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, 2008
| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number: 000-29611
FLASHZERO CORP.
(fka Children’s Internet, Inc.)
(Exact name of registrant as specified in its charter)
| Wyoming (formerly Nevada) | 20-1290331 | |
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) |
Stresemannallee 4c
Neuss 41460
Germany
(Address of principal executive offices)
+49 (0)2131-151 08
(Issuer's telephone number)
Children’s Internet, Inc.
2377 Gold Meadow Way, Suite 100
Gold River, CA 95670
(Former Name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☐ No ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer, ” "non-accelerated filer ," “ smaller reporting company, ” and “ emerging growth company ” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | o | Accelerated filer | o |
| Non-accelerated filer | x | Smaller reporting company | x |
| Emerging growth company | o | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ☐
As of June 30, 2008 there were 31,373,738 shares of common stock, $0.001 par value per share, outstanding.
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PART I - FINANCIAL INFORMATION
FLASHZERO CORP.
(Formerly Children’s Internet Inc)
| June 30, 2008 (unaudited) | December 31, 2007 (audited) | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalent | $ | 37,378 | $ | 37,482 | ||||
| Total Current Assets | 37,378 | 37,482 | ||||||
| Fixed Assets | 3,558 | 3,613 | ||||||
| Total Fixed Assets, net | 3,558 | 3,613 | ||||||
| Other Assets | ||||||||
| Deposit-State Board of Equalization | – | 2,000 | ||||||
| Utility Deposit | – | 118 | ||||||
| Total Assets | $ | 40,936 | $ | 43,213 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Overdraft | $ | 22,855 | $ | – | ||||
| Account Payables | 972,040 | 791,622 | ||||||
| Accrued Salaries | 749,319 | 729,319 | ||||||
| Notes payable to Randick, O’Dea & Tooliatos, LLP | – | 264,504 | ||||||
| Notes Payables- current | 320,698 | – | ||||||
| Loan Payable to Related Parties | 115,770 | 101,518 | ||||||
| Accrued Payroll Taxes | 44,472 | 42,942 | ||||||
| Taxes Payable | 8,440 | 4,817 | ||||||
| Total Current Liabilities | 2,233,594 | 1,934,722 | ||||||
| Long Term Liabilities | ||||||||
| Due to related parties | 1,029,806 | 1,028,831 | ||||||
| Total Liabilities | 3,263,400 | 2,963,553 | ||||||
| Stockholders' Deficit: | ||||||||
| Common stock, $0.001 par value; 75,000,000 shares authorized, 31,373,738 shares issued and outstanding | 31,374 | 31,374 | ||||||
| Additional paid-in capital | 2,367,887 | 2,364,660 | ||||||
| Accumulated deficit | (5,621,725 | ) | (5,316,374 | ) | ||||
| Total Stockholders’ Deficit | (3,222,464 | ) | (2,920,340 | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | 40,936 | $ | 43,213 | ||||
The accompanying notes are an integral part of these financial statements.
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FLASHZERO CORP.
(Formerly Children’s Internet Inc)
For the Three Months Ended | For the Three Months Ended | For the Six Months Ended | For the Six Months Ended | |||||||||||||
| Revenue | $ | – | $ | 191 | $ | – | $ | 383 | ||||||||
| Cost of revenue | – | 25 | – | 51 | ||||||||||||
| Gross Profit | – | 166 | – | 332 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Depreciation | (1,087 | ) | – | (2,173 | ) | – | ||||||||||
| General & administrative expenses | (113,741 | ) | (280,650 | ) | (276,471 | ) | (561,300 | ) | ||||||||
| Total Operating Expenses | (114,828 | ) | (280,650 | ) | (278,644 | ) | (560,866 | ) | ||||||||
| Loss from operation | (114,828 | ) | (280,484 | ) | (278,644 | ) | (560,866 | ) | ||||||||
| Other Income / (Expense) | (14,071 | ) | (10,813 | ) | (26,707 | ) | (21,626 | ) | ||||||||
| Loss Before Tax | (128,899 | ) | (291,297 | ) | (305,351 | ) | (582,492 | ) | ||||||||
| Taxation | – | – | – | – | ||||||||||||
| Net Loss | $ | (128,899 | ) | $ | (291,297 | ) | $ | (305,351 | ) | $ | (582,492 | ) | ||||
| Income per share | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.02 | ||||||||
| Weighted average shares outstanding | 26,873,738 | 26,873,738 | 26,873,738 | 26,873,738 | ||||||||||||
The accompanying notes are an integral part of these financial statements.
