling $950,000are due every sixth month thereafter. On October 20, 2010 Innocent Inc.has terminated the agreement with Global Finish Inc., a Nevada Corporation, to acquire 51% of the issued and outstanding shares of Global Finishing Inc.in a share exchange whereby Innocent Inc.would have issued .9 shares of Innocent Inc.rule 144 restricted common stock for one share of Global Finishing Inc.The agreement was approved by an excess of 51% of the shareholders of both Global Finishing Inc.and Innocent Inc.by majority shareholder consent in lieu of a meeting. The agreement was signed on May 31, 2010by the Companies with the approval of the Board of Directors. The agreement provided for 10 working days to administer the share exchange and this provision was extended until Innocent Inc.issued a demand to conclude the transaction and as of this date decided to cancel the agreement. Innocent Inc.and Global Finishing Inc.were unable to reach an acceptable timely conclusion to the share exchange under the terms of the original agreement. Therefore, the Board of Directors of Innocent Inc.cancelled the share exchange agreement effective October 20, 2010. The parties to the original agreement will meet to resolve the funding and purchase of the Murciealagos Vizcaya and Lilly Raimining concessions in the Zaruma-Portovelo Mining Districtof Ecuador's El Oro Province. As a result of this decision Innocent Inc.will cancel the original 10,000,000 shares issued under the $880,000.00subscription agreement due that was subsequently held for the share exchange that the Board of Directors of Innocent Inc.cancelled. The 10,000,000 shares will be returned to treasury and monies advanced for the Murciealagos Vizcaya and Lilly Raimining concessions will be recorded as a note payable due Innocent Inc.from Global Finishing Inc.until such time as the parties can agree on the terms and conditions of joint ownership. On October 20, 2010 Innocent Inc.received notification from Ecuadorconcerning the approval to own an Ecuador Registered Company, "JUST RESOURCES MINAS S.A." file reference number 732697. This company will be 100% owned by Innocent Inc.and will provide the company a structure to acquire and operate mineral interest in Ecuadorin accordance with the new mining laws that went into effect in April 2010. Innocent Inc.is in negotiations with a local executive to manage this newly approved operating company. While approval has been received, no entity has been established. 10
November 23, 2010 Innocent Inc.acquired from Sedunda Oportunidad, LLC, the 100% working interest in an Oil and Gas Leasehold Estateincluding the effective net revenues flowing therefrom. The effective net revenue yield is 82% after the landowner Royalty is paid. The property, Thomas Lease, one well located center of south quarter section 7, Township 24 North Range West, Garfield County, Oklahoma, Book 1955 page 534 on 8/13/09. The parties agreed on a purchase price of $150,000whereby Innocent Inc.will issue a non interest bearing note payable for the purchase price. The note will be a one year demand note payable. The surrounding property of approximately 300 acres contains approximately 45 wells in various states of operation and non-operation that can be acquired. It is anticipated that an additional $150,000working capital will be required to return the property to the status of a working well, with most of the expense associated to the pipeline of the gas to the refinery, that is already in process. The acquisition of the Thomas Lease from Oportunidad, LLC, included the 100% rights to the property that currently has one gas well that in the past produced both oil and gas. The leasehold assignment also includes a royalty to the land owner and the contract service that maintains and services the well, which totals 18% of the Gross Revenue, leaving a net yield of 84% of the Gross Revenue to Innocent Inc.The well is in the process of refurbishing and at this time we are not ready to make projections of income. The Initial purchase price of $150,000by issuance of a note payable and $60,000to-date for site prep and well refurbishing represent the $210,000investment. The company has been dependent upon related party/shareholders for its funding to date and currently lacks funding to complete the opportunities in Ecuador. Although, we plan to pursue the Note Receivable from Global Finishing Inc., instead of a joint ownership of Murciealagos Vizcaya and Lilly Raimining concessions, there can be no assurances that Global Finishing Inc., will execute a funding plan to complete the acquisition or a plan that will insure that Innocent Inc.is repaid, therefore we have financially reserved the note payable against earnings. In the event Global Finishing Inc.secures the property and/or funding, Innocent Inc., will utilize all remedies available to recover the entire note receivable. On February 14, 2011 Innocent Inc.Board of Directors approved a letter of intent ("LOI") which constitutes an expression of the intent of Steele Resources, Inc. ("SRI") to enter into a Joint Venture Agreement with Innocent Inc.