Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2017 | Jun. 30, 2017 | |
Document and Entity Information: | |||
Entity Registrant Name | COCONNECT, INC. | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Trading Symbol | ccon | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,088,638 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 4,186,094 | ||
Entity Public Float | $ 17,554,000 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | ||
Current assets | ||||
Cash | $ 6 | |||
Prepaid expenses and other current assets | 19 | |||
Total current assets | 25 | |||
Security deposit | $ 5 | 5 | ||
Total assets | 5 | 30 | ||
Current liabilities | ||||
Accounts payable and accrued expenses | 33 | 48 | ||
Related party advance | 2 | |||
Total current liabilities | 35 | 48 | ||
Total liabilities | 35 | 48 | ||
Stockholders' equity | ||||
Preferred stock | [1] | [2] | ||
Common stock | 4 | [3] | 3 | [4] |
Additional paid-in capital | 13,859 | 11,973 | ||
Accumulated deficit | (13,893) | (11,994) | ||
Total stockholders' equity | (30) | (18) | ||
Total liabilities and stockholders' equity | $ 5 | $ 30 | ||
[1] | $.001 par value, 1,000,000 shares authorized; no shares issued and outstanding as of 12/31/2015. | |||
[2] | $.001 par value, 1,000,000 shares authorized; no shares issued and outstanding as of 12/31/2014. | |||
[3] | $.001 par value, 4,999,000,0000 shares authorized; 4,186,094 shares issued and outstanding as of 12/31/2015. | |||
[4] | $.001 par value, 4,999,000,000 shares authorized; 3,179,428 shares issued and outstanding as of 12/31/2014. |
Statements of Operations
Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Expenses | ||
General and administrative | $ 1,899 | $ 102 |
Total expenses | 1,899 | 102 |
Net loss | $ (1,899) | $ (102) |
Net loss per common share, basic | $ (0.57) | $ (0.03) |
Net loss per common share, diluted | $ (0.57) | $ (0.03) |
Shares used in computing net loss per common share, basic | 3,327 | 3,014 |
Shares used in computing net loss per common share, diluted | 3,327 | 3,014 |
Statements of Stockholders' Def
Statements of Stockholders' Deficit - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | |
Stockholders' equity, beginning of period, Value at Dec. 31, 2013 | $ 3 | $ 11,824 | $ (11,892) | $ (65) | ||
Stockholders' equity, beginning of period, Shares at Dec. 31, 2013 | 2,750,000,000 | |||||
Debt contributed to capital by stockholder | 24 | 24 | ||||
Common stock issued in private placement and for services, Value at Dec. 31, 2014 | $ 3 | [1] | 140 | 140 | ||
Common stock issued in private placement and for services, Shares at Dec. 31, 2014 | 429,428 | |||||
Costs related to private placement | (15) | (15) | ||||
Net loss | (102) | (102) | (102) | |||
Stockholders' equity, end of period, Value at Dec. 31, 2014 | (18) | $ 3 | 11,973 | (11,994) | (18) | |
Stockholders' equity, end of period, Shares at Dec. 31, 2014 | 3,179,428,000 | |||||
Common stock issued in private placement and for services, Value at Dec. 31, 2015 | 4 | [2] | $ 1 | 1,006 | 1,007 | |
Common stock issued in private placement and for services, Shares at Dec. 31, 2015 | 1,006,666 | |||||
Common stock to be issued for services at Dec. 31, 2015 | $ 0 | 447 | 447 | |||
Stock-based compensation | 433 | 433 | 433 | |||
Net loss | (1,899) | (1,899) | (1,899) | |||
Stockholders' equity, end of period, Value at Dec. 31, 2015 | $ (30) | $ 4 | $ 13,859 | $ (13,893) | $ (30) | |
Stockholders' equity, end of period, Shares at Dec. 31, 2015 | 4,633,761,000 | |||||
Common stock to be issued for services, Shares | 447,667 | |||||
[1] | $.001 par value, 4,999,000,000 shares authorized; 3,179,428 shares issued and outstanding as of 12/31/2014. | |||||
[2] | $.001 par value, 4,999,000,0000 shares authorized; 4,186,094 shares issued and outstanding as of 12/31/2015. |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (1,899) | $ (102) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||
Gain on accounts payable write-off | (34) | |
Stock-based compensation | 433 | |
Common stock issued for services | 947 | |
Common stock to be issued for services | 447 | |
Changes in assets and liabilities: | ||
(Increase) decrease in prepaid expenses and other current assets | 19 | (24) |
Increase (decrease) in accounts payable and accrued expenses | (15) | 30 |
Net cash flows provided by (used in) operating activities | (68) | (130) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock | 60 | 140 |
Payment of private placement costs | (15) | |
Proceeds from related party and shareholder cash advances | 2 | 11 |
Net cash flows provided by (used in) financing activities | 62 | 136 |
Net change in cash | (6) | 6 |
Cash at beginning of period | $ 6 | |
Cash at end of period | 6 | |
Non-cash investing and financing activities | ||
