0001088638
2012-01-01
2012-06-30
0001088638
2012-08-20
0001088638
2012-06-30
0001088638
2011-12-31
0001088638
2011-01-01
2011-06-30
0001088638
2010-12-31
0001088638
2011-06-30
0001088638
2012-04-01
2012-06-30
0001088638
2011-04-01
2011-06-30
0001088638
2011-01-01
2011-12-31
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
COCONNECT INC
0001088638
10-Q
2012-06-30
false
--12-31
No
No
Yes
Smaller Reporting Company
Q2
2012
2750000
56950
250517
8000
1660
209977
47290
40540
966
209948
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209948
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2750000
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2750000
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Basis of Presentation</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The accompanying interim
unaudited condensed financial statements have been prepared in accordance with  U.S/ generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six months ended June 30, 2012are not necessarily indicative of the results that may be expected
for the year ending December 31, 2012. For further information, refer to the financial statements and footnotes thereto included
in our Form 10-K Report for the fiscal year ended December 31, 2011.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Going Concern</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The accompanying consolidated
financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred recurring operating losses, had negative operating cash
flows and has not generated any significant revenues in recent fiscal years. In addition, the Company had a deficit accumulated
during the development stage of approximately $11.9 million at June 30, 2012. These factors raise substantial doubt about
the Company’s ability to continue as a going concern.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The Company’s continuation
as a going concern is dependent on attaining profitable operations, restructuring its financial obligations, and obtaining additional
outside financing.  The Company has funded losses from operations primarily from the issuance of debt, issuance of common
stock and the sale of the Company’s common stock.  The Company believes that the issuance of debt and the sale
of the Company’s common stock will continue to fund operating losses in the short-term until the Company can generate revenues
sufficient to fund its operations.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Cash and Cash Equivalents</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Cash equivalents include
short-term, highly liquid investments with maturities of three months or less at the time of acquisition.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Concentrations of Credit
Risk</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">A financial instrument which
potentially subjects the Company to concentrations of credit risk is cash.  The Company places its cash with financial
institutions deemed by management to be of high credit quality.  The Federal Deposit Insurance Corporation (“FDIC”)
provides basic deposit coverage with limits to $250,000 per owner.  In addition to the basic insurance deposit coverage,
the FDIC is providing temporary unlimited coverage for noninterest-bearing transaction accounts from December 31, 2010 to December
31, 2012.  At June 30, 2012, there were no uninsured deposits.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Use of Estimates</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America 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 period.  Actual
results could differ from those estimates. Estimates and assumptions principally relate to the fair value and forfeiture rates
of stock based transactions, and long-lived asset depreciation and amortization, and potential impairment.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br /></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Income Taxes</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Income tax expense is provided
for the tax effects of transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes.  Deferred
taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes.  The
differences relate primarily to the effects of net operating loss carry forwards and differing basis, depreciation methods, and
lives of depreciable assets. The deferred tax assets represent the future tax return consequences of those differences, which will
be deductible when the assets are recovered.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">No income tax benefit (expense)
was recognized for the six months ended June 30, 2012 as a result of tax losses in this period and because deferred tax benefits,
derived from the Company’s prior net operating losses, were previously fully reserved.  The Company had federal
net operating loss carryforwards of approximately $12.0 million.The use of our net operating losses may be restricted in future
years due to the limitations pursuant to IRC Section 382 on changes in ownership.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The Company currently has
tax return periods open beginning with December 31, 2004 through December 31, 2010.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Basic Net Loss per Share
of Common Stock</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Basic net loss per common
share is based on the weighted average number of shares outstanding during the periods presented.  Diluted earnings per share
are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period.