("INI") which will govern the exploration and operations of mineral rights within the A&P Patented Claims and the Ponyexploration projects jointly referred to as the Mineral Hill Project(" Mineral Hill Project"). The agreement (non- binding LOI) has been funded with the initial payment, completing the initial obligation of Innocent, Inc.as provided in the LOI attached as an exhibit. Innocent, Inc.expects that the second deposit will be funded no later than the end of February 2011, in accordance with the Letter of Intent executed on January 27, 2011. The parties have verbally agreed to extend the funding dates from the original agreement to allow time for the Funder to forward the funds to Innocent, Inc.if necessary. Although the Funder of the initial payment has committed the balance of the funds and we expect that obligation to be met, no guarantee can be issued until such time as the funds are received by the funding source. On February 21, 2011 Innocent Inc., entered into a material definitive agreement with Steele Resources, Inc.(SELR: OTCBB) to acquire 50% of the Mineral Hill Gold Exploration Project. The project is located near Pony Hill, Montanain the Mineral Hill Mining Districtand consists of 17 patented and 67 unpatented lode mining claims (approximately 1,800 acres). The agreement is a 50/50 Joint Venture under which the two companies will work together to explore and operate the claims. The initial participating interests of Innocent, Inc.and Steele Resources, Inc. in the JV will be 50% and 50%. Under the terms of the agreement, Innocent may contribute up to $5,000,000in operating funds over one year. In the event those funds are not provided, Innocent will forfeit 10% per $1,000,000not provided. Steele Resources, Inc.will act as the operating partner and have a commitment to match up to $5,000,000in funding within one year of Innocent, Inc.contributing its first $1,000,000. Steel Resources, Inc.will forfeit 10% per $1,000,000not provided under its obligation. Innocent Inc.has made the initial payment of three hundred thousand dollars ( $300,000) under the terms of the LOI dated January 27, 2011. The second payment is expected be completed on or before May 31th, 2011. Pursuant to a non-binding Letter of Intent entered into on January 27, 2011(the "LOI"), between Steele Resources Corporation ("SRC") and Innocent, Inc.("INCT"), INCT and SRC expressed an interest in entering into a Joint Venture in which INCT would provide up to $5,000,000of funding to explore the Mineral Hill Mining Projectlocated near Pony, Montana. Pursuant to the LOI, INCT was required advance up to $500,000to SRC's subsidiary, Steele Resources, Inc.("SRI") in order to allow SRI to close on two mineral leases representing the Mineral Hill Mining Project. Pursuant to the LOI, on February 7, 2011, INCT advanced an initial $300,000which allowed SRI to close on the Pony Projectrepresenting 17 patented and 67 unpatented mining claims located in the Pony Mining Districtof Montana. 11
-------------------------------------------------------------------------------- Pursuant to the LOI, on
February 20, 2011INCT and SRC entered into a definitive Joint Venture Agreement (the "JV Agreement") relating to the Mineral Hill Mining Project. Pursuant to the JV Agreement INCT agreed to provide up to $5,000,000to fund the exploration and development of the Mineral Hill Mining Project. However, the JV Agreement was conditioned upon INCT providing an initial $550,000to close the Pony Projectand the A&P Project, of which $300,000was provided on February 15, 2011and the remaining $250,000was funded on March 23, 2011. In addition, the parties have agreed to amend the JV Agreement to allow INCT to fund an additional $450,000on or before March 31, 2011. The JV Agreement provides that when INCT provides at least $1,000,000of financing, then SRC would agree to match INCT's investment up to $5,000,000thus providing up to an aggregate of $10,000,000to explore and, if warranted, develop the Mineral Hill Mining Project. Under the terms of the JV Agreement INCT and SRC would each own 50% of the Joint Venture however the percentage ownership would be reduced by 10% for each $1,000,000a party failed to contribute to the Joint Venture.
