UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10/A
Amendment No. 3
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934
LZG INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
FLORIDA (State or other jurisdiction of incorporation or organization) | 98-0234906 (I.R.S. Employer Identification No.) |
455 EAST 400 SOUTH, SUITE #5 , SALT LAKE CITY, UTAH (Address of principal executive offices) | 84111 (Zip code) |
Registrant’s telephone number, including area code: (435) 674-1282
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of class)
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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer [ ] Non-accelerated filer [ ] | Accelerated filer [ ] Smaller reporting company [X] |
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TABLE OF CONTENTS
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
ITEM 6. EXECUTIVE COMPENSATION
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 15
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 16
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCI AL DISCLOSURE 26
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
EXPLANATORY NOTE
On May 26, 2010, LZG International, Inc. filed a General Form for Registration of Securities on Form 10. The Securities and Exchange Commission (the “SEC”) conducted a full review of our registration statement and requested that we revise and amend certain disclosures. Accordingly, we have revised and expanded our disclosures to address the SEC’s concerns and included audited financial statements for the year ended May 31, 2010. In addition, on July 14, 2010 we changed our independent certified public accounting firm, which is discussed under revised “Item 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.”
This registration statement shall become effective on July 25, 2010 and from that date forward we will be subject to the requirements of Regulation 13A under the Exchange Act, which will require the Company to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.
Unless otherwise noted, references in this registration statement to “LZG,” “Company,” “we,” “our,” “us” or the “Registrant,” refer to LZG International, Inc.
FORWARD-LOOKING STATEMENTS
There are statements in this registration statement that are not historical facts. These “forward-looking statements” can be identified by use of terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions. You should be aware that these forward-looking s tatements are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire registration statement carefully; especially the risks discussed under the section entitled “Risk Factors.”
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Although management believes that the assumptions underlying the forward-looking statements included in this registration statement are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward-looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legis lative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this registration statement will in fact transpire. You are cautioned to not place undue reliance on these forward-looking statements, which speak only as of the date of this filing. We do not undertake any obligation to update or revise any forward-looking statements.
ITEM 1. BUSINESS
Historical Development
LZG International, Inc. was incorporated in the state of Florida on May 22, 2000, as LazyGrocer.Com, Inc. We intended to establish an online grocery solution, but we were unable to raise sufficient capital to continue operations and limited our operations in November 2001. On August 28, 2009, the Company’s name was changed to LZG International, Inc.
Our Business
Our business purpose is to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12 months and beyond will be to achieve long-term growth potential through a combination with a business, rather than immediate, short-term earnings. Our search for a business opportunity will not be limited to any particular geographical area or industry, including both U.S. and international companies. Our management has unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions and other factors. Our management believes that companies who desire a public market to enhance liquidity for current stockholders or plan to acquire additional assets through issuance of securities rather than for cash will be potential merger or acquisition candidates.
We are a "blank check" company based on our proposed business activities. The United States Securities and E xchange Commission (the “SEC”) defines those companies as "any development stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Exchange Act, and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies." Under SEC Rule 12b-2 under the Exchange Act, we also qualify as a “shell company” because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.
The analysis of new business opportunities will be undertaken by or under the supervision of our management. As of the date of this filing, we have not entered into any definitive agreement with any party, nor have there been any specific discussions with any potential business combination candidate regarding business opportunities for the Company. We have unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In our efforts to analyze potential acquisition targets, we intend to consider the following factors:
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·
Potential for growth, indicated by new technology, anticipated market expansion or new products;
·
Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;
·
Strength and diversity of management, either in place or scheduled for recruitment;
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Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;
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The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;
·
The extent to which the business opportunity can be advanced;
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The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and
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Other relevant factors.
In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and m ake a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to our limited capital available for investigation, we may not discover or adequately evaluate adverse facts about the opportunity to be acquired. In addition, we will be competing against other entities that possess greater financial, technical and managerial capabilities for identifying and completing business combinations.
In evaluating a prospective business combination, we will conduct as extensive a due diligence review of potential targets as possible; however, none of our management are professional business analysts. (See, Item 5: “Directors and Execu tive Officers,” below.) Our management has not had experience with mergers and acquisitions of business opportunities and has not been involved with an initial public offering. Potential investors must recognize that due to our management’s inexperience we may not adequately evaluate a potential business opportunity.
We are unable to predict the time as to when, and if we may ever actually participate in any specific business endeavor. We anticipate that proposed business ventures will be made available to us through personal contacts of our directors, executive officers and principal stockholders, professional advisors, broker dealers in securities, venture capital personnel, members of the financial community and others who may present unsolicited proposals. In certain cases, we may agree to pay a finder’s fee or to otherwise compensate the persons who submit a potential business endeavor in which we eventually participate. Such persons may include our directors, executive officers and beneficial owners of our securities or their “affiliates.” In that event, such fees may become a factor in negotiations regarding any potential venture and, accordingly, may present a conflict of interest for such individuals. Management does not presently intend to acquire or merge with any business enterprise in which any member has a prior ownership interest.
In addition, certain conflicts of interest exist or may develop between LZG and our officers and directors. Our management has other business interests to which they currently devote attention, which include their primary employment and management of other shell reporting companies. (See, Item 5: “Directors and Executive Officers,” below.) They may be expected to continue to devote their attention to these other business interests although management time should be devoted to our business. Also, in the process of negotiations for an
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acquisition or merger, our management may consider their own personal pecuniary benefit or the interests of other shell companies they are affiliated with rather than the best interests of LZG and our stockholders.
We presently do not foresee entering into a merger or acquisition transaction with any business with which our officers or directors are currently affiliated. We may acquire or merge with companies of which our management’s affiliates or associates have a direct or indirect ownership interest