Notes to Financial Statements
June 30, 2017
(Unaudited)
Note 1 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization
SigmaBroadband
Co. ("Sigma" or the "Company") was incorporated in Georgia in
October 2012. The Company has been in the development stage since
inception and has not generated any revenue to date. The Company is
a full service, facilities-based broadband service provider, local
exchange and inter-exchange carrier serving residential and
commercial customers with a special focus on rural
areas.
Basis of Presentation
The
accompanying unaudited financial statements have been prepared in
accordance with U.S. generally accepted accounting principles for
interim financial information. Certain information and footnote
disclosures normally included in annual financial statements
prepared in accordance with U.S. generally accepted accounting
principles have been condensed or omitted pursuant to such
principles and regulations of the Securities and Exchange
Commission for Form 10-Q. All adjustments, consisting of normal
recurring adjustments, have been made which, in the opinion of
management, are necessary for a fair presentation of the results of
interim periods. The results of operations for such interim periods
are not necessarily indicative of the results that may be expected
for a full year because of, among other things, seasonality factors
in the retail business. The unaudited financial statements
contained herein should be read in conjunction with the audited
financial statements and notes thereto for the fiscal year ended
December 31, 2016.
Equipment, net
Equipment
is stated at cost. Major renewals and betterments are capitalized
while maintenance and repairs, which do not extend the lives of the
respective assets, are expensed when incurred. Depreciation is
computed over the estimated useful lives of the assets using the
straight line method of accounting.
The
Company has estimated the useful life of the equipment to be 10
years.
The
cost and accumulated depreciation for equipment sold, retired, or
otherwise disposed of are relieved from the accounts, and any
resulting gains or losses are reflected in income.
At
June 30, 2017 and December 31, 2016, the assets have been fully
impaired.
Use of Estimates
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 amounts reported in the financial statements and accompanying
notes. Actual results could differ from those
estimates.
Segment Information
The
Company follows Accounting Standards Codification ("ASC") 280,
"Segment Reporting". The Company currently operates in a single
segment and will evaluate additional segment disclosure
requirements as it expands its operations.
Net Loss Per Common Share
Basic
net (loss) income per common share is calculated using the weighted
average common shares outstanding during each reporting period.
Diluted net (loss) income per common share adjusts the weighted
average common shares for the potential dilution that could occur
if common stock equivalents (convertible debt and preferred stock,
warrants, stock options and restricted stock shares and units) were
exercised or converted into common stock. There were no common
stock equivalents at June 30, 2017 and December 31,
2016.
Income Taxes
The
Company follows the asset and liability method of accounting for
future income taxes. Under this method, future income tax assets
and liabilities are recorded based on temporary differences between
the carrying amount of assets and liabilities and their
corresponding tax basis. In addition, the future benefits of income
tax assets including unused tax losses, are recognized, subject to
a valuation allowance to the extent that it is more likely than not
that such future benefits will ultimately be realized. Future
income tax assets and liabilities are measured using enacted tax
rates and laws expected to apply when the tax liabilities or assets
are to be either settled or realized. The Company’s effective
tax rate approximates the Federal statutory rates.
Sigmabroadband Co.
Notes to Financial Statements
June 30, 2017
(Unaudited)
Stock-Based Compensation
Stock-based
compensation is accounted for at fair value in accordance with ASC
718,”Compensation – Stock Compensation”, when
applicable. Under FASB Accounting Standards Codification No. 718,
companies are required to measure the compensation costs of
share-based compensation arrangements based on the grant-date fair
value and recognize the costs in the financial statements over the
period during which employees are required to provide services.
Share-based compensation arrangements include stock options,
restricted share plans, performance-based awards, share
appreciation rights and employee share purchase plans. As such,
compensation cost is measured on the date of grant at their fair
value. Such compensation amounts, if any, are amortized over the
respective vesting periods of the option grant. The Company applies
this statement prospectively.