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FLASHZERO CORP.
(Formerly Children’s Internet Inc)
STATEMENT OF CHANGES IN EQUITY(DEFICIT)
For the Period Ended June 30, 2008 and 2007
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid in | Accumulated | Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance – January 1, 2007 | 26,873,738 | $ | 26,874 | $ | 2,262,622 | $ | (4,150,386 | ) | $ | (1,860,890 | ) | |||||||||
| Loss for the period ended March 31, 2007 | – | – | – | (291,629 | ) | (291,629 | ) | |||||||||||||
| Balance – March 30, 2007 | 26,873,738 | 26,874 | 2,262,622 | (4,442,015 | ) | (2,152,519 | ) | |||||||||||||
| Loss for the period ended June 30, 2007 | – | – | – | (291,297 | ) | (291,297 | ) | |||||||||||||
| Balance – June 30, 2007 | 26,873,738 | $ | 26,874 | $ | 2,262,622 | $ | (4,733,312 | ) | $ | (2,443,816 | ) | |||||||||
| Balance – January 1, 2008 | 31,373,738 | $ | 31,374 | $ | 2,364,660 | $ | (5,316,374 | ) | $ | (2,920,340 | ) | |||||||||
| Loss for the period ended March 31, 2008 | – | – | 2,000 | (176,452 | ) | (174,452 | ) | |||||||||||||
| Balance – March 30, 2008 | 31,373,738 | 31,374 | 2,366,660 | (5,492,826 | ) | (3,094,792 | ) | |||||||||||||
| Loss for the period ended June 30, 2008 | – | – | 1,227 | (128,899 | ) | (127,672 | ) | |||||||||||||
| Balance – June 30, 2008 | 31,373,738 | $ | 31,374 | $ | 2,367,887 | $ | (5,621,725 | ) | $ | (3,222,464 | ) | |||||||||
The accompanying notes are an integral part of these financial statements.
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FLASHZERO CORP.
(Formerly Children’s Internet Inc)
| For the Six Months Period Ended | ||||||||
| June 30, | ||||||||
| 2008 | 2007 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (305,351 | ) | $ | (582,492 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Services perform as capital contribution | – | 7,500 | ||||||
| Utility Deposit | 2,118 | (118 | ) | |||||
| – | – | |||||||
| Changes in assets and liabilities: | ||||||||
| Account payable and accrued expense | 208,426 | 293,271 | ||||||
| Accrued salary | 20,000 | 240,045 | ||||||
| Note payables | 56,194 | 64,504 | ||||||
| Loan payable to related parties | 15,227 | 11,578 | ||||||
| Net cash used in operating activities | (3,386 | ) | 34,288 | |||||
| Cash flows from investing activities: | ||||||||
| Acquisition of Equipment | – | – | ||||||
| Cash flows from financing activities: | ||||||||
| Additional paid in capital | 3,282 | – | ||||||
| Net cash provided by financing activities | 3,282 | – | ||||||
| Net increase (decrease) in cash | (104 | ) | 34,288 | |||||
| Cash, beginning of year | 37,482 | 3,194 | ||||||
| Cash, end of year | $ | 37,378 | $ | 37,482 | ||||
The accompanying notes are an integral part of these financial statements.
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FLASHZERO CORP.
(Formerly Children’s Internet Inc)
Notes to the Financial Statements
June 30, 2008 and 2007
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Children's Internet, Inc. (the Company) was incorporated under the laws of the State of Nevada on September 25, 1996 under the name D.W.C. Installations. At that date, 2,242,000 shares were issued to a small group of shareholders. The Company was primarily inactive until July 3, 2002 when Shadrack Films, Inc. (Shadrack) purchased 2,333,510 newly-issued shares of the Company’s common stock for $150,000, thereby obtaining a majority ownership interest. The total issued and outstanding shares of the Company was increased to 4,575,510 shares as a result of this sale to Shadrack. On December 27, 2002, the Company’s name was changed from D.W.C. Installations to The Children’s
Internet, Inc.