Cancellation of debt to prior shareholders | $ 24 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Description of Business | 1. Business Operations Business CoConnect, Inc., a Nevada corporation, (the Company), currently has no operations, and has been engaged in efforts to identify an operating company to acquire or merge with through an equity-based exchange transaction. As our planned principal operations have not yet commenced, our activities are subject to significant risks and uncertainties, including the need to obtain additional financing, as described below. Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to our present stockholders. We expect that the closing of such a transaction would result in a change in control and be accounted for as a reverse merger, whereby the operating company would be considered as the legal acquiree and accounting acquirer, and we would be considered the legal acquirer and the accounting acquiree. As a result, at and subsequent to closing of any such transaction, the financial statements of the operating company would become our financial statements for all periods presented. As of December 31, 2015, there was no transaction. Change-in-Control Transaction On May 1, 2014, PacificWave Partners Limited, a Gibraltar company (PacificWave), acquired 2,307,767 shares of our outstanding common stock for $210,000 (approximately $0.09 per share), plus legal fees of $20,000, from our stockholders at that time pursuant to a Share Purchase Agreement (the SPA). The 2,307,767 shares represented approximately 83.9% of our then outstanding shares of common stock. At closing, PacificWave also transferred a number of the purchased shares to certain person and entities providing services in connection with the change-in-control transaction. At the conclusion of this transaction, PacificWave and its Managing Director and sole owner, Henrik Rouf, were the owners of an aggregate of 120,000 shares of our common stock, which constituted 4.4% of the outstanding shares of common stock at that time. We were not a party to these transactions Additional terms of the SPA provided for the surrender and cancellation of the 100,000 outstanding shares of our Series B preferred stock also held by the same stockholders, which represented all of our then outstanding shares of preferred stock. The SPA also stipulated that each of the selling stockholders waive any outstanding liabilities, claims, damages or obligations, contingent or otherwise, owed by us to the selling stockholders. Accordingly, amounts owed by us to such stockholders totaling approximately $24,000 were recorded as a contribution to additional paid-in capital on May 1, 2014. Effective May 1, 2014, our sole officer and director at that time, York Chandler (who had been previously appointed on December 31, 2013), resigned, and Bennett J. Yankowitz was appointed as our sole director and as its President, Secretary and Treasurer. In connection with the aforementioned transaction with PacificWave, Mr. Yankowitz purchased 461,000 shares for an aggregate purchase price of $42,000 (approximately $0.09 per share) from PacificWave on May 1, 2014, reflecting approximately 16.8% of the outstanding shares of common stock at that time. The purchase price was evidenced by a promissory note due May 1, 2019 with interest at 3% per annum and secured by the purchased shares. We were not a party to this transaction. PacificWave and Mr. Yankowitz did not have any relationship with us prior to the aforementioned change-in-control transaction. Henrik Rouf is Managing Director of PacificWave and also serves as our Assistant Secretary. On July 15, 2015, we entered into an agreement with PacificWave to provide consulting and investment banking services to us, in particular with respect to raising capital for us and in identifying and evaluating potential acquisition candidates. |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Going Concern | 2. Going Concern Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At December 31, 2015, we did not have any business operations. We have experienced recurring operating losses and negative operating cash flows, and have financed our recent working capital requirements primarily through the issuance of debt and equity securities, as well as borrowings from related parties. As of December 31, 2015, our working capital deficiency was approximately $35,000 and our accumulated deficit was approximately $13,893,000. As a result, management believes that there is substantial doubt about our ability to continue as a going concern. Management is seeking to identify an operating company and engage in a merger or business combination of some kind, or acquire assets or shares of an entity actively engaged in a business that generates sustained revenues. We are considering several potential acquisitions and is investigating various candidates to determine whether they would have the potential to add value to us for the benefit of our stockholders. We do not intend to restrict our consideration to any particular business or industry segment, and we may consider, among other businesses, finance, brokerage, insurance, transportation, communications, services, natural resources, manufacturing or technology. Because we have limited resources, the scope and number of suitable candidates to merge with is relatively limited. Because we may participate in a business opportunity with a newly formed firm, a firm that is in the development stage, or a firm that is entering a new phase of growth, we may incur further risk due to the inability of the targets management to have proven its abilities or effectiveness, or the lack of an established market for the targets products or services, or the inability to reach profitability in the next few years. Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to our present stockholders. As it is expected that the closing of such a transaction will result in a change in control, such transaction is expected to be accounted for as a reverse merger, with the operating company being considered the legal acquiree and accounting acquirer, and we would be considered the legal acquirer and the accounting acquiree. As a result, at and subsequent to closing of any such transaction, the financial statements of the operating company would become our financial statements for all periods presented. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Significant Accounting Policies | 3. Summary of Significant Accounting Policies Basis of Presentation The financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Use of Accounting Estimates The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management's estimates are based on the facts and circumstances available at the time estimates are made, past historical experience, risk of loss, general economic conditions and trends and management's assessments of the probable future outcome of these matters. Consequently, actual results could differ from such estimates. Reclassifications Certain amounts in the fiscal 2014 financial statements have been reclassified to conform to the fiscal 2015 presentation. Cash Our cash balances may periodically exceed federally insured limits. We have not experienced a loss in such accounts to date. We maintain our accounts with financial institutions with high credit ratings. Fair Value of Financial Instruments The authoritative guidance with respect to fair value established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required. Level 1. Level 2. Level 3. We determine the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, we perform an analysis of the assets and liabilities at each reporting period end. Income Taxes We account for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, we recognize deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made. We are subject to U.S. federal and state income taxes. As our net operating losses have yet to be utilized, all previous tax years remain open to examination by Federal authorities and other jurisdictions in which we currently operate or have operated in the past. We account for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. The tax effects of a position are recognized only if it is more-likely-than-not to be sustained by the taxing authority as of the reporting date. If the tax position is not considered more-likely-than-not to be sustained, then no benefits of the position are recognized. As of December 31, 2015, we had not recorded any liability for uncertain tax positions. In subsequent periods, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense. We are currently delinquent with respect to our U.S. federal income tax filings for the past several years. Stock-Based Compensation We periodically issue stock options and warrants to officers, directors and consultants for services rendered. Stock options and warrants vest and expire according to terms established at the grant date. We account for stock-based payments to officers and directors by measuring the cost of services received in exchange for equity awards based on the grant date fair value of the awards, with the cost recognized as compensation expense in our financial statements on a straight-line basis over the vesting period of the awards. We account for stock-based payments to consultants by determining the value of the stock compensation based upon the measurement date at either (a) the date at which a performance commitment is reached or (b) at the date at which the necessary performance to earn the equity instruments is complete. Options and warrants granted to outside consultants are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. The valuation of employee stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable employee stock options. Accordingly, an option pricing model is utilized to derive an estimated fair value. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In calculating the estimated fair value of our stock options we use the Black-Scholes pricing model, which requires the consideration of the following six variables for purposes of estimating fair value: · · · · · · The fair value of each option granted is estimated on the date of grant using the Black Scholes option pricing model with the following weighted average assumptions: Stock Option Exercise Price and Grant Date Price of Common Stock. Expected Term. Expected Volatility. Expected Dividends. Risk-Free Interest Rate. We were also required to estimate the level of award forfeitures expected to occur and record compensation expense only for those awards that are ultimately expected to vest. This requirement applies to all awards that are not yet vested. Basic and Diluted Loss Per Share Basic loss per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is based upon the weighted-average common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period. Common equivalent shares result from the assumed exercise of outstanding stock options and warrants, the proceeds of which are then assumed to have been used to repurchase outstanding common stock using the treasury stock method. In addition, the numerator is adjusted for any changes in income that would result from the assumed conversion of potential shares. At December 31, 2015 and 2014 there were no potentially dilutive shares which would have the effect of being antidilutive. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2014, the FASB issued Accounting Standards Update 2014-12, Compensation-Stock Compensation Adoption of this accounting guidance is not expected to have any significant impact on our consolidated financial statements. In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40) Adoption of this accounting guidance is not expected to have any significant impact on our consolidated financial statements. In August 2015, the FASB issued Accounting Standards Update 2015-15, Interest Imputation of Interest (Subtopic 835-30) Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (ASU 2015-15). In April 2015, the FASB issued Accounting Standards Update 2015-03, Interest Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03). Adoption of this accounting guidance is not expected to have any significant impact on our consolidated financial statements. |
Terminated Merger Transaction
Terminated Merger Transaction | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Terminated Merger Transaction | 4. Terminated Merger Transaction On October 31, 2014, we entered into a Stock and Membership Interest Exchange Agreement (the Agreement) between us and the members (equity owners) of House of Knipschildt, LLC, a Connecticut limited liability company (HOK). The Agreement provided for the acquisition of all of the outstanding membership interests of HOK by us in exchange for 4,200,000 newly issued unregistered shares of our common stock. HOK is a privately owned manufacturer, wholesaler and retailer of hand-made and other high-end chocolate products, and is based in Norwalk, Connecticut. HOK has one retail store. The Agreement provided for various conditions to closing, including the completion of a due diligence review by us and HOK, completion of an audit of HOKs financial statements and the absence of any material adverse change in the business, assets or condition (financial or otherwise) of either us or HOK. We also had the right to terminate the Agreement if satisfaction of any closing condition by December 15, 2014, or such later date as the parties may have agreed upon, became impossible (other than through our failure to comply with our obligations under the Agreement). As a condition to the closing of the Agreement, we were required to complete a private placement of newly issued unregistered shares of our common stock for net proceeds of at least $900,000. The 4,200,000 shares of common stock that were to be issued to the equity owners of HOK at closing would have constituted approximately 50.1% of our outstanding shares of common stock, after issuance of the new shares in the private placement. On March 18, 2015, we elected to terminate the Agreement for, among others, the following reasons: (i) numerous negative matters that came to light during our due diligence review of HOK; (ii) ongoing delays and deficiencies in producing financial statements for 2013 and 2014 in a form capable of being audited; and (iii) material adverse changes in HOKs business, assets and financial condition. We do not believe we will subject to any material termination penalty or other liability as a result of the termination of the Agreement We incurred costs related to the terminated acquisition of $5,000 and $54,000 during the years ended December 31, 2015 and 2014, respectively. |
Gain from Accounts Payable Writ
Gain from Accounts Payable Write-off | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Gain from Accounts Payable Write-off | 5. Gain from Accounts Payable Write-off As of December 31, 2014, we recorded a gain of approximately $34,000 on the write-off of accounts payable that no longer represented our obligation. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Income Taxes | 6. Income Taxes We are required to file federal and state income tax returns in the United States. The preparation of these tax returns requires us to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by us. In consultation with our tax advisors, we base our tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various federal and state taxing authorities in the jurisdictions in which we file tax returns. As part of these reviews, a taxing authority may disagree with respect to the income tax positions taken by us (uncertain tax positions) and, therefore, may require us to pay additional taxes. As required under applicable accounting rules, we accrue an amount for our estimate of additional income tax liability, including interest and penalties, which we could incur as a result of the ultimate or effective resolution of the uncertain tax positions. We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. We account for uncertain income tax positions by accruing for the estimated additional amount of taxes for the