SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
Form 10-QSB
(Mark One)
S QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2007
£ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to________________
Commission File No. 0-18958
___________________________
CoConnect, Inc.
(Name of small business issuer in its charter)
Nevada | 63-1205304 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
7430 S. Creek Road, Suite 102
Sandy, Utah 84093
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 262-5200
Check whether the Issuer (1 ) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No £
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes S No £
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes £ No £
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the last practicable date.
Class |
| Outstanding as of March 31, 2007 |
Common Stock, $0.001 |
| 83,407,005 |
Transitional Small Business Disclosure Format (Check one): Yes £ No S
COCONNECT, INC.
FORM 10-QSB
TABLE OF CONTENTS
PART 1 – FINANCIAL INFORMATION |
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Item 1. | Financial Statements |
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| Balance Sheets, March 31, 2007 (unaudited) | 3 |
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| Condensed Statements of Operations for the Three Months |
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| ended March 31, 2007 and 2006 (unaudited) | 4 |
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| Condensed Statements of Cash Flows for the Three Months |
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| ended March 31, 2007 and 2006 (unaudited) | 5 |
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| Notes to Condensed Financial Statements | 6 |
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Item 2. | Management’s Discussion and Analysis of Financial Condition |
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| and Results of Operations | 7 |
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Item 3. | Controls and Procedures | 8 |
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Part II – OTHER INFORMATION |
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Item 1. | Legal Proceedings | 8 |
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Item 2. | Changes in Securities and Use of Proceeds | 8 |
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Item 3. | Defaults Upon Senior Securities | 9 |
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Item 4. | Submission of Matters to a Vote of Security Holders | 9 |
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Item 5. | Other Information | 9 |
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Item 6. | Exhibits | 9 |
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SIGNATURES | 9 | |
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PART 1 – FINANCIAL INFORMATION
Item 1. Financial Statements
COCONNECT, INC. | ||
CONDENSED BALANCE SHEET | ||
As at March 31, 2007 | ||
(Unaudited) | ||
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ASSETS |
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CURRENT ASSETS |
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Cash | $ | 25 |
Advance |
| 1,000 |
Security Deposits |
| 7,825 |
Total Current Assets |
| 8,850 |
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FIXED ASSETS |
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Furniture(net of depreciation) |
| 12,977 |
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| 12,977 |
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Total Assets | $ | 21,827 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current Liabilities |
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Accounts Payable | $ | 55,938 |
Bank Overdraft |
| 0 |
Accrued Interest Payable |
| 205,490 |
Accrued Expenses |
| 2,600 |
Advances Related Party |
| 50,000 |
Note Payable-Related Party |
| 50,000 |
Notes Payable |
| 312,000 |
Total Current Liabilities |
| 676,028 |
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Total Liabilities |
| 676,028 |
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EQUITY |
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Common Stock-150,000,000 common stock par value .001 |
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authorized. Issued and outstanding March 31, 2007 |
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83,407,005 |
| 83,407 |
Additional paid in capital |
| 11,054,637 |
Retained earnings or (Deficit accumulated during |
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development stage) |
| (11,792,245) |
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Total Stockholder's Equity |
| (654,201) |
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Total Liabilities And Stockholders Equity | $ | 21,827 |
See accompanying notes to financial statements.
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COCONNECT, INC. | ||||
CONDENSED STATEMENTS OF OPERATIONS | ||||
(Unaudited) | ||||
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| For the Three Months Ended | ||
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| March 31, | ||
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| 2007 |
| 2006 |
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REVENUES | $ | 0 | $ | 0 |
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OPERATING EXPENSES |
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Consulting expenses |
| 360,000 |
| 0 |
Depreciation |
| 734 |
| 0 |
Legal Expense |
| 165,000 |
| 0 |
General and administrative |
| 0 |
| 848 |
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Total Operating Expenses |
| 525,734 |
| 848 |
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NET OPERATING LOSS |
| (525,734) |
| (848) |
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OTHER EXPENSES |
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Interest expense |
| (7,678) |
| (10,386) |
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Total Other Expenses |
| (7,678) |
| (10,386) |
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NET LOSS BEFORE |
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INCOME TAXES |
| (533,412) |
| (11,234) |
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INCOME TAX EXPENSE |
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| 0 |
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NET LOSS | $ | (533,412) | $ | (11,234) |
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BASIC LOSS PER COMMON SHARE | $ | (0.01) | $ | (0.00) |
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WEIGHTED AVERAGE NUMBER OF |
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COMMON SHARES OUTSTANDING |
| 80,907,005 |
| 54,185943 |
See accompanying notes to financial statements.