On 15th day of February 2015, the company filed an article of amendment for a change of name to FLASHZERO CORP
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company’s cash is deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount.
Cash and Cash Equivalents
The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. There were $37,381 and $37,482 cash equivalents for the years ended December 31, 2008, and 2007.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic No. 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described below:
Level 1: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
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Level 2: Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates.
Level 3: Level 3 inputs are unobservable inputs.
The following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The methods and assumptions used to estimate the fair values of each class of financial instruments are as follows: Accounts Receivable, and Accounts Payable. The items are generally short-term in nature, and accordingly, the carrying amounts reported on the consolidated balance sheets are reasonable approximations of their fair values.
The carrying amounts of Notes Payable approximate the fair value as the notes bear interest rates that are consistent with current market rates.
Income Taxes
We follow ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.
We adopted ASC 740-10-25 (“ASC 740-10-25”) with regard to uncertainty income taxes. ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures. We had no material adjustments to our liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. For the years ended December 31, 2008 and 2007, the diluted loss per share is the same as the basic loss per shares as the inclusion of any potentially dilutive shares would result in anti- dilution due to the net loss incurred by the Company
Recent Accounting Pronouncements
The Company has implemented all applicable 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 might have a material impact on its financial position or results of operations.
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NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has no revenue and has accumulated deficit of $5,621,725 as of June 30, 2008. The Company requires capital for its contemplated operational activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.
NOTE 4 – INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss, and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21% is being used.
Net deferred tax assets consist of the following components as of:
June 30, 2008 | June 30, 2007 | |||||||
| Federal income tax benefit attributable to: | ||||||||
| Current Operations | $ | – | $ | – | ||||
| Less: valuation allowance | – | – | ||||||
| Net provision for Federal income taxes | $ | – | $ | – |
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the fiscal years ending, due to the following:
June 30, 2008 | June 30, 2007 | |||||||
| Deferred tax asset attributable to: | ||||||||
| Net operating loss carryover | $ | (5,621,725 | ) | $ | (5,316,374 | ) | ||
| Less: valuation allowance | 5,621,725 | 5,316,374 | ||||||
| Net deferred tax asset | $ | – | $ | – | ||||
At June 30, 2008, the Company had net operating loss carry forwards of approximately $5,621,725 that may be offset against future taxable income. No tax benefit has been reported in the June 30, 2008 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2015.
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NOTE 5 – SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were issued and has identified the following events to disclose in these financial statements.
On 15th day of February 2015, the company filed an article of amendment for a change 0.of name to FLASHZERO CORP
On April 1, 2022, CS Diagnosis of Germany acquired the majority control of FlashZero. CS Diagnostics is a pharmaceutical international wholesaler and manufacturer of medical technology with all necessary licenses. For more than 10 years we have been supplying national and international specialists, practices, clinics as well as ministries of health and working close with universities, experts and opinion leaders. CS Diagnostics is offering access to international pharmaceutical markets and the service of approval of medical products. Furthermore, CS Diagnostics is developing own products with the aim of maximizing patient benefit. We guarantee the fulfillment of our product promises by means of our own post-market studies and by providing support to customers and users through our experts.”
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Report.
Forward-Looking Statements
The following information contains certain forward-looking statements of management of the Company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may," "could," "expect," "estimate," "anticipate," “plan,” "predict," "probable," "possible," "should," "continue," or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
Critical Accounting Policies and Estimates
The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 period. Actual results could differ from those estimates.