uncertain tax positions when the uncertain tax position does not meet the more likely than not standard for sustaining the position. We review and update our accrual as more definitive information becomes available from taxing authorities, upon completion of tax audits, upon expiration of statutes of limitation, or upon occurrence of other events. This requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in our consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate. Reconciliation between our effective tax rate and the United States statutory rate is as follows: Years Ended December 31, 2015 2014 Expected federal tax rate (35.0%) (35.0%) Change in valuation allowance 35.0% 35.0% Net loss 0.0% 0.0% Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the tax basis of the assets and liabilities using the enacted tax rate in effect in the years in which the differences are expected to reverse. A valuation allowance has been recorded against the deferred tax asset as it is more likely than not, based upon our analysis of all available evidence, that the tax benefit of the deferred tax asset will not be realized. Significant components of our deferred tax assets as of December 31, 2015 and 2014 consists of the following: Years Ended December 31, 2015 2014 Net operating loss carryforwards $ 4,863,000 $ 4,198,000 Valuation allowance (4,863,000) (4,198,000) Net deferred tax assets $ - $ - A valuation allowance has been established for our tax assets as their use is dependent on the generation of sufficient future taxable income, which cannot be predicted at this time. Potential 382 Limitation Our net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service. Our ability to utilize our net operating loss (NOL) and alternative minimum tax (AMT) may be substantially limited due to ownership changes that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions. These ownership changes may limit the amount of NOL and AMT that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined in Section 382 of the Code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50% of the outstanding stock of a company by certain stockholders or public groups. We have not completed a study to assess whether one or more ownership changes have occurred since we became a loss corporation as defined in Section 382 of the Code, but we believe that it is likely that an ownership change has occurred. If we have experienced an ownership change, utilization of the NOL and AMT would be subject to an annual limitation, which is determined by first multiplying the value of our common stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any such limitation may result in the expiration of a portion of the NOL and AMT before utilization. Until a study is completed and any limitation known, no amounts are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit under ASC 740. Any carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding adjustment to the valuation allowance. Due to the existence of the valuation allowance, it is not expected that any potential limitation will have a material impact on our operating results. As of December 31, 2015, we had federal tax net operating loss carryforwards of approximately $13,893,000. The federal net operating loss carryforwards will expire at various dates from 2026 through 2035. As of December 31, 2015, we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. No interest and penalties have been recognized by us to date. For the years ended December 31, 2015 and 2014, we provided for no taxes in our statement of operations as we have significant net loss carryforwards. Our net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and are subject to certain limitations in the event of cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Commitments and Contingencies | 7. Commitments and Contingencies On August 10, 2014, we executed a month-to-month lease for office space beginning September 1, 2014 at a cost of approximately $5,000 per month. Effective December 1, 2014, the lease was amended to reduce the space occupied and to reduce the monthly rental to approximately $4,000 per month. Effective January 1, 2015, we entered into an office sublease arrangement with Bamboo Holdings, LLC (Bamboo). Bamboo is owned by Mr. Yankowitz. The sublease arrangement, which was terminated during the three months ended June 30, 2015, required Bamboo to pay us approximately $1,000 per month, the approximate fair market value for such space. Approximately $7,000 of sublease income was offset against our total rent expense of approximately $21,000 during year ended December 31, 2015 and is included in general and administrative expenses. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Related Party Transactions | 8. Related Party Transactions Through April 30, 2014, certain prior stockholders advanced us funds in order to fund our working capital requirements. During the year ended December 31, 2014, such advances totaled approximately $11,000. As of May 1, 2014, such advances totaled approximately $24,000. Pursuant to the terms of the SPA, amounts owed by us to such stockholders totaling approximately $24,000 were recorded as a contribution to additional paid-in capital on May 1, 2014. In connection with the sale of shares of our common stock on May 21, 2014, we paid a company associated with one of the ultimate non-U.S. stockholders cash fees of approximately $14,000 for services rendered with respect to such financing, which were charged to additional paid-in capital. During the year ended December 31, 2014, our former sole officer and director was paid cash compensation of $2,000 through April 30, 2014. Effective May 1, 2014, Bennett J. Yankowitz was appointed as our President, Secretary, Treasurer and sole director. Mr. Yankowitz devotes approximately one-third of his time on an annual basis to matters involving us. On October 20, 2014, the Board of Directors authorized the payment of $1,000 per month to Mr. Yankowitz for such services, effective for the period from May 1, 2014 through December 31, 2014 (subsequently amended to October 31, 2014). During the year ended December 31, 2014, we recorded a charge to operations of $6,000 pursuant to this compensation arrangement. Mr. Yankowitz received no compensation during the year ended December 31, 2015. Effective January 1, 2015, we entered into an office sublease arrangement with Bamboo Holdings, LLC (Bamboo). Bamboo is owned by Mr. Yankowitz. The sublease arrangement, which was terminated during the three months ended June 30, 2015, required Bamboo to pay us approximately $1,000 per month, the approximate fair market value for such space. Approximately $7,000 of sublease income was offset against our total rent expense of approximately $21,000 during year ended December 31, 2015 and is included in general and administrative expenses. On February 3, 2015, we sold 20,000 shares of our common stock to PacificWave Partners Limited, which is owned by our Assistant Secretary, for an aggregate sales price of $20,000. On March 16, 2015, PacificWave Partners Limited loaned us $5,000 for working capital purposes pursuant to a short-term unsecured promissory note due March 31, 2015 with interest at 5%. The promissory note was repaid on March 23, 2015. During the year ended December 31, 2015, PacificWave Partners Limited provided us an advance of approximately $2,000 to pay certain regulatory fees and is included in our balance sheet as of December 31, 2015. On May 21, 2014, we sold 429,428 shares of common stock to PacificWave Partners Limited for gross cash proceeds of approximately $140,000. PacificWave resold these shares to five accredited investors who were non-U.S. residents in an exempt transaction. On November 23, 2015, we sold 946,666 shares of common stock to PacificWave Partners Limited for an aggregate sales price of approximately $946,000, or $1.00 per share. In addition, an additional 333,333 shares of our common stock and 114,334 shares of our common stock were reserved for future issuance to PacificWave Partners Limited and Henrik Rouf, the owner of PacificWave Partners Limiterd and our Assistant Secretary, respectively, for an aggregate price of approximately $447,000 or $1.00 per share. |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Stockholders' Deficit | 9. Stockholders Equity Common Stock On May 21, 2014, we sold 429,428 shares of common stock to PacificWave Partners Limited at $0.32672 per share for gross cash proceeds of approximately $140,000. PacificWave Partners Limited resold the shares to five accredited investors who were non-U.S. residents in an exempt transaction. Costs associated with the sale of the shares amounted to approximately $14,000 and were charged to additional paid-in capital as of December 31, 2014. On February 3, 2015, we sold 20,000 shares of our common stock to PacificWave Partners Limited for an aggregate sales price of $20,000. On March 25, 2015, we sold an additional 40,000 shares of our common stock to two significant stockholders for an aggregate amount of $40,000. On November 23, 2015, we sold 946,666 shares of common stock to PacificWave Partners Limited for an aggregate sales price of approximately $946,000, or $1.00 per share. In addition, an additional 333,333 shares of our common stock and 114,334 shares of our common stock were reserved for future issuance to PacificWave Partners Limited and Henrik Rouf, the owner of PacificWave Partners Limiterd and our Assistant Secretary, respectively, for an aggregate price of approximately $447,000 or $1.00 per share. The share sale transaction was completed in reliance on the exemptions provided by Section 4(2) of the Securities Act of 1933, as amended (the Securities Act), and Rules 504, 505, 506 and 903 thereunder. The shares will not be registered under the Securities Act or any state securities laws, and unless so registered, may not be reoffered or resold in the United States absent such registration or an applicable exemption therefrom, or in a transaction not subject to the registration requirements of the Securities Act and other applicable securities laws. Common Stock Options On November 20, 2015, our board of directors approved the grant to Mr. Yankowitz of a non-qualified stock option exercisable into 473,334 shares of our common stock. The stock option was issued as compensation for services provided to us and to be provided through December 31, 2015. The stock option was immediately vested on the date of grant and exercisable at $0.15 per share. In determining the fair value of the stock option, we utilized the Black-Scholes pricing model utilizing the following assumptions: i) stock option exercise price of $0.15; ii) grant date price of our common stock of $1.00; iii) expected term of option of 5 years; iv) expected volatility of our common stock of 100%; v) expected dividend rate of 0.0%; and vi) risk-free interest rate of 0.0%. Accordingly, we recorded stock-based compensation in general and administrative expenses of approximately $433,000 during the year ended December 31, 2015. |