Equity
instruments (“instruments”) issued to other than
employees are recorded on the basis of the fair value of the
instruments, as required by FASB Accounting Standards Codification
No. 718. FASB Accounting Standards Codification No. 505, Equity
Based Payments to Non-Employees defines the measurement date and
recognition period for such instruments. In general, the
measurement date is when either a (a) performance commitment, as
defined, is reached or (b) the earlier of (i) the non-employee
performance is complete or (ii) the instruments are vested. The
measured value related to the instruments is recognized over a
period based on the facts and circumstances of each particular
grant as defined in the FASB Accounting Standards
Codification.
Cash and Cash Equivalents
The
Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. Cash and
cash equivalents are stated at cost, which approximates fair value.
The amount of cash equivalents as of June 30, 2017 and 2016 were
nil.
Reclassification of Prior Period Financial Statements
Certain
items previously reported have been reclassified to conform with
the current year's presentation. The reclassification has no effect
on aggregate assets, liabilities, equity, or net income as previous
reported.
Recent Accounting Pronouncements
The Company has
reviewed all recently issued, but not yet effective, accounting
pronouncements and does not believe the future adoption of any such
pronouncements may be expected to cause a material impact on our
financial condition or the results of its operations.
In
March 2016, the FASB issued ASU 2016-03. The amendments in this
Update make the guidance in Updates 2014-02, 2014-03, 2014- 07, and
2014-18 effective immediately by removing their effective dates.
The amendments also include transition provisions that provide that
private companies are able to forgo a preferability assessment the
first time they elect the accounting alternatives within the scope
of this Update. The Company is in the process of evaluating the
impact of the adoption of this ASU.
In
March 2016, the FASB issued ASU 2016-09, Stock Compensation, which
is intended to simplify several aspects of the accounting for
share-based payment award transactions. The guidance will be
effective for the fiscal year beginning after December 15, 2016,
including interim periods within that year. The Company is in the
process of evaluating the impact of the adoption of this
ASU.
Note 2 – EQUIPMENT, NET
The
Company's furniture and equipment at June 30, 2017 and December 31,
2016 consisted of the following:
|
|
|
|
|
Telecommunications
equipment
|
10,000,000
|
10,000,000
|
|
Less:
accumulated depreciation
|
2,000,000
|
2,000,000
|
|
Less:
impairment
|
8,000,000
|
8,000,000
|
|
Total
|
-
|
-
|
Note
3. LOAN PAYABLE - STOCKHOLDER
At
June 30, 2017 and December 31, 2016, a stockholder and officer of
the Company was owed $35,658 and $34,342 by the Company for funds
he had advanced to pay for certain expenses. The loan bears no
interest and is payable on demand.
Sigmabroadband Co.
Notes to Financial Statements
June 30, 2017
(Unaudited)
At
June 30, 2017 and December 31, 2016, a second stockholder and
officer of the Company was owed $17,356 and $14,105 by the Company
for funds he had advanced to pay for certain expenses. The loan
bears no interest and is payable on demand.
Note
4. NOTE PAYABLE
In December 2013, the Company signed an agreement
to purchase certain telecommunications equipment for $10 million.
The agreement called for the Company to sign an installment
agreement for $1,000,0000. The installment agreement, as amended in
November 2015, calls for this balance to be amortized over a six
year term with interest accruing at 8% per annum. Additionally,
under the terms of this modification, payments will begin 48 months
after the signing of the original agreement (December 2013) at
which time all interest accrued until that time will be due and
payable. Interest only payments will begin in month 49 and will
continue through month 72 at which time a balloon payment of the
principal and any unpaid interest will be due. At June 30, 2017 and
December 31, 2016, accrued interest on this note totaled
$324,187 and $284,187
,
respectively.
The
amendment stipulates that the remaining $9,000,000 owed by the
Company will be paid by the issuance of 10,000,000 shares of the
Company's preferred stock within 36 months from the date of the
amendment.
Note
5. STOCKHOLDERS' DEFICIT
The Company has authorized 500,000,000 shares of
common stock with a par value of $0.0001 per share. At June 30,
2017,
247,240
shares of common
stock were issued and outstanding.
The
Company has authorized 10,000,000 shares of preferred stock with no
par value. No shares were issued or outstanding at June 30,
2017.
In
first quarter of 2016, the Company issued 1,000 shares of common
stock for consulting services, the common shares issued were valued
at $13,000.
In
second quarter of 2016, the Company issued 500 shares of common
stock to settle $5,000 of accounts payable.
All
share issued and outstanding has been retroactively adjusted to
reflect the decreased number of shares resulting from the reverse
stock split.
Note 6. COMMITMENTS AND CONTINGENCIES
The
Company currently leases its offices on a month to month basis from
the Company's President and stockholder for $500 per
month.
Rent
expense for the six months ended June 30, 2017 and 2016 totaled
$3,000 and $3,000, respectively, and was forgiven and converted to
additional paid-in capital.
Note
7. INCOME TAXES
|
|
|
|
|
Net
operating loss carryforward
|
1,773,000
|
1,732,000
|
|
Valuation
allowance
|
(1,773,000
)
|
(1,732,000
)
|
|
Deferred
tax asset, net
|
-
|
-
|
Sigmabroadband Co.
Notes to Financial Statements
June 30, 2017
(Unaudited)
The
income tax benefit differs from the amount computed by applying the
statutory federal and state income tax rates to the loss before
income before income taxes. The sources and tax effects of the
differences are as follows:
|
|
|
|
|
Statutory
federal income tax rate
|
34
%
|
34
%
|
|
State
income taxes, net of federal taxes
|
6
%
|
6
%
|
|
Valuation
allowance
|
(40
%)
|
(40
%)
|
|
Effective
income tax rate
|
0
%
|
0
%
|
As of June 30, 2017
and December 31, 2016, the Company has a deferred taxes asset of
approximately $1,773,000 and $1,732,000, respectively, to reduce
future federal and state taxable income through 2035.
The Company currently has no federal or state tax
examinations in progress, nor has it had any federal or state
examinations since its inception. All of the Company's tax years
are subject to federal and state tax examinations. The Company is
only subject to state taxes in Georgia.
Note
8. GOING CONCERN
These financial
statements have been prepared on a going concern basis, which
assumes the Company will be able to realize its assets and
discharge its liabilities in the normal course of business for the
foreseeable future. The Company has yet to demonstrate sustainable
profitability and it does not currently have the funding to fully
implement its business plan. Future losses are anticipated in the
continued development of its business, raising substantial doubt
about the Company’s ability to continue as a going concern.
The ability to continue as a going concern is dependent upon
the Company generating profitable operations in the future and, or,
obtaining the necessary financing to meet its obligations and repay
its liabilities arising from normal business operations when they
come due. Management intends to finance operating costs over the
next twelve months with existing cash on hand, loans from directors
or stockholders or through debt or equity financings.
The
financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may
result from the possible inability of the Company to continue as a
going concern.
Note
9. SUBSEQUENT EVENTS
On
July 15, 2017, the Board of Directors of the Company and the
majority shareholders of the Company, approved a reverse stock
split of the outstanding shares of the Company’s Common
Stock, par value $0.0001 per share (the “Common
Stock”), at a ratio of 1-for-100 (the “Reverse Stock
Split”) effective on July 28, 2017. As a result of the
reverse stock split, every 100 of the Company’s old issued
common stock will be converted into one share of the
Company’s new issued common stock. All share information
presented in these financial statements and accompanying footnotes
has been retroactively adjusted to reflect the decreased number of
shares resulting from the reverse stock split. In addition, in the
third quarter of 2017, the Company received $125,000 from an
unrelated party as an unsecured loan.