RESULTS OF OPERATIONS
Selected Financial Data
The following selected statement of operations and balance sheet data for the three months ended June 30, 2008 as compared to the three months ended June 30, 2007 were derived from our financial statements and notes thereto included in this report which are unaudited. Historical results are not necessarily indicative of results that may be expected for any future period. The following data should be read in conjunction with "Plan of Operation" below, and our unaudited financial statements, including the related notes to the financial statements.
| For the three months ended June 30, 2008 | For the three months ended June 30, 2007 | |||||||
| Statement of Operations Data: | ||||||||
| Net revenues | $ | – | $ | 166 | ||||
| Operating expenses | $ | (114,828 | ) | $ | (280,650 | ) | ||
| Operating loss | $ | (114,828 | ) | $ | (280,484 | ) | ||
| Net loss | $ | (128,899 | ) | $ | (291,297 | ) | ||
| June 30, 2008 | ||||
| Balance Sheet Data: | ||||
| Total assets | $ | 40,936 | ||
| Total liabilities | $ | 2,233,594 | ||
| Total stockholders' deficit | $ | (3,222,464 | ) | |
Our total operating expenses decreased by $165,822 for the three months ended June 30, 2008, as compared to the three months ended June 30, 2007. The major change was a decrease of ($166,909) in general and administration expenses.
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(Note: The following constituted our business plan during the 2008 and 2009 fiscal years. After an analysis of the lack of progress, the Company filed a Form 15 with the SEC on July 28, 2010. The new Board has determined to seek other opportunities, and so the following Plan of Operation is no longer effective.)
Plan of Operation
This plan of operation contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those described elsewhere in this report.
On September 10, 2002, we entered into a License Agreement with Two Dog Net (‘TDN”) for an exclusive worldwide license to market and sell The Children’s Internet® service. We subsequently replaced the royalty and license agreement with a new Wholesale Sales & Marketing Agreement dated March 3, 2003. The new agreement provides for us to be the exclusive marketers of TDN’s proprietary secure Internet service for children at the pre-school to junior high levels called The Children’s Internet®. We further amended this agreement in February 2005 to decrease the per user fee to TDN from $3.00 to $1.00. In consideration for this decrease of the royalty fee, TDN was granted an option to acquire 18,000,000 shares of the Company’s restricted common stock at an exercise price of $.07 per share for five years from the date of grant. The shares underlying the option have “piggy back” registration rights for a period of one year following any exercise of the option.
TDN did not give written notice to terminate the contract one year prior to the expiration of the initial five-year term. Therefore, the licensing agreement was automatically renewed for an additional five years expiring in 2013.
The Company released The Children’s Internet®, version 9.0, to the market on March 2, 2006. The Company is the exclusive marketer and distributor of The Children's Internet® membership-based service created just for kids. In the August 2004 issue of PC Magazine, The Children's Internet® was ranked as Editors' Choice in the category of "Kids' Browsers and Services," and was voted number one over AOL, EarthLink and MSN Premium 9. Additionally in August 2006, The Children's Internet® was declared winner of Outstanding Products of 2006 by iParenting Media Awards in the software category. Shortly thereafter in September 2006, The Children's Internet® received the coveted National Parenting Center's Seal of Approval.
We believe The Children's Internet® is the most comprehensive, smart solution to the problems inherent to a child’s unrestricted and unsupervised Internet access. We offer a protected online service and "educational super portal" specifically designed for children, pre-school to junior high, providing them with SAFE, real-time access to the World Wide Web; access to hundreds of thousands of the best pre-selected, pre-approved educational and entertaining web pages accessed through a secure propriety browser and search engine.
During 2007, the technology on which the product is based and the functionality of the service was improved. The Company, through TDN, also substantially upgraded the underlying system infrastructure by increasing redundant servers and improving control procedures which in turn increased the reliability of the service. Additionally, during the first quarter of 2007, where appropriate, the Company contracted with third party companies to outsource administrative support services and effectively put in place the infrastructure to support the marketing initiatives. These outsource providers handled telemarketing and the order taking process and media placement.
RESULTS OF OPERATIONS FOR THREE MONTH PERIOD ENDED JUNE 30, 2008 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2007
Revenue
We recognized $0 and $166 revenue during the three months ended June 30, 2008 and 2007, respectively.
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General and Administrative Expenses
During the three months ended June 30, 2008, we incurred general and administrative expenses of ($113,741).
By comparison, during the three months ended June 30, 2007, we incurred general and administrative expenses of ($280,650).
Operating Loss
During the three months ended June 30, 2008 and 2007, we incurred depreciation of ($1,087) and $0, respectively. During the three months ended June 30, 2008 and 2007, we recognized operating losses of ($114,828) and ($280,484), respectively.
