The common stock issued and outstanding have been adjusted to reflect a 1-for-70 reverse split, which was effective in February 2017.
The common stock issued and outstanding have been adjusted to reflect a 1-for-70 reverse split, which was effective in February 2017.
The common stock issued and outstanding have been adjusted to reflect a 1-for-70 reverse split, which was effective in February 2017.
Notes to Financial Statements
June 30, 2017
NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS
Lash, Inc. (the “Company”) was incorporated in the State of Nevada on September 14, 2009, and its year-end is June 30. The Company’s principle executive office address is 297 President Street, Brooklyn, New York 11231.
The Company had previously acquired mineral properties located in the Thunder Bay mining district, Province of Ontario, Canada but never determined whether these properties contain reserves that are economically recoverable. As of June 30, 2015, we ceased our exploration operations in the Thunder Bay mining district due to a lack of funds, but maintained our plan as a mining exploration company, seeking other mining properties to explore and asses for economic potential.
On September 19, 2016, the shareholders of Company approved an increase to the number of authorized shares from 256,000,000 shares to 500,000,000 shares and added 25,000,000 shares of (“blank check”) preferred stock, par value $0.001 per share. The board of directors of the Company is authorized to provide for the issuance of preferred stock in series, to establish the number of shares to be included in each series, and to fix the designation, powers, preference and rights to the shares of each series and any qualifications, limitations or other restrictions. The Company filed a Certificate of Amendment with the State of Nevada, effective on September 28, 2016, increasing the number of authorized shares from 256,000,000 shares to 500,000,000 shares and adding a new class of 25,000,000 shares of (“blank check”) preferred stock, par value $0.001 per share.
On September 28, 2016, William Drury resigned as President, Treasurer and director of the Company. Mr. Drury remains the Company’s Secretary.
On October 17, 2016, the shareholders of Cassidy Ventures Inc., approved a name change and approved a 1-for-70 reverse split. Thereafter, Cassidy Ventures Inc. filed a Certificate of Amendment with the State of Nevada, effective on October 19, 2016, changing its name to “Lash, Inc.” and the contemplated 1-for-70 reverse split. On October 28, 2016 and in accordance with SEC Rule 10b-17 and FINRA Rule 6490, the Company submitted documents and other information to FINRA in furtherance of pursuing and obtaining approval of the subject reverse stock split. The Company also submitted additional documents requested by, and necessary to obtain approval of, FINRA in connection with the subject reverse stock split. FINRA and the transfer agent recognized the split on February 14, 2017. The authorized shares did not change in connection with the split and will remain at 500,000,000 shares of common stock and 25,000,000 shares of (“blank check”) preferred stock.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company provides estimates for its common stock valuations and valuation allowances for deferred taxes.
Cash Flow Reporting
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method ("Indirect method") as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. There were no cash equivalents as of June 30, 2017.
The Company maintains its cash balance at one financial institution that is insured by the Federal Deposit Insurance Corporation.
Basic Earnings (loss) per Share
The Company computes net income (loss) per share in accordance with ASC 260,
Earnings per Share.
ASC 260 specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock.
Basic net earnings (loss) per share amounts are computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company.
Share Based Compensation
The Company accounts for share-based compensation in accordance with the fair value recognition provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 718 and No. 505. The Company issues restricted stock to employees for their services. Cost for these transactions are measured at the fair value of the equity instruments issued at the date of grant. These shares are considered fully vested and the fair market value is recognized as expense in the period granted. The Company also issues restricted stock to consultants for various services. Costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment only if there is sufficient disincentive to ensure performance or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. For agreements requiring future services, the consulting expense is to be recognized ratably over the requisite service period.
Fair Value Measurements
In September 2006, the FASB issued ASC 820 (previously SFAS 157) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 were effective January 1, 2008.
As defined in ASC 820, fair value is 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 (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observations of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy defined by ASC 820 are as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
Income Taxes
The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.
The Company follows ASC 740-10, “Accounting for Uncertainty in Income Taxes” (“ASC 740-10”). This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. ASC 740-10 is effective for fiscal years beginning after December 15, 2006. Management has adopted ASC 740-10 for 2007, and they evaluate their tax positions on an annual basis, and have determined that as of June 30, 2017, no additional accrual for income taxes is necessary. The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest or penalties since its inception.
The Company intends to file income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2010 to 2016 remain open for examination by federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax year.
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 incurred a loss since inception resulting in an accumulated deficit of $19,094,124 at June 30, 2017 and further losses are anticipated in the 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 and/or private placement of common stock.
There is no guarantee that the Company will be able to raise any capital through any type of offering.
NOTE 3 RELATED PARTY TRANSACTIONS
On February 1, 2015, the Company entered into a 24-month consulting agreement extension with William Drury, an Officer of the Company and WICAWIBE LLC., 297 President Street, Brooklyn, NY 11231. Prior to subsequent termination, the agreement was to expire on January 31, 2017 and the monthly fee was $15,000. On September 28, 2016, Mr. Drury resigned as President and Treasurer of the Company. On September 29, 2016, a settlement agreement between Mr. Drury and the Company was signed which provides a payment of $50,000 in cash and $50,000 in the Company’s common stock to release the Company from all possible claims of accrued salary, independent contractor fees, expense and cost owed to Mr. Drury and terminate the consulting agreement which was scheduled to expire on January 31, 2017. On October 2, 2016, Mr. Drury resigned as director and the Company accepted his resignation and ratified the settlement agreement dated September 29, 2016. According to the settlement agreement, $46,500 was paid directly to Mr. Drury on October 5, 2016 and the remaining $3,500 paid directly to an attorney for the legal fees related to the settlement agreement. The shares of the Company’s common stock are issuable to Mr. Drury in increments of 3,571 shares. Mr. Drury will continue to be issued 3,571 until he is able to garner $50,000 by selling the shares in the over-the-counter market or an exchange (as defined under the securities act of 1933, as amended). On October 24, 2016, the Company issued 14,286 shares of the Company’s common stock to Mr. Drury to partially settle the $50,000 common stock obligation. Those shares had a fair value of $3,200 at the date of issuance. This liability represents an unconditional obligation to issue a variable number of shares for a fixed monetary amount. The fair value of the shares issued to Mr. Drury but not yet sold yet are netted against the liability in the balance sheet. Subsequent adjustments to the fair value of the shares issued but not sold are recognized as an adjustment to the net liability and other income/expense until such time as the shares are sold. Mr. Drury has not sold these shares as of June 30, 2017. For the year ended June 30, 2017, approximately $3,943 of other income has been recognized due to the marking of these shares to fair value subsequent to issuance. As a result of the settlement agreement, the Company wrote-off liabilities of $624,900 related to Mr. Drury to additional paid-in capital on the accompanying balance sheet.
As of June 30, 2017 and June 30, 2016, the accrued expenses-related party was $-0- and $615,000, respectively. The Company incurred consulting expense of $44,000 and $180,000 during the twelve months ended June 30, 2017 and 2016, respectively, pursuant to the consulting agreement which was terminated. The balance due was written-off during the three months ended September 30, 2016.
During September 2016, the new Company President, Amber Finney, advanced the Company $10,000 as a related party loan. During November 2016, a member of Ms. Finney’s family advanced the Company an additional $10,000. During January 2017, Ms. Finney advanced the Company an additional $5,000. During May 2017, a related party advanced the Company an additional $10,000. The proceeds for these loans were used for working capital. As of June 30, 2017 and June 30, 2016, there are related party loans totaling $35,000 and $65,899 respectively. These advances are unsecured, due on demand and carry no interest or collateral.
The officers of the Company could become involved in other business activities as they become available. This could create a conflict between the Company and the other business interests. The Company has not formulated a policy for the resolution of such a conflict should one arise.
NOTE 4 PROVISION FOR INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company's assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company's tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
The provision for refundable federal income tax consists of the following for the 12 months ending:
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
Federal income tax benefit attributable to:
|
|
|
|
|
|
|
Net operating loss
|
|
$
|
28,123
|
|
|
$
|
64,730
|
|
Less, valuation allowance
|
|
|
(28,123
|
)
|
|
|
(64,730
|
)
|
Net benefit
|
|
$
|
-
|
|
|
$
|
-
|
|
The cumulative tax effect at the expected rate of 34% on the net deferred tax amount is as follows:
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
Deferred tax attributed:
|
|
|
|
|
|
|
Deferred tax benefits
|
|
$
|
6,492,002
|
|
|
$
|
6,463,879
|
|
Less valuation allowance
|
|
|
(6,492,002
|
)
|
|
|
(6,463,879
|
)
|
Net Deferred Tax Asset
|
|
$
|
-
|
|
|
$
|
-
|
|
At June 30, 2017 and 2016, the Company had a net operating loss ("NOL's") carry forward in the amount of $19,094,124 and $19,011,410, respectively, available to offset future taxable income. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. The Company has not filed its federal tax returns since inception and therefore, the NOL's will not be available to offset future taxable income until the tax returns are filed with the respective federal tax authorities.
A reconciliation of the Company's effective tax rate as a percentage of income before taxes and federal statutory rate for the periods ended June 30, 2017 and 2016 is summarized below.
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Federal statutory rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
State income taxes, net of federal benefits
|
|
|
0.0
|
|
|
|
0.0
|
|
Valuation allowance
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
NOTE 5 EQUITY TRANSACTIONS
On September 19, 2016, the shareholders of Company approved an increase to the number of authorized shares from 256,000,000 shares to 500,000,000 shares of common stock and added 25,000,000 shares of (“blank check”) preferred stock, par value $0.001 per share.
On February 14, 2017, the Company received final approval for a 1-for-70 reverse stock split of its common stock. Immediately after effecting the subject 1-for-70 reverse stock split, the Company had 4,400,000 shares of common stock issued and outstanding and -0- shares of preferred stock issued and outstanding. The authorized shares did not change in connection with the split and will remain at 500,000,000 shares of common stock and 25,000,000 shares of (“blank check”) preferred stock.
On September 19, 2016, the shareholders of Company approved the sale of 2,271,429 shares of the Company’s common stock for $0.0220 per share for an aggregate of $50,000 to Amber Finney, the Company’s president. The shares were issued to Ms. Finney on November 2, 2016.
On October 24, 2016, the Company issued 14,286 shares of the Company’s common stock to the Company’s former president, William Drury, to partially settle the $50,000 common stock obligation discussed in Note 3. The shares were valued at $.224 per share or $3,200.
As of June 30, 2017 there are 500,000,000 shares of common stock at par value of $0.001 per share authorized and 4,400,000 issued and outstanding and 25,000,000 shares of (“blank check”) preferred stock, par value $0.001 per share authorized and -0- shares issued and outstanding.
NOTE 6 SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred after June 30, 2017 up through the date these financial statements were available for issuance. During this period, the Company did not have any material recognizable subsequent events.