Of the funds received on
The Company received a notification from its joint venture partner (SRI), that
Innocent Inc.was in default on the balance of its funding commitment of the $1,000,000. The Company did not agree with the exact interpretation of the default and Innocent Inc.is seeking the additional capital to fulfill its committed obligation. After further discussion the JV Partnershave decided that in consideration of Innocent's willingness to negotiate, in good faith, a payment plan for the $460,000currently due from the commitment under the Joint Venture Agreement. Steele Resources is willing to withdraw the default condition established in its letter of notification conditional upon Innocent Inc.entering into a negotiation process with Steele by May 2, 2011. Steele Resources stated that it would not seek any default remediation so long as Innocent negotiates a "good faith" funding solution. The JV Agreement is clear that ; under the terms of the JV Agreement INCT and SRC would each own 50% of the Joint Venture however the percentage ownership would be reduced by 10% for each $1,000,000a party failed to contribute to the Joint Venture. The balance of the $460,000is still due Steele to complete the initial obligation of Innocent. Innocent expected, due to a shareholder nonbinding commitment letter to complete this funding, and as of the date of this Form Q filing the funding has not been completed. The shareholder that issued the nonbinding commitment letter in May has issued a follow up letter stating the intent to complete a private placement in August and September 2011and explained the delay was due to unavoidable causes. Although the company believes the intent of the Shareholder in reference to a private placement to be a good faith commitment, there can be no guarantee that the funds will received or received in a timely manner to complete the $460,000obligation since Steele may utilize a third party to secure the funds. Under the terms and conditions of the agreement, Steel is within its right to secure the funds from a third party or advance the funds itself and become the majority shareholder of the JV. The full agreement was filed by Innocent in an 8K filing. On August 30, 2011 Innocent Inc.notified Steele Resources the company no longer felt that the capital committed and necessary for the JV Agreement could be secured by Innocent in a timely manner and Innocent Inc.felt it was in the best interest of the shareholders of both companies to terminate the agreement. The parties to the original agreement terminated the agreement on Aug 31, 2011in accordance with the terms and conditions that have been filed in an 8K regulatory filing. The Company has advanced funds totaling $290,010to Steele Resources with the intention of establishing a joint venture. The venture did not materialize and Steele Resources has agreed to return the funds to the Company. We have not received repayment as of May 31, 2012but anticipate doing so in the near term. No allowance for bad debt has been established as a result. On September 6, 2011 Global Finishing Inc.and Innocent Inc.entered into an agreement whereby Global assigned 50% interest of the MURCIELAGOS VIZCAYA and LILLY RAI, Ecuadorproperties as collateral for the $390,000outstanding note due Innocent Inc.On May 31, 2012 Innocent Inc.and Steele Resources Inc., agreed and entered into an Amended Agreement to the August 30, 2011Termination of Definitive Agreement. The detailed agreement is filed as an 8K event. On 10/30/2013 Innocent Inc.and Ewing Oil Company LLC, a Colorado, Limited Liability Corporationwhose principal place of business is located at P.O. Box 431, Burbank, California91503 singed an asset purchase agreement. Ewing Oil Companyis majority owned by Patrick Johnson, a current Director and COO of Innocent Inc.The agreement includes the sale, assignment, transfer, conveyance and deliver to Innocent Inc.free and clear of all liens, encumbrances, claims, clouds, charges; intellectual property, goodwill, materials, supplies, business records, and other proprietary assets in regard to Oil And Gas Leases (the "Leases") located in Texasand Oklahoma. The purchase price of two hundred seventy three thousand five hundred dollars( $273,500) is payable by the issuance of a note payable with the annual interest rate of ten percent (10%). Innocent Inc.will seek the funding to complete the necessary drilling program and secure the leases. The agreement will include the following intellectual property and assets. 12
-------------------------------------------------------------------------------- On 11/4/ 2013 the company received official communication that
Marcus Mueller, was resigning as a Director of Innocent Inc.to pursue other interest. The Board of Directors then appointed Patrick Johnsonto serve as a Director of Innocent Inc.
