UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

 

FORM 10-Q

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 

For the quarterly period ended: June 30, 2015

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______ 

 

Commission file number: 0-55270

 

FLASR Inc.

(Exact name of registrant as specified in its charter)

 

Nevada		46-2681687
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

1075 Peachtree Street NE, Suite 3650 

Atlanta, GA 30309

(Address of principal executive offices) 

 

409-965-376

(Registrant’s telephone number, including area code)

 

_______________________________________________________________

(Former name, former address and former fiscal year, if changed since last report) 

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o No x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

As of August 13, 2015, 112,696,664 shares of common stock, par value $0.001 per share, were issued and outstanding. 

 

 

   

TABLE OF CONTENTS

 

			PAGE
PART I  FINANCIAL INFORMATION
Item 1.	Financial Statements			3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			16
Item 4.	Controls and Procedures			16
PART II  OTHER INFORMATION
Item 1.	Legal Proceedings			17
Item 1A.	Risk Factors			17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			17
Item 3.	Defaults Upon Senior Securities			17
Item 4.	Mine Safety Disclosures			17
Item 5.	Other Information			17
Item 6.	Exhibits			18

 

2

 

PART I  FINANCIAL INFORMATION

 

Item 1. Financial Statements. 

 

FLASR, INC.

(Formerly: Language Arts Corp.)

BALANCE SHEET

 

		June 30, 2015				March 31, 2015
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	10,160			$	6,421
Accounts receivable, net of allowance for doubtful accounts of $5,184 at June 30, 2015 and March 31, 2015			4,394				4,350
Inventory			48,613				48,671
Prepaid expenses			14,583				-
Total Current Assets			77,750				59,442
Trademark, net of $558 and $288 in accumulated amortization at June 30, 2015 and March 31, 2015, respectively			4,567				4,837
Total Assets		$	82,317			$	64,279
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable		$	67,993			$	121,321
Accrued interest			45,880				23,053
Short-term debt, net of deferred financing fees of $41,946 and $0 at June 30, 2015, respectively			897,804				586,000
Fair value of derivatives on convertible debt			130,475				-
Due to shareholder			119,256				176,586
Total Current Liabilities			1,261,408				906,960
Total Liabilities			1,261,408				906,960
COMMITMENTS AND CONTINGENCIES			-				-
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value, 150,000,000 shares authorized, 114,480,000 and 114,050,00 shares issued and outstanding as of June 30, 2015 and March 31, 2015, respectively			114,480				114,050
Additional paid-in captial			3,795,520				3,757,450
Accumulated deficit			(5,089,091	)			(4,714,181	)
Total Stockholders' Deficit			(1,179,091	)			(842,681	)
Total Liabilities and Stockholders' Deficit		$	82,317			$	64,279

 

The accompanying notes are an integral part of these financial statements.

 

3

 

FLASR, INC.

(Formerly: Language Arts Corp.)

STATEMENTS OF OPERATIONS

 

		Three Months ended June 30,
		2015				2014
REVENUES		$	695			$	3,132
COST OF SALES			6,467				1,494
GROSS PROFIT (LOSS)			(5,772	)			1,638
OPERATING EXPENSES:
General and administrative			88,709				18,322
Preproduction costs			-				500
Product advertising costs			109,478				2,838
Amortization expense			270				-
Research and development costs			-				1,182
Total Operating Expenses			198,457				22,842
OTHER EXPENSE:
Interest expense			40,206				-
Unrealized loss on derivatives for convertible debt			130,475				-
Total Other Expense			170,681				-
NET LOSS		$	(374,910	)		$	(21,204	)
Basic and diluted loss per share		$	(0.00	)		$	(0.00	)
Basic and diluted weighted average common shares outstanding:			114,182,308				86,000,000

 

The accompanying notes are an integral part of these financial statements. 

 

4

 

FLASR, INC.

(Formerly: Language Arts Corp.)