Legal Matters
Legal Matters | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Legal Matters | 10. Legal Proceedings Other than as stated herein, we are not a party to any other legal proceedings, other than ordinary routine litigation incidental to our business, which we believe will not have a material affect on our financial position or results of operations. In May 2016, Investment Services V Devkom International, LLC (Devkom), one of our former controlling shareholders, filed a complaint in the Eighth Judicial District Court for Clark County, Nevada against us, PacificWave Partners Limited (PWP), PWPs principal, Henrik Rouf, Bennett Yankowitz, our President and sole director, and Mr. Yankowitzs former law firm. The complaint contained several claims for relief arising out of an alleged breach of a contract between Devkom and PWP for the purchase of a controlling interest in our stock in May 2014. The breach alleged was the failure of PWP to pay approximately $76,000 to Devkom under the terms of the contract. Other claims included breach of an implied escrow agreement, conversion, breach of fiduciary duty, and fraud. Devkom sought to recover general, exemplary and punitive damages. In August 2016, the Court dismissed the complaint without prejudice. In June 2017, Devkom filed a similar complaint against the same defendants in the Superior Court of California for the County of San Diego. In June 2017, we and PWP filed a motion to quash the service of the summons and complaint in the action on the grounds that the Court has no jurisdiction over the Company or PWP and that service was defective. At the same time, Mr. Yankowitz and his former law firm filed demurrers to all of the causes of action specified in the complaint. A hearing on the motion to quash and the demurrers was held on January 5, 2018. The Court made a tentative ruling upholding our motion to quash, which if finalized, will have the effect of dismissing us as a defendant in the suit. A further hearing is scheduled for February 2, 2018. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Notes | |
Subsequent Events | 11. Subsequent Events We evaluated all events or transactions that occurred after the balance sheet date through the date when we issued these financial statements. Other than the legal proceedings discussed in Note 10, we did not have any material recognizable subsequent events during this period. |
Income Taxes_ Income Tax Policy
Income Taxes: Income Tax Policy (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Policies | |
Income Tax Policy | We are required to file federal and state income tax returns in the United States. The preparation of these tax returns requires us to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by us. In consultation with our tax advisors, we base our tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various federal and state taxing authorities in the jurisdictions in which we file tax returns. As part of these reviews, a taxing authority may disagree with respect to the income tax positions taken by us (uncertain tax positions) and, therefore, may require us to pay additional taxes. As required under applicable accounting rules, we accrue an amount for our estimate of additional income tax liability, including interest and penalties, which we could incur as a result of the ultimate or effective resolution of the uncertain tax positions. We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. We account for uncertain income tax positions by accruing for the estimated additional amount of taxes for the uncertain tax positions when the uncertain tax position does not meet the more likely than not standard for sustaining the position. We review and update our accrual as more definitive information becomes available from taxing authorities, upon completion of tax audits, upon expiration of statutes of limitation, or upon occurrence of other events. This requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in our consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate. |
Income Taxes_ Schedule of Effec
Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Effective Income Tax Rate Reconciliation | Years Ended December 31, 2015 2014 Expected federal tax rate (35.0%) (35.0%) Change in valuation allowance 35.0% 35.0% Net loss 0.0% 0.0% |
Income Taxes_ Schedule of Defer
Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Deferred Tax Assets and Liabilities | Years Ended December 31, 2015 2014 Net operating loss carryforwards $ 4,863,000 $ 4,198,000 Valuation allowance (4,863,000) (4,198,000) Net deferred tax assets $ - $ - |