11/13/2013 Innocent Inc.signed an exploration agreement with EvergreenPetroleum of Dallas, TX. Evergreenhas over 150 years' experience in the oil and gas industry, and particular with expertise in the state of Wyomingwill be the General Manager of the Exploration Projectincluding selection of areas to lease, drilling exploratory wells, drilling development wells, and producing oil and gas found. Evergreenhas conducted and will continue to conduct both regional and local geological studies to define prospects that are worthy of acquiring oil and gas leases. Preliminary examinations of title to the minerals in these selected areas and the acquisition of said leases will be carried out for and on behalf of the Parties by Pacer Energy LLC("Pacer") of Gillette, Wyoming. The Operator of the drilling venture will be L & J Operating Inc.of Gillette, Wyoming, with the responsibility of obtaining the required bonds, preparation of the Joint Operating Agreement A.A.P.L. Form 610 - 1989. This team will be responsible for the selection of all contractors and suppliers, payment of all invoices, sale of produced oil, payment of Ad Valorem, Conservation, and Severance Taxes and payment to the Parties of their net income on a monthly basis. We will engage engineering and geological consultants as required. All the activities of the Operator shall be under the supervision of the parties to this agreement including daily and other interval reports. Innocent Inc.will be responsible for the funding of this project, with the initial operating funds of twenty-five thousand dollars( $25,000) due in 30 days from the date of the agreement. On 11/14/2013the Board of Directors authorized the issuance of five million (5,000,000) shares of rule 144 restricted common stock at a price of .015 per share value paid by the company and issued to Patrick Johnsonfor accepting the COO position, service as a Director and his efforts to bring a new venture and funding to the company. This issuance represents ownership of 20% of the current authorized and outstanding shares (25,000,000) of Innocent Inc.
RESULTS OF OPERATIONS
The following is a discussion and analysis of our results of operation for the three-month period ended
February 28, 2014, and the factors that could affect our future financial condition. This discussion and analysis should be read in conjunction with our unaudited financial statements and the notes thereto included elsewhere in this quarterly report. Our financial statements are prepared in accordance with United Statesgenerally accepted accounting principles. All references to dollar amounts in this section are in United Statesdollars unless expressly stated otherwise. September 27, 2006 (inception) Three months ended February 28, Six months ended February 28, to February 28, 2014 2013 2014 2013 2014 Revenues $ - $ - $ - $ - $ - Operating expenses Exploration expenses 5,000 - 278,500 - 278,500 Professional fees 39,200 19,952 301,749 37,252 557,499 Travel and promotion 3,794 4,392 11,714 11,337 100,337 Bad debt - - - 250,000 878,354 Other general and administrative 3,185 3,975 7,137 7,704 109,429 Total operating expenses 51,179 28,319 599,100 306,293 1,924,119 Loss from operations (51,179) (28,319) (599,100) (306,293) (1,924,119) 13
Our gross revenue for the three-month period ended
The primary increase in the operating expenses for the second quarter over the prior quarter was the addition of the company COO,
Liquidity and Capital Resource
February 28, August 31, 2014 2013 (Unaudited) ASSETS Current assets Cash
$ 1,344 $ 11,667Total current assets 1,344 11,667 Fixed assets 210,000 210,000 Total assets $ 211,344 $ 221,667Cash Flows September 27, 2006 (inception) to Six months ended February 28, February 28, 2014 2013 2014 Cash provided by (used in) operating activities $ (303,601) $ (23,294) $ (674,210)Cash flows used in investing activities - (250,000) (1,000,010) Cash provided by financing activities 293,278 263,500 1675,564 Cash at end of period $ 1,344 $ 100 $ 1,344 We had cash of $1,344; accounts payable and accrued liabilities of $159,550, a note payable $750,097and related party notes of $870,578, interest expense of $30,832for the second quarter and $319,515from the inception period, and an accumulated shareholder deficit of (2,043,415) as of Feb 28, 2014.
Cash Used In Operating Activities
Our cash balance of
The audited financial statements for the year ended
August 31, 2013, included in our annual report on the Form 10-K filed with Securities and Exchange Commission, have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has generated no revenue since inception, and has never paid any dividends and is unlikely to pay dividends or generate substantial earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As at February 28, 2014, our company has accumulated losses of $2,043,415inception. As we do not have sufficient funds for our planned operations, we will be required to raise additional funds for operations and expansion. Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended August 31, 2013,our independent registered auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent registered auditors.
The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
The company's operating budget to maintain the public entity reporting requirements is approximately
We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to secure sufficient funding from the sale of our common stock to fund our marketing plan and operations. At this time, we cannot provide investors with any assurance that we will be able to secure sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing and continue to be dependent upon related party/shareholder funding. The company plans to secure additional capital by the use of Notes Payable, Convertible Notes Payable, Private Placements, and partnerships and revenue sharing in future opportunities. This financing activity may lead to stock dilution and changes in control
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.