 At June 30, 2012 there was no common stock equivalents issued.  </p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Financial Instruments</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Fair value measurements are
determined based on the assumptions that market participants would use in pricing an asset or liability.  ASC 820-10
establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use
of unobservable inputs by requiring that the most observable inputs be used when available. FASB ASC 820 establishes a fair value
hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Level 1: Quoted prices (unadjusted)
for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of
fair value and must be used to measure fair value whenever available.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Level 2: Significant other observable
inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not
active; or other inputs that are observable or can be corroborated by observable market data.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Level 3: Significant unobservable
inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing
an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted
future cash flows method.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The recorded amounts of financial
instruments, including cash equivalents accounts payable, other payables and due to shareholders, approximate their market values
as of June 30, 2012 and December 31, 2011.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Basis of Presentation</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The accompanying interim
unaudited condensed financial statements have been prepared in accordance with  U.S/ generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six months ended June 30, 2012are not necessarily indicative of the results that may be expected
for the year ending December 31, 2012. For further information, refer to the financial statements and footnotes thereto included
in our Form 10-K Report for the fiscal year ended December 31, 2011.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Cash and Cash Equivalents</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Cash equivalents include
short-term, highly liquid investments with maturities of three months or less at the time of acquisition.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Concentrations of Credit
Risk</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">A financial instrument which
potentially subjects the Company to concentrations of credit risk is cash.  The Company places its cash with financial
institutions deemed by management to be of high credit quality.  The Federal Deposit Insurance Corporation (“FDIC”)
provides basic deposit coverage with limits to $250,000 per owner.  In addition to the basic insurance deposit coverage,
the FDIC is providing temporary unlimited coverage for noninterest-bearing transaction accounts from December 31, 2010 to December
31, 2012.  At June 30, 2012, there were no uninsured deposits.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Use of Estimates</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America 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 period.  Actual
results could differ from those estimates. Estimates and assumptions principally relate to the fair value and forfeiture rates
of stock based transactions, and long-lived asset depreciation and amortization, and potential impairment.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Income Taxes</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Income tax expense is provided
for the tax effects of transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes.  Deferred
taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes.  The
differences relate primarily to the effects of net operating loss carry forwards and differing basis, depreciation methods, and
lives of depreciable assets. The deferred tax assets represent the future tax return consequences of those differences, which will
be deductible when the assets are recovered.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">No income tax benefit (expense)
was recognized for the six months ended June 30, 2012 as a result of tax losses in this period and because deferred tax benefits,
derived from the Company’s prior net operating losses, were previously fully reserved.  The Company had federal
net operating loss carryforwards of approximately $12.0 million.The use of our net operating losses may be restricted in future
years due to the limitations pursuant to IRC Section 382 on changes in ownership.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The Company currently has
tax return periods open beginning with December 31, 2004 through December 31, 2010.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Basic Net Loss per Share
of Common Stock</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Basic net loss per common
share is based on the weighted average number of shares outstanding during the periods presented.  Diluted earnings per share
are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period.
 At June 30, 2012 there was no common stock equivalents issued.  </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Financial Instruments</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Fair value measurements are
determined based on the assumptions that market participants would use in pricing an asset or liability.  ASC 820-10
establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use
of unobservable inputs by requiring that the most observable inputs be used when available. FASB ASC 820 establishes a fair value
hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Level 1: Quoted prices (unadjusted)
for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of
fair value and must be used to measure fair value whenever available.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Level 2: Significant other observable
inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not
active; or other inputs that are observable or can be corroborated by observable market data.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Level 3: Significant unobservable
inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing
an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted
future cash flows method.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The recorded amounts of financial
instruments, including cash equivalents accounts payable, other payables and due to shareholders, approximate their market values
as of June 30, 2012 and December 31, 2011.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><b>Going Concern</b></p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The accompanying consolidated
financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred recurring operating losses, had negative operating cash
flows and has not generated any significant revenues in recent fiscal years. In addition, the Company had a deficit accumulated
during the development stage of approximately $11.9 million at June 30, 2012. These factors raise substantial doubt about
the Company’s ability to continue as a going concern.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The Company’s continuation
as a going concern is dependent on attaining profitable operations, restructuring its financial obligations, and obtaining additional
outside financing.  The Company has funded losses from operations primarily from the issuance of debt, issuance of common
stock and the sale of the Company’s common stock.  The Company believes that the issuance of debt and the sale
of the Company’s common stock will continue to fund operating losses in the short-term until the Company can generate revenues
sufficient to fund its operations.</p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The Company began capital
raising efforts during the year ended December 31, 2011 to cover certain cash obligations regarding possible acquisition targets
and other capital funding needs.  At December 31, 2011 we had raised $209,977 and have recorded these cash receipts as other
payables on the Balance Sheets.  The Company is in the process of creating financing documentation (“Financing Offer”)
related to these payables and once finalized will roll these amounts into a bridge promissory note and/or future share issuances
that are consistent with our Financing Offer, of which the terms have not been finalized.  In March 2012, the Company determined
it did not raise the required funds to close on our capital raising effort, and began returning amounts to the prospective investors
