Delaware
|
95-4868120
|
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
|
PAGE
|
|||
PART
I - FINANCIAL INFORMATION
|
||||
Item
1. Financial Statements (Unaudited)
|
||||
Consolidated
Balance Sheet
|
3
|
|||
|
||||
Statements
of Operations
|
4
|
|||
|
||||
Statements
of Cash Flows
|
5
|
|||
|
||||
Notes
to Consolidated Financial Statements
|
6
|
|||
|
||||
Special
Note Regarding Forward Looking Statements
|
13
|
|||
|
||||
Item
2. Management's Discussion and Analysis or Plan of
Operations
|
13
|
|||
Item
3. Controls and Procedures
|
16
|
|||
|
||||
PART
II - OTHER INFORMATION
|
16
|
|||
|
||||
Item
1. Legal Proceedings
|
16
|
|||
|
||||
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
16
|
|||
Item
3. Defaults Upon Senior Securities
|
16
|
|||
|
||||
Item
4. Submission of Matters to a Vote of Security
Holders
|
17
|
|||
|
||||
Item
5. Other Information
|
17
|
|||
|
||||
Item
6. Exhibits
|
17
|
|||
|
||||
SIGNATURES
|
18
|
ASSETS
|
||||
Current
assets
|
||||
Cash
|
$
|
30,157
|
||
Accounts
receivable
|
38,217
|
|||
Inventory
|
39,072
|
|||
Total
current assets
|
107,446
|
|||
|
|
|||
Property
and equipment, net
|
116,604
|
|||
Deferred
financing cost
|
346,285
|
|||
TOTAL
ASSETS
|
$
|
570,335
|
||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||
Current
liabilities
|
||||
Current
maturities of long-term debt
|
$
|
67,382
|
||
Accounts
payable
|
851,092
|
|||
Accrued
expenses
|
1,446,251
|
|||
Notes
payable
|
965,801
|
|||
Dividend
payable
|
35,971
|
|||
Derivative
liability
|
31,800
|
|||
TOTAL
CURRENT LIABILITIES
|
3,398,297
|
|||
|
||||
Long-term
debt
|
921,718
|
|||
Commitments
|
||||
STOCKHOLDERS'
DEFICIT:
|
||||
Preferred
stock, $.001 par value, 10,000,000 shares authorized,
|
||||
492,000
shares issued and outstanding
|
492
|
|||
Common
stock, $.001 par value, 900,000,000 shares authorized,
|
||||
569,302,879
shares issued and outstanding
|
569,303
|
|||
Additional
paid-in capital
|
6,304,996
|
|||
Accumulated
deficit
|
(10,624,471
|
)
|
||
Total
Stockholders' Deficit
|
(3,749,680
|
)
|
||
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$
|
570,335
|
|
2006
|
|
2005
|
||||
|
As
restated
|
||||||
Revenues
|
$
|
136,490
|
$
|
-
|
|||
Cost
of revenues
|
107,690
|
-
|
|||||
Gross
profit
|
28,800
|
-
|
|||||
Operating
expenses:
|
|||||||
Selling,
general and administrative
|
942,909
|
84,343
|
|||||
Outside
services
|
50,259
|
139,763
|
|||||
Legal
fees
|
27,034
|
13,998
|
|||||
Professional
fees
|
18,705
|
295,012
|
|||||
Depreciation
and amortization
|
5,450
|
416
|
|||||
Total
operating expenses
|
1,044,357
|
533,532
|
|||||
Loss
from operations
|
(1,015,557
|
)
|
(533,532
|
)
|
|||
Interest
expense
|
(86,782
|
)
|
(23,537
|
)
|
|||
Derivative
income (loss)
|
(13,992
|
)
|
-
|
||||
Net
loss
|
$ |
(1,116,331
|
)
|
$
|
(557,069
|
)
|
|
Loss
applicable to common shareholders:
|
|||||||
Net
loss
|
$
|
(1,116,331
|
)
|
$
|
(557,069
|
)
|
|
Beneficial
conversion features and accretions of preferred stock
|
(22,610
|
)
|
(144,000
|
)
|
|||
Loss
applicable to common shareholders
|
$
|
(1,138,941
|
)
|
$
|
(701,069
|
)
|
|
Loss
per common share:
|
|||||||
Basic
and diluted
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
|
Weighted
average shares outstanding:
|
|||||||
Basic
and diluted
|
519,917,518
|
371,296,897
|
|
|
2006
|
|
2005
|
|||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
loss
|
$
|
(1,116,331
|
)
|
$
|
(557,069
|
)
|
|
Adjustments
to reconcile net loss to cash used in
|
|||||||
operating
activities:
|
|||||||
Depreciation
and amortization
|
5,450
|
416
|
|||||
Stock
based compensation
|
530,021
|
-
|
|||||
Amortization
of deferred financing costs
|
2,900
|
-
|
|||||
Amortization of
debt discount
|
56,021
|
-
|
|||||
Derivative
loss
|
13,992
|
-
|
|||||
Changes
in assets and liabilities:
|
|||||||
Decrease
in inventory
|
21,090
|
-
|
|||||
Increase
in accounts receivable
|
(38,217
|
)
|
-
|
||||
Increase
in accounts payable
|
6,544
|
234,563
|
|||||
Decrease
in accrued expenses
|
(73,351
|
)
|
205,129
|
||||
CASH
FLOWS USED IN OPERATING ACTIVITIES
|
(591,881
|
)
|
(116,961
|
)
|
|||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Additions
to property and equipment
|
(5,963
|
)
|
-
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
(5,963
|
)
|
-
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Proceeds
from sale of common stock
|
696,215
|
-
|
|||||
Proceeds
from sale of preferred stock
|
-
|
148,166
|
|||||
Payments
of notes payable
|
(75,000
|
)
|
-
|
||||
CASH
FLOW FROM FINANCING ACTIVITIES
|
621,215
|
148,166
|
|||||
NET
INCREASE (DECREASE) IN CASH
|
23,371
|
31,205
|
|||||
Cash,
beginning of period
|
6,786
|
2,794
|
|||||
Cash,
end of period
|
$
|
30,157
|
$
|
33,999
|
|||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
|||||||
Interest
paid
|
$
|
4,313
|
$
|
19,876 | |||
Income
taxes paid
|
- |
$
|
-
|
||||
Supplemental
Disclosure of Non-cash Transactions:
|
|||||||
Amortization
of deferred financing costs
|
$
|
49,315
|
$
|
-
|
|||
Conversion
of series A preferred stock
|
$
|
58,840
|
$
|
-
|
2006
|
|
2005
|
|||||
Net
loss applicable to common shareholders:
|
$
|
(1,138,941
|
)
|
$
|
(701,069
|
)
|
|
Share-based
employee compensation included in net
loss
|
$
|
530,021
|
-
|
||||
Pro
forma net loss applicable to common shareholders for share-based
employee
compensation
|
(45,500
|
)
|
|||||
Pro
forma net loss applicable to common shareholders
|
$
|
(746,569
|
)
|
||||
Loss
per common share:
|
|||||||
Basic
and diluted - as reported
|
$
|
(0.00
|
)
|
||||
Basic
and diluted - pro forma
|
$
|
(0.00
|
)
|
Outstanding,
December 31, 2005
|
103,107,400
|
|||
Granted
|
33,000,000
|
|||
Cancelled
|
-
|
|||
Exercised
|
-
|
|||
Outstanding,
March 31, 2006
|
136,107,400
|
|||
Weighted-average
grant-date fair
|
||||
value
of options
|
$
|
0.01
|
||
Weighted-average
remaining years
|
||||
of
contractual life
|
9.1
|
(a)
Exhibits
31.1
Certification by Chief Executive Officer pursuant to Sarbanes Oxley
Section 302.
31.2
Certification by Chief Financial Officer pursuant to Sarbanes Oxley
Section 302.
32.1
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section
1350
32.2
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section
1350
|
INNOVA HOLDINGS, INC. | ||
|
|
|
/s/ Walter K. Weisel | ||
Walter
K. Weisel
Chief
Executive Officer (Principal Executive
Officer)
|
|
|
|
/s/ Eugene V. Gartlan | ||
Eugene
V. Gartlan
Chief
Financial Officer (Principal Accounting and Financial
Officer)
|
||