STATEMENT OF CASH FLOWS

 

		Three Months ended June 30,
		2015				2014
OPERATING ACTIVITIES
Net loss		$	(374,910	)		$	(21,204	)
Amortization of deferred financing fees			16,254				-
Amortization expense			270				-
Common stock issued for marketing services			38,500				-
Unrealized loss on derivatives for convertible debt			130,475				-
Adjustments to reconcile net loss to net cash used by operations:
Net changes in operating assets and liabilities:
Prepaid expenses			(14,583	)
Accounts receivable			(44	)			-
Inventory			58				1,235
Accounts payable			(53,328	)			(5,999	)
Accrued interest			22,827				-
Net Cash Used in Operating Activities			(234,481	)			(25,968	)
FINANCING ACTIVITIES
Proceeds from short-term debt			373,750				50,000
Proceeds from shareholder loan			-				2,005
Repayment of short-term debt			(20,000	)			(5,000	)
Repayment of shareholder loan			(57,330	)			(19,050	)
Deferred financing fees			(58,200	)			-
Net Cash Provided by Financing Activities			238,220				27,955
NET INCREASE IN CASH AND CASH EQUIVALENTS			3,739				1,987
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			6,421				134
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	10,160			$	2,121
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID FOR:
Interest		$	40,206			$	-
NON-CASH TRANSACTIONS
Common stock issued for services to raise capital		$	14,400			$	-
Common stock issued for marketing services		$	38,500			$	-

 

The accompanying notes are an integral part of these financial statements.

 

5

 

FLASR, Inc.

(Formerly: Language Arts Corp.) 

Notes to Financial Statements 

 

NOTE 1 – HISTORY AND ORGANIZATION OF THE COMPANY 

 

We were incorporated on April 22, 2013 in the State of Nevada under the name “Language Arts Corp.” to design, develop and launch an online language learning and translation service but never commenced such planned operations and has limited start-up operations and generated no revenues. 

 

On July 23, 2014, Everett Dickson consummated the purchase of 6,000,000 shares of common stock of the Company from Maria del Pilar Jaen. The shares represented 63% of the issued and outstanding shares of the Company on a fully diluted basis. The purchase price for the shares of $30,000 was payable by Mr. Dickson to Ms. Jean on January 23, 2015.  

 

Effective July 23, 2014, in connection with the closing of the Purchase Agreement, Ms. Jaen resigned as the sole officer and director of the Company and Mr. Dickson was appointed President, Chief Executive Officer, Chief Financial Officer and sole director of the Company. 

 

The acquisition of FLASR by the Company was treated as a reverse capitalization, with FLASR deemed the accounting acquirer and the Company deemed the accounting acquiree under the purchase method of accounting. The reverse merger is deemed a recapitalization and the accompanying financial statements represent the continuation of the financial statements of FLASR (the accounting acquirer/legal subsidiary) except for its capital structure, and the accompanying financial statements reflect the assets and liabilities of FLASR recognized and measured at their carrying value before the combination and the assets and liabilities of Language Arts (the legal acquiree/legal parent). The equity structure reflects the equity structure of Language Arts, the legal parent, and the equity structure of FLASR, the accounting acquirer, as restated to reflect the number of shares of the legal parent. The merged entity is referred to herein as “the Company”. 

 

The Company sells portable waste solutions for consumers of moist tobacco products. We have created the FLASR™, a discreet, considerate, convenient and reusable spittoon system.

 

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 

Basis of Presentation

 

The accompanying financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. 

 

The Company has elected a March 31 fiscal year end. 

 

The accompanying financial statements at June 30, 2015 and March 31, 2015 and for the three-month ended June 30, 2015 and 2014 contain all normally recurring adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for such periods. Operating results for the three months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending March 31, 2016. 

 

These financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s audited financial statements for the year ended March 31, 2015, attached as Exhibit 99.1 to the Form 8-K filed with the SEC on June 29, 2015. 

 

6

 

FLASR, Inc.

(Formerly: Language Arts Corp.) 

Notes to Financial Statements

 

Recent Accounting Pronouncements

 

In May 2014, Financial Accounting Standards Board (“FASB”) issued guidance that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. In April 2015, the FASB decided to delay the effective date for the guidance.  The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it will have on its financial statements.  