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COCONNECT, INC. | ||||
CONDENSED STATEMENTS OF CASH FLOWS | ||||
(Unaudited) | ||||
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| For the Three Months Ended | ||
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| March 31, | ||
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| 2007 |
| 2006 |
OPERATING ACTIVITIES |
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Net Loss | $ | (533,412) | $ | (11,234) |
Adjustments to reconcile net loss to |
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cash used by operation activities: |
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Stock issued for services |
| 525,000 |
| 0 |
Depreciation |
| 734 |
| 0 |
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Changes in operating, assets & liabilities |
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Increase (decrease ) in accounts payable |
| 0 |
| 2,687 |
Increase (decrease ) in accrued interest and expenses |
| 7,678 |
| 10,387 |
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CASH FLOWS USED IN OPERATING ACTIVITIES |
| 0 |
| 1,840 |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Advances made on notes receivable |
| 0 |
| 0 |
CASH FLOWS USED IN INVESTING ACTIVITIES |
| 0 |
| 0 |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Decrease in bank overdraft |
| 0 |
| (1,811) |
Common stock issued for cash |
| 0 |
| 0 |
Proceeds from Notes Payable |
| 0 |
| 0 |
CASH FLOWS USED IN FINANCING ACTIVITIES |
| 0 |
| (1,811) |
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Net Increase (Decrease) in cash |
| 0 |
| 29 |
Balance at beginning of period |
| 25 |
| 0 |
Balance as at end of period | $ | 25 | $ | 29 |
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SUPPLEMENTAL CASH FLOW INFORMATION |
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CASH PAID FOR: |
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Interest |
| 0 |
| 0 |
Income Taxes |
| 0 |
| 0 |
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NON-CASH INVESTING AND FINANCING ACTIVITIES: |
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Common stock issued for services rendered |
| 525,000 |
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Common stock issued in satisfaction of notes payable |
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and accrued expenses |
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| 229,646 |
See accompanying notes to financial statements.
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COCONNECT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2007
GENERAL
CoConnect, Inc. (the Company) has elected to omit substantially all footnotes to the financial statements for the three months ended March 31, 2007, since there have been no material changes (other than indicated in other footnotes) to the information previously reported by the Company in their Annual Report filed on the form 10 KSB for the twelve months ended December 31, 2006.
EQUITY TRANSACTIONS
On January 17, 2007, the Company issued 10,000,000 shares of its common stock at market value of $.01 for deferred compensation for 2006.
On February 16, 2007, the Company canceled 1,500,000 shares of its common stock that had been issued in 2006.
On February 16, 2007, the Company issued 1,750,000 shares of its common stock at market value of $.01 for consulting services rendered.
On February 16, 2007, the Company issued 5,500,000 shares of its common stock at market value of $.01 for legal services rendered.
On February 16, 2007, the Company issued 250,000 shares of its common stock at market value of $.01 for consulting services rendered.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all adjustments which are, in the opinion of management, necessary to properly reflect the results of the interim period presented. The information presented is not necessarily indicative of the results from operations expected for the full fiscal year.
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Item 2. Plan Of Operations
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION
PLAN OF OPERATION
The Company is seeking to acquire assets or shares of an entity actively engaged in business which generates revenues. The Company has several acquisitions in mind and is investigating the candidates to determine whether or not they will add value to the Company for the benefit of its shareholders. The Board of Directors intends to obtain certain assurances of value of the target entity's assets prior to consummating such a transaction. Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to present stockholders of the Company.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2007, the Company had current assets of $8,850 and current liabilities of $676,028, resulting in a working capital deficiency of $667,178. Through payment of accrued compensation obligations and notes payable with its common stock and through the sale of its common stock in private placements, the Company had a stockholders' deficit of $654,201 at March 31, 2007.
As of March 31, 2007, the Company’s total assets in the amount of $21,827 consisted of $25 in cash, $1,000 in advances, $7,825 in security deposits, and $12,977 in fixed assets. The Company’s liabilities were $676,028 consisting of $55,938 in accounts payable, $205,490 in accrued interest payable, $2,600 in accrued expenses, $100,000 in advances and notes payable to related parties, and $312,000 in other notes payable.
During the three-months ended March 31, 2007, the Company used net cash of $0 in operating activities as compared to $1,840 for the same period in 2006.
During the three-months ended March 31, 2007 and 2006, the Company did not use any cash for investing activities.
During the three-months ended March 31, 2007, net cash provided by financing activities was $0 compared to $1,811 in a decrease in the bank overdraft for the same period in 2006.