on a pro-rata basis.At June 30, 2012, the Company had $1,660 due to these prospective investors.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="margin: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: left; margin: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">The Company received cash
advances to pay outstanding payables in connection with our SEC reporting obligaitons and annual audit, from shareholders, Dave
Hunt and BCGU, LLC in amounts of $2,667 and $5,333, respectively, during the six months ended June 30, 2012.  The Company
made no payments to BCGU, LLC or Dave Hunt during the six months ended June 30, 2012, and $8,000 was due to these shareholders
at June 30, 2012.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">Dave Hunt is the managing
member of RVCA, a principal owner of the Company and BCGU, LLC is a principal owner of the Company.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">At June 30, 2012 preferred
stock of the Company consisted of: $0.001 par value: 1,000,000 shares authorized. 100,000 shares issued and outstanding</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">At June 30, 2012 common stock
of the Company consisted of: $0.001 par value: 4,999,000,000 shares authorized and 2,750,000 shares issued and outstanding.</p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif">On January 20, 2012, the
Company issued 100,000 shares of common stock to a law firm for professional services provided, valued at $61,000.  Services
by the law firm were never performed, as a result these shares were subsequently returned to the Company and retired in its treasury
and no expense was recorded.  </p>
<p style="text-indent: 0pt; margin: 0; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">65,000 warrants were issued
to Brad Bingham, our director, and 15,000 warrants were issued to Dave Hunt, the managing member of RVCA, a principal owner of
the Company, during the year ended December 31, 2011, for services provided.  The warrants were valued using a Black-Scholes
valuation model.  The variables used in this option-pricing model included: (1) discount rates of .24% (2) expected warrant
life is two years, (3) expected volatility of 345% and (4) zero expected dividends.  These warrants expire on December
19, 2013.</p>
<p style="text-indent: 0pt; margin: 0"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">A summary of the activity of
the warrants for the six months ended June 30, 2012 is as follows:</p>
<p style="text-indent: 0pt; margin: 0"><br />
</p>
<p style="text-align: center; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; font-size: 10pt; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2" style="font-size: 8pt; font-weight: bold; text-align: center; text-indent: 0pt">Weighted Average</td>
<td nowrap="nowrap" style="text-align: left; font-size: 8pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px; font-size: 8pt; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-size: 8pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-size: 8pt; font-weight: bold; text-align: center; text-indent: 0pt">Amount</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-size: 8pt; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-size: 8pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-size: 8pt; font-weight: bold; text-align: center; text-indent: 0pt">Exercise Price</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="width: 76%; text-align: left; text-indent: 0pt">Outstanding December 31, 2010</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 9%">-</td>
<td nowrap="nowrap" style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 9%">-</td>
<td nowrap="nowrap" style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Expired/Retired</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Exercised</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt">Issued</td>
<td style="padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right; font-family: Times New Roman, Times, Serif">80,000</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">0.50</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="padding-bottom: 4px; text-align: left; font-weight: bold; text-indent: 0pt">Outstanding December 31, 2011</td>
<td style="padding-bottom: 4px; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: right; font-family: Times New Roman, Times, Serif; font-weight: bold">80,000</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px; font-weight: bold"> </td>
<td style="padding-bottom: 4px; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: left; font-weight: bold">$</td>
<td style="border-bottom: black 4px double; text-align: right; font-weight: bold">0.50</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px; font-weight: bold"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Expired/Retired</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Exercised</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt">Issued</td>
<td style="padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="padding-bottom: 4px; text-align: left; font-weight: bold; text-indent: 0pt">Outstanding June 30, 2012</td>
<td style="padding-bottom: 4px; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: right; font-weight: bold">80,000</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px; font-weight: bold"> </td>
<td style="padding-bottom: 4px; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: left; font-weight: bold">$</td>
<td style="border-bottom: black 4px double; text-align: right; font-weight: bold">0.50</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px; font-weight: bold"> </td></tr>
</table>
<p style="text-indent: 0pt; margin: 0"><br />
</p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; font-size: 10pt; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2" style="font-size: 8pt; font-weight: bold; text-align: center; text-indent: 0pt">Weighted Average</td>
<td nowrap="nowrap" style="text-align: left; font-size: 8pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px; font-size: 8pt; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-size: 8pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-size: 8pt; font-weight: bold; text-align: center; text-indent: 0pt">Amount</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-size: 8pt; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-size: 8pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-size: 8pt; font-weight: bold; text-align: center; text-indent: 0pt">Exercise Price</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="width: 76%; text-align: left; text-indent: 0pt">Outstanding December 31, 2010</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 9%">-</td>
<td nowrap="nowrap" style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 9%">-</td>
<td nowrap="nowrap" style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Expired/Retired</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Exercised</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt">Issued</td>
<td style="padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right; font-family: Times New Roman, Times, Serif">80,000</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">0.50</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="padding-bottom: 4px; text-align: left; font-weight: bold; text-indent: 0pt">Outstanding December 31, 2011</td>
<td style="padding-bottom: 4px; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: right; font-family: Times New Roman, Times, Serif; font-weight: bold">80,000</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px; font-weight: bold"> </td>
<td style="padding-bottom: 4px; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: left; font-weight: bold">$</td>
<td style="border-bottom: black 4px double; text-align: right; font-weight: bold">0.50</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px; font-weight: bold"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Expired/Retired</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Exercised</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt">Issued</td>
<td style="padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="padding-bottom: 4px; text-align: left; font-weight: bold; text-indent: 0pt">Outstanding June 30, 2012</td>
<td style="padding-bottom: 4px; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: right; font-weight: bold">80,000</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px; font-weight: bold"> </td>
<td style="padding-bottom: 4px; font-weight: bold"> </td>
<td style="border-bottom: black 4px double; text-align: left; font-weight: bold">$</td>
<td style="border-bottom: black 4px double; text-align: right; font-weight: bold">0.50</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px; font-weight: bold"> </td></tr>
</table>
80000
80000
80000
.50
.50
.50
0
0
1660
0
2667
5333