 

In June 2014, the FASB issued amended guidance on the accounting for certain share-based employee compensation awards. The amended guidance applies to share-based employee compensation awards that include a performance target that affects vesting when the performance target can be achieved after the requisite service period.  These targets are to be treated as a performance condition.  As such, the performance target should not be reflected in estimating the grant-date fair value of the award and compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved.  The amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.  The Company does not expect adoption will have a material impact on its financial statements. 

 

In February 2015, the FASB issued amended guidance on the consolidation of legal entities including limited partnerships and limited liability corporations. The guidance modifies the consolidation models to be analyzed in determining whether a reporting entity should consolidate certain types of legal entities. The guidance must be applied using one of two retrospective application methods and will be effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years.  Early adoption is permitted, including adoption in any interim period. The Company does not expect adoption will have a material impact on its financial statements.   

 

In April 2015, the FASB issued guidance in order to simplify the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of the debt liability rather than as a deferred charge asset as required under current guidance. The guidance also requires that the amortization of debt issuance costs be reported as interest expense.  The guidance is effective for the Company starting January 1, 2016 and must be applied on a retrospective basis. Early adoption is permitted. The Company has chosen to early adopt this guidance as of the interim period ended March 31, 2015.  No retrospective application was deemed necessary, as the Company did not have any debt issuance costs prior to the three months ended June 30, 2015.  Approximately $0.04 million of debt issuance costs have been deducted from the carrying amount of debt as of June 30, 2015. 

 

In June 2015, the FASB issued Accounting Standards Update No. 2015-10: Technical Corrections and Improvements (ASU 2015-10). ASU 2015-10 is part of an initiative to clarify the Accounting Standards Codification (Codification), correct unintended application of guidance, and make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. ASU 2015-10 covers a wide range of topics in the Codification and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015; early adoption is permitted. The Company is currently evaluating the provisions of this accounting update and assessing the impact, if any, it may have on its financial position and results of operations. 

 

7

 

FLASR, Inc.

(Formerly: Language Arts Corp.) 

Notes to Financial Statements

 

NOTE 3 – GOING CONCERN

 

The Company's financial statements are prepared using US GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has limited operating history and a working capital deficit. These factors raise substantial doubt about the Company's ability to continue as a going concern. 

 

The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. 

 

Management plans to raise money by selling stock, and expects additional cash flows from sales in future periods. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. 

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 

 

NOTE 4 – ISSUANCE OF NEW SHARES 

 

During the quarter ended June 30, 2015, in consideration for services previously rendered, the Company issued an additional 430,000 common shares to third party investors. The common shares issued and outstanding totaled 114,480,000 on June 30, 2015. The shares were valued at the market price on the respective dates of issuance, and the fair value of the shares was determined to be $52,900 and is recorded as advertising expense and cost of equity for the quarter ended June 30, 2015. 

 

During the first quarter of fiscal year 2016, the Company entered into an agreement with Sports Byline USA that in consideration of services to be rendered, Sports Byline USA will receive shares valued at the market price on the respective date of issuance of $250,000 when services are rendered throughout the fiscal year.

 

NOTE 5 – DERIVATIVES AND SHORT-TERM DEBT 

 

Derivatives 

 

During the first quarter of fiscal year 2016, the Company entered into several Security Purchase Agreements for convertible debt which contain the following embedded derivatives: (i) rights to convert principal and interest payable into shares of the Company’s common stock under specific circumstances for each Note; and (ii) conversion prices that varies depending on the stock prices at the time of the conversion.

 

8

 

FLASR, Inc.

(Formerly: Language Arts Corp.) 

Notes to Financial Statements

 

Accounting standards define fair value, outline a framework for measuring fair value, and detail the required disclosures about fair value measurements. Under these standards, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. Standards establish a hierarchy in determining the fair market value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. Standards require the utilization of the highest possible level of input to determine fair value. 

 

Level 1 – inputs include quoted market prices in an active market for identical assets or liabilities 

 

Level 2 – inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an active market, and other observable information that can be corroborated by market data. 

 

Level 3 – inputs are unobservable and corroborated by little or no market data. 

 

While the Company believes that its valuation methods, as set forth below, are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain instruments could result in a different estimate of fair value at the reporting date. 