Loss before Income Tax
During the three months ended June 30, 2008 and 2007, we incurred other expenses of ($14,071) and ($10,813), respectively. During the three months ended June 30, 2008 and 2007, we recognized losses before income tax of ($128,899) and ($291,297), respectively.
Provision for Income Tax
No provision for income taxes was recorded during the three months ended June 30, 2008 and 2007.
Net Loss
During the three months ended June 30, 2008 and 2007, we recognized net losses of ($128,899) and ($291,297), respectively, due to the factors discussed above.
RESULTS OF OPERATIONS FOR SIX MONTH PERIOD ENDED JUNE 30, 2008 COMPARED TO THE SIX MONTH PERIOD ENDED JUNE 30, 2007
Revenue
We recognized $0 and $332 revenue during the six months ended June 30, 2008 and 2007, respectively.
General and Administrative Expenses
During the six months ended June 30, 2008, we incurred general and administrative expenses of ($276,471).
By comparison, during the six months ended June 30, 2007, we incurred general and administrative expenses of ($561,300).
Operating Loss
During the six months ended June 30, 2008 and 2007, we incurred depreciation of ($2,173) and $0, respectively. During the six months ended June 30, 2008 and 2007, we recognized operating losses of ($278,644) and ($560,866), respectively.
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Loss before Income Tax
During the six months ended June 30, 2008 and 2007, we incurred other expenses of ($26,707) and ($21,626), respectively. During the six months ended June 30, 2008 and 2007, we recognized losses before income taxes of ($305,351) and ($582,492), respectively.
Provision for Income Tax
No provision for income taxes was recorded during the six months ended June 30, 2008 and 2007.
Net Loss
During the six months ended June 30, 2008 and 2007, we recognized net losses of ($305,351) and ($582,492), respectively, due to the factors discussed above.
CASH FLOW
As of June 30, 2008, we had cash or cash equivalents of $37,378, fixed assets of $3,558, no revenue generating activities or other source of income and we had outstanding liabilities of $3,263,400 and a shareholders’ deficit of $(3,222,464).
By comparison, as of December 31, 2007, we had cash or cash equivalents of $37,482, fixed assets of $3,613, no revenue generating activities or other source of income and we had outstanding liabilities of $2,963,553 and a shareholders’ deficit of ($2,920,340).
Consequently, we are now dependent on raising additional equity and/or debt to meet our ongoing operating expenses. There is no assurance that we will be able to raise the necessary equity and/or debt that we will need to fund our ongoing operating expenses.
Future losses are likely to occur as we have no sources of income to meet our operating expenses. As a result of these, among other factors, we received from our registered independent public accountants in their report for the financial statements for the years ended December 31, 2007 and 2006, an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.
CRITICAL ACCOUNTING POLICIES
All companies are required to include a discussion of critical accounting policies and estimates used in the preparation of their financial statements. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are described in Note 2 of our Unaudited Financial Statements above. These policies were selected because they represent the more significant accounting policies and methods that are broadly applied in the preparation of our financial statements.
Inflation
In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future.
Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.
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Off-Balance Sheet Arrangements
Per SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. As of June 30, 2008 we have no off-balance sheet arrangements.
Share-based Compensation
The cost of equity instruments issued to non-employees in return for goods and services is measured by the fair value of the equity instruments issued in accordance with ASC 718, “Compensation - Stock Compensation.” Measurement date for non-employees is the grant date of the stock-based compensation. The cost of employee services received in exchange for equity instruments is based on the grant date fair value of the equity instruments issued.
Recently Issued Accounting Pronouncements
We have reviewed all the recently issued, but not yet effective, accounting pronouncements and do not believe any of these pronouncements will have a material impact on our financial statements.