RESULTS OF OPERATIONS
During the periods ended March 31, 2007 and 2006, the Company had no revenues from operations.
Total operating expenses of $525,734 for the three-months ended March 31, 2007 consisted of $360,000 in consulting expenses, $734 in depreciation, and $165,000 in legal fees. Total operating expenses for the three-months ended March 31, 2006 were $848 consisting solely of general and administrative expenses. The net loss for the three-months ended March 31, 2007 was $533,412 compared to a net loss of $11,234 for the same period in 2006.
The Company accrued interest expense for the three-months ended March 31, 2007 and 2006 of $7,678 and $10,386, respectively, on the notes payable to a former director and a former president.
For the current fiscal year, the Company anticipates incurring a loss as a result of legal and accounting expenses, and expenses associated with locating and evaluating acquisition candidates. The Company anticipates that until a business combination is completed with an acquisition candidate, it will not generate revenues, and may continue to operate at a loss after completing a business combination, depending upon the performance of the acquired business.
NEED FOR ADDITIONAL FINANCING
Additional funding will be required in order for the company to survive as a going concern and to finance growth and to achieve our strategic objectives. Management is actively pursuing additional sources of funding. In addition, management is expecting an increase in cash flows through anticipated increases in revenue as a result of the executions of current tactical and strategy plans.
If we do not raise sufficient funds in the future, we may not be able to fund expansion, take advantage of future opportunities, meet our existing debt obligations or respond to competitive pressures or unanticipated requirements. Financing transactions in the future may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.
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All forward-looking statements contained herein are deemed by the Company to be covered by and to qualify for the safe harbor protection provided by the Private Securities Litigation Reform Act of 1995. Prospective shareholders should understand that several factors govern whether any forward-looking statement contained herein will be or can be achieved. Any one of those factors could cause actual results to differ materially from those projected herein. These forward-looking statements include plans and objectives of management for future operations, including plans and objectives relating to the products and the future economic performance of the Company. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development projects, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of those assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in any of the forward-looking statements contained herein will be realized. Based on actual experience and business development, the company may alter its marketing, capital expenditure plans or other budgets, which may in turn affect the Company's results of operations. In light of the significant uncertainties inherent in the forward-looking statements included therein, the inclusion of any such statement should not be regarded as a representation by the Company or any other person that the objectives or plans of the company will be achieved.
Item 3. Controls And Procedures
(a) Evaluation of Disclosure Controls and Procedures. The Company's management, with the participation of the chief executive officer/chief financial officer, carried out an evaluation of the effectiveness of the Company's “disclosure, controls and procedures” (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15(e) and 15-d-15(e) as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based upon that evaluation, the chief executive officer/chief financial officer concluded that, as of the Evaluation Date, the Company's disclosure, controls and procedures are effective, providing them with material information relating to the Company as required to be disclosed in the reports the Company files or submits under the Exchange Act on a timely basis.
(b) Changes in Internal Control over Financial Reporting. There were no changes in the Company's internal controls over financial reporting, known to the chief executive officer/chief financial officer, that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
During 2006 the Company was involved in several lawsuits. In January 2007, the Company and Heritage Communications, Inc., parties to consolidated lawsuits in the State of Utah, Third District Court, Civ. Nos. 05-091-1718 and 05-091-2224, have agreed that all allegations about the parties made in prior filings with the Securities and Exchange Commission and all allegations made in lawsuits between the parties have been completely settled and resolved by all parties, and the lawsuits have been settled with prejudice.
Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds.
On January 17, 2007, the Company issued 10,000,000 shares of its common stock at market value of $.01 for deferred compensation for 2006.
On February 16, 2007, the Company canceled 1,500,000 shares of its common stock that had been issued in 2006.
On February 16, 2007, the Company issued 1,750,000 shares of its common stock at market value of $.01 for consulting services rendered.
On February 16, 2007, the Company issued 5,500,000 shares of its common stock at market value of $.01 for legal services rendered.
On February 16, 2007, the Company issued 250,000 shares of its common stock at market value of $.01 for consulting services rendered.
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Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission Of Matters To A Vote Of Security Holders.
None; not applicable
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits And Reports On Form 8-K.
(a) Exhibits
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-B.
Exhibit No. | Title of Document | Location |
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31.1 | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Attached |
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31.2 | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Attached |
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32.1 | Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Attached |
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32.2 | Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Attached |
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
CoConnect, Inc.
Date: May 19, 2007
By: /s/ Richard Ferguson
Richard Ferguson
Chief Executive Officer
Date: May 21, 2007
By: /s/ Dean Becker
Dean Becker
Chief Financial Officer
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