 

The Company estimated the fair value of the embedded derivatives based upon Level 3 inputs as described below. 

 

Convertible Notes 

 

The Company estimated the fair value of the Convertible Notes using the Black-Scholes approach. The fair value of the derivatives at June 30, 2015 is $130,475.  

 

During the first quarter of fiscal year 2016, the Company entered into a Securities Purchase Agreement with Vis Vires Group, Inc. (“Vis Vires”) for the sale of a convertible promissory note (the “Vis Vires Note”) in the principal amount of $38,000. On April 1 2015, Vis Vires executed the Securities Purchase Agreement and funded the Company pursuant to the terms thereof. The note bears an interest rate of 8% and is due on December 27, 2015. The note holder shall have the right to convert the note to the Company common stock beginning on the date which is 180 days from the date of this note and the conversion price is 58% multiplied by the average of the lowest three trading prices during the 10 trading day period prior to the conversion date. The note was valued at $52,369 using the Black-Scholes valuation method. The estimated Warrants total 581,878, and the estimated exercise price is $.0690. 

 

The following table sets forth the inputs to the Black-Scholes model that was used to value the embedded derivative at June 30, 2015. 

 

Stock price		$	0.18
Exercise price		$	0.07
Issuance date		April 1, 2015
Maturity date		December 27, 2015
Volatility			136.71	%
Discount rate			.18	%

 

During the first quarter of fiscal year 2016, the Company entered into a Securities Purchase Agreement with LG Capital Funding, LLC, a New York limited liability Company (“LG”) for the sale of two convertible notes (the “LG Note”) in the principal amount of $157,500 ($78,750 each). The notes bear an interest rate of 8% and are due on April 1, 2016. The note holder shall have the right to convert the Second Note to the Company common stock once the Buyer Note is paid off in cash. The conversion price is 60% multiplied by the lowest 20 trading prices prior to the conversion date. The note was valued at $102,717 using the Black-Scholes valuation method. The estimated Warrants total 1,141,304, and the estimated exercise price is $.0690.

 

9

 

FLASR, Inc.

(Formerly: Language Arts Corp.) 

Notes to Financial Statements

 

The following table sets forth the inputs to the Black-Scholes model that was used to value the embedded derivative at June 30, 2015. 

 

Stock price		$	0.18
Exercise price		$	0.07
Issuance date		April 1, 2015
Maturity date		April 1, 2016
Volatility			136.71	%
Discount rate			.37	%

 

During the first quarter of fiscal year 2016, the Company entered into a Securities Purchase Agreement with Adar Bays, LLC, a Florida limited liability Company (“Adar Bays”) for the sale of two convertible notes (the “Adar Bays Note”) in the principal amount of $150,000 ($75,000 each). The notes bear an interest rate of 8% and are due on April 2, 2016. The note holder shall have the right to convert the Second note to the Company common stock once the Buyer Note is paid off in cash. The conversion price is 60% multiplied by the lowest 20 trading prices prior to the conversion date. The note was valued at $97,826 using the Black-Scholes valuation method. The estimated Warrants total 1,086,957, and the estimated exercise price is $.0690.  

 

The following table sets forth the inputs to the Black-Scholes model that was used to value the embedded derivative at June 30, 2015. 

 

Stock price		$	0.17
Exercise price		$	0.07
Issuance date		April 2, 2015
Maturity date		April 2, 2016
Volatility			135.68	%
Discount rate			.37	%

 

During the first quarter of fiscal year 2016, the Company executed a 12% convertible note (the “JSJ Note”) in the principal amount of $57,000 with JSJ Investments Inc., a Texas corporation (“JSJ”). The JSJ Note, which is due on October 1, 2015, bears interest at the rate of 12% per annum. The note holder shall have the right to convert the note to the Company common stock at any time and the conversion price is 45% multiplied by the lowest 20 trading prices prior to the conversion date. The note was valued at $105,078 using the Black-Scholes valuation method. The estimated Warrants total 1,167,536, and the estimated exercise price is $.0518. 

 

10

 

FLASR, Inc.

(Formerly: Language Arts Corp.) 