Contractual Obligations
None.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of June 30, 2008, we carried out an evaluation, under the supervision and with participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based upon that evaluation, we concluded that our disclosure controls and procedures were ineffective to provide reasonable assurance that material information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
In making this evaluation, our Chief Executive Officer and Chief Financial Officer considered the material weaknesses discussed in Management’s Report on Internal Control Over Financial Reporting. Based on this evaluation, we concluded that our disclosure controls and procedures were not effective at a reasonable assurance level as of June 30, 2008 because of the identification of material weaknesses in our internal control over financial reporting. There have been no significant changes made in our internal controls or in other factors that could significantly affect our internal controls during the period covered by this report or subsequent to the end of the period covered by this report. Our size and limited financial resources prevent us from employing sufficient personnel currently to enable us to have an adequate segregation of duties within our internal control system.
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Oswald & Yap
On November 24, 2004, Oswald & Yap, a Professional Corporation (“O&Y”), formerly counsel to the Company, filed a complaint in the Superior Court of California, County of Orange, Case No. 04CC11623, against the Company, seeking recovery of allegedly unpaid legal fees in the amount of $50,984.86 in connection with the legal representation of the Company. Subsequently the amount claimed of unpaid legal fees was reduced to $37,378.43 because it was discovered that O&Y did not properly credit all of the payments that were made by the Company to O&Y. The amount of $37,378.43 was deposited in an escrow account by the Company on July 5, 2005. The complaint includes causes of action for breach of contract. The Company disputes the amounts claimed alleging that O&Y’s services were otherwise unsatisfactory. On May 9, 2005, O&Y submitted an Offer to Compromise for a $0 payment by the Company to O&Y in exchange for mutual releases which the Company rejected.
On February 14, 2005, a cross-claim was filed in the Superior Court of California, County of Orange, Case No. 04CC11623 by the Company against O&Y alleging breach of contract, professional negligence, negligent representation, and breach of good faith and fiduciary duty. The basis of the allegations is that O&Y was retained to assist the Company’s predecessor company in the purchase and acquisition of D.W.C. Installations (“D.W.C.”) with the expectation that D.W.C. had available free-trading shares such that the Company could immediately raise capital on the relevant markets and that in advising the Company through the purchase, O&Y failed to properly advise the Company as to the status of D.W.C. and its shares, which in fact were not free-trading. As a result of this conduct, the Company alleges damages in an unspecified amount but including purchase costs of D.W.C., extended operation costs, refiling costs, audit costs, legal fees, loan fees, lost market share, and costs for registration. O&Y has vigorously disputed the claims set forth in the cross-complaint and has indicated its intention, should it prevail in its defense, to institute a malicious prosecution action against the Company, Nasser Hamedani, Sholeh Hamedani and Company counsel. Litigation of this matter is currently stayed pending the SEC Complaint below.
SEC Complaint
On September 27, 2006, the Commission filed a complaint (“Complaint”) against The Children’s Internet, Inc. (“TCI”) and its principles, Nasser Hamedani and Sholeh Hamedani (collectively, the “Hamedanis”) and Two Dog Net, Inc. (“TDN”) and two of its stock promoters, Peter Perez (“Perez”) and Cort Poyner (“Poyner”). In the Complaint, the Commission alleged that, from February 2002 through June 2005, the Hamedanis purportedly on behalf of TCI, fraudulently obtained approximately $5.5 million from public investors. The Hamedanis diverted a significant amount of the investors’ money to pay personal expenses and also hundreds of thousands of dollars in undisclosed commissions to two stock promoters, Perez and Poyner.
On March 19, 2008, the Court entered a final judgment against Perez directing him to pay $85,000 in disgorgement and prejudgment interest.
Lumber & Company
On April 8, 2008, Lumer & Company filed a claim in the Superior Court of California, City and County of San Francisco for breach of contract related to unpaid accounting service fees, CGC 08-474007. On June 25, 2008, a judgment was entered against the Company for $58,175.66, including prejudgment interest and cost.
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As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company had no “Unregistered Sales” of its securities during the period covered by this report.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
None.
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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.
| Date: November 17, 2022 | FLASHZERO CORP. |
| (fka The Children’s Internet, Inc.) | |
| /s/ Thomas Fahrhöfer | |
| Thomas Fahrhöfer | |
| CEO and Director | |
| (Chief Executive Officer and Principal Executive Officer) | |
| /s/ Thomas J. Migotsch | |
| Thomas J. Migotsch | |
| CFO and Director | |
| (Chief Financial Officer and Principal Accounting Officer) |
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