Notes to Financial Statements

 

The following table sets forth the inputs to the Black-Scholes model that was used to value the embedded derivative at June 30, 2015. 

 

Stock price		$	0.17
Exercise price		$	0.05
Issuance date		April 2, 2015
Maturity date		October 1, 2016
Volatility			135.68	%
Discount rate			.18	%

 

During the first quarter of fiscal year 2016, the Company entered into a Securities Purchase Agreement with Union Capital, LLC, Nevada Limited Liability Company (“Union Capital”) for the sale of two convertible notes (the “Union Capital Note”) in the principal amount of $100,000 ($50,000 each). The notes bear and interest rate of 8% and are due on April 15, 2016.  

 

The note holder shall have the right to convert the Second note to the Company common stock once the Buyer Note is paid off in cash. The conversion price is 60% multiplied by the lowest 20 trading prices prior to the conversion date. The note was valued at $72,464 using the Black-Scholes valuation method. The estimated Warrants total 724,638, and the estimated exercise price is $.0690.  

 

The following table sets forth the inputs to the Black-Scholes model that was used to value the embedded derivative at June 30, 2015. 

 

Stock price		$	0.19
Exercise price		$	0.07
Issuance date		April 15, 2015
Maturity date		April 15, 2016
Volatility			131.25	%
Discount rate			.37	%

 

During the first quarter of fiscal year 2016, the Company entered into a Securities Purchase Agreement with Black Forest Capital, LLC, a a New York Limited liability Company (“Black Forest”) for the sale of two convertible notes (the “Black Forest Note”) in the principal amount of $150,000 ($75,000 each). The notes bear an interest rate of 10% and are due on May 4, 2016. The note holder shall have the right to convert the Second note to the Company common stock once the Buyer Note is paid off in cash. The conversion price is 58% multiplied by the lowest 10 trading prices prior to the conversion date. The note was valued at $78,711 using the Black-Scholes valuation method. The estimated Warrants total 1,124,438 and the estimated exercise price is $.0667.  

 

The following table sets forth the inputs to the Black-Scholes model that was used to value the embedded derivative at June 30, 2015. 

 

Stock price		$	0.14
Exercise price		$	0.07
Issuance date		May 4, 2015
Maturity date		May 4, 2016
Volatility			126.20	%
Discount rate			.37	%

 

The Company reserved 21,425,000 shares of common stock for issuance upon full conversion of convertible debt. 

 

11

 

FLASR, Inc.

(Formerly: Language Arts Corp.) 

Notes to Financial Statements

 

NOTE 6.  INCOME TAXES 

 

Deferred tax assets and liabilities are recognized for future tax consequences attributable 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 are expected to be recovered or settled.  The effect of deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. 

 

Deferred tax assets are recognized to the extent that the realization of the related tax benefit through future taxable profits is probable. The Company provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that the Company will not earn income sufficient to realize the deferred tax assets during the carry forward period. 

 

The Company applies recognition thresholds and measurement attributes for the financial statement recognition and of a tax position taken or expected to be taken in a tax return as it relates to accounting for uncertainty in income taxes. In addition, it is the Company’s policy to recognize interest accrued and penalties, if any, related to unrecognized benefits as income tax expense in its consolidated statement of operations. 

 

NOTE 7 – SUBSEQUENT EVENTS 

 

Management evaluated the events subsequent to June 30, 2015, and through August 13, 2015 and the following information was identified:

 

On May 22, 2015, the Company filed an 8-K to Amend the Articles of Incorporation by increasing the amount of shares of Common Stock from 150 million to 500 million shares and 5 million shares of Preferred Stock. The purpose was to allow the Company to be able to offer stock options to service plans. The Company has entered into such agreements in the second quarter of the fiscal year. 

 

On June,4 2015, the Company entered into a Securities Purchase Agreement with Vis Vries Group, Inc. for the sale of a convertible redeemable note (the “Vis Vries Group Note”) in the principal amount of $48,000. Funds were not received until the second quarter. The note bears an interest rate of 8% and is due on March 8, 2016. The note holder shall have the right to convert the note to the Company common stock beginning on the date which is 180 days from the date of this note and the conversion price is 58% multiplied by the average of the lowest three trading prices during the 10 trading day period prior to the conversion date. 

 

On July 14, 2015, the Company entered into a Securities Purchase Agreement with GW Holdings Group, LLC for the sale of a convertible redeemable note (the “GW Holdings Group Note”) in the principal amount of $37,000. The note bears an interest rate of 8% is are due on July 16, 2016. The note holder shall have the right to convert the notes to the Company common stock at any time and the conversion price is 42.5% multiplied by the lowest twenty trading prices prior to the conversion date. 

 

On July 28, 2015, the Company entered into a Securities Purchase Agreement with Auctus Fund, LLC for the sale of a convertible redeemable note (the “Auctus Fund, LLC Note”) in the principal amount of $51,000. The note bears an interest rate of 10% and is due on April 28, 2016. The note holder shall have the right to convert the notes to the Company common stock at any time and the conversion price is the lesser of 55% multiplied by the lowest 25 trading prices ending on the last complete trading day prior to the date of this Note or the variable trading price which is 55% multiplied by the lowest 25 trading prices ending on the latest complete trading day prior to the conversion date. 

 

12

 

Item 2. Management’s Discussion and Analysis or Plan of Operations.  

 

As used in this Quarterly Report on Form 10-Q, references to the “Company,”, “we,” “our” or “us” refer to FLASR Inc. unless the context otherwise indicates.

 

Forward-Looking Statements

 

The following discussion should be read in conjunction with the financial statements of the Company which are included elsewhere in this Form 10-Q. Certain statements contained in this report, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, primarily with respect to the future operating performance of the Company and other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements speak only as of the date on which they are made.  We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law.

 

Plan of Operation 

 

History 

 

On July 23, 2014, Everett Dickson consummated the purchase of 6,000,000 shares of common stock of the Company from Maria del Pilar Jaen. The shares represented 63% of the issued and outstanding shares of the Company on a fully diluted basis. The purchase price for the shares of $30,000 was payable by Mr. Dickson to Ms. Jean on January 23, 2015.

 

Effective July 23, 2014, in connection with the closing of the Purchase Agreement, Ms. Jaen resigned as the sole officer and director of the Company and Mr. Dickson was appointed President, Chief Executive Officer, Chief Financial Officer and sole director of the Company.

 

Everett Dickson, the majority stockholder and sole officer and director of the Company, took control of the Company with the intention of merging his private, solely owned company "FLASR Inc." into the Company. The Company’s board of directors approved the implementation of a stock dividend payment in the form of a 1:6 forward stock split whereby shares of common stock held by each stockholder of record on August 28, 2014 automatically received shares at the rate of 1 for 5, without any action on the part of the stockholders. Accordingly, there were an additional 47,500,000 shares of common stock issued and outstanding. The Company also filed an application with FINRA to (i) change the ticker symbol of the Company to "FLSR", (ii) change the name of the Company to FLASR Inc., (iii) increase the authorized share shares of common stock from 75,000,000 to 150,000,000 and (iv) increase the authorized share capital of the Company by providing for the adoption of 5,000,000 shares of blank check preferred stock which became effective in September 2014.

 

Pursuant to the closing of the Purchase Agreement on September 16, 2014, the Company acquired all of the issued and outstanding capital stock of FLASR Inc. from Mr. Dickson for 50,000,000 shares of the Company’s common stock and FLASR became a wholly-owned subsidiary of the Company. As a result of the acquisition, management intends to focus the Company’s business on FLASR’s development and sale of the portable FLASRs for tobacco by products.

 

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The acquisition of FLASR by the Company was treated as a reverse capitalization, with FLASR deemed the accounting acquirer and the Company deemed the accounting acquiree under the purchase method of accounting. The reverse merger is deemed a recapitalization and the accompanying financial statements represent the continuation of the financial statements of FLASR (the accounting acquirer/legal subsidiary) except for its capital structure, and the accompanying financial statements reflect the assets and liabilities of FLASR recognized and measured at their carrying value before the combination and the assets and liabilities of Language Arts Corp. (the legal acquiree/legal parent). The equity structure reflects the equity structure of Language Arts, the legal parent, and the equity structure of FLASR, the accounting acquirer, as restated to reflect the number of shares of the legal parent. The merged entity is referred to herein as “the Company”.

 

On May 19, 2015, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada increasing the amount of authorized shares of common stock of the Company from 150,000,000 to 500,000,000 shares.

 

Results of Operations 

 

For the three months ended June 30, 2015 and June 30, 2014 

 

Revenues 

 

The Company generated $695 in revenues during the three months ended June 30, 2015, as compared to $3,132 in revenues for the three months ended June 30, 2014. The decrease in revenues was primarily due to reduced sales from one source of revenue. 

 

Total operating expenses 

 

For the three months ended June 30, 2015, total operating expenses were $198,457, consisting of product marketing costs of $109,478, general and administrative expenses of $88,709 and amortization expense of $270. For the three months ended June 30, 2014, total operating expenses were $22,842, consisting of $2,838 in product marketing costs, $18,322 in general and administrative expenses, $500 in preproduction costs and $1,182 in research and development costs. Operating expenses increased $175,615, primarily due to the increase in product marketing costs and general and administrative expenses. 

 

Net loss 

 

For the three months ended June 30, 2015, the Company had a net loss of $374,911, as compared to a net loss for the three months ended June 30, 2014 of $21,204. 

 

Liquidity and Capital Resources 

 

As of June 30, 2015, the Company had approximately $10,160 in cash. We estimate that within the next 12 months we will need approximately $1,500,000 for the next twelve months to develop our business. We cannot be certain that the required additional financing will be available or available on terms favorable to us. If additional funds are raised by the issuance of our equity securities, such as through the issuance of additional shares and the issuance and exercise of warrants, then existing stockholders will experience dilution of their ownership interest. If adequate funds are not available or not available on acceptable terms, we may be unable to fund our operations. The Company currently has no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

 

As a result of the notes issued by the Company within the last several months, the Company has an aggregate of $897,804 due and payable as short-term debt as of June 30, 2015. These convertible debentures mature December 31, 2015, April and May 2016 and October 2016. 

 

As of June 30, 2015, the Company and its wholly owned subsidiary FLASR, had outstanding notes payable to Everett Dickson, the Company’s sole officer and director, of $119,256. These notes are unsecured, payable upon demand and have no stated interest rate.

 

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Going Concern 

 

As of June 30, 2015, the Company had a total stockholders’ deficit of $1,179,091. The ability of the Company to continue as a going concern is dependent on the Company obtaining net sales and adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Our auditors have issued a going concern opinion on our financial statements. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay for our expenses. This is because we have not generated sufficient revenues. There is no assurance we will ever reach this point. Accordingly, we must raise sufficient capital from sources. Our only other source for cash at this time is investments by others. We must raise cash to stay in business. In response to these problems, management intends to raise additional funds through public or private placement offerings.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 

 

Off-Balance Sheet Arrangements 

 

We have no off-balance sheet arrangements.

 

Critical Accounting Policies 

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

Recently Issued Accounting Pronouncements 

 

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that may have a material impact on its financial position or results of operations.

 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures 

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure. As of June 30, 2015, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were effective as of June 30, 2015. 

 

Changes in Internal Controls over Financial Reporting 

 

There were no changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

 

Item 1A. Risk Factors.

 

As a “smaller reporting company”, we are not required to provide the information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the quarter ended June 30, 2015, the Company in consideration for services previously rendered, issued an additional 430,000 shares of common stock. Such shares were issued in reliance upon an exemption from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended. 

 

Purchases of equity securities by the issuer and affiliated purchasers.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures. 

 

Not Applicable

 

Item 5. Other Information.

 

 None

 

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Item 6. Exhibits.

 

Exhibit No.		Description
31.1		Certification of Principal Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1		Certification of Principal Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

 

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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.

 

	FLASR INC.
Dated: August 14, 2015	By	/s/ Everett Dickson
		Everett Dickson President, Chief Executive Officer and Chief Financial Officer (Principal Executive, Financial and Accounting Officer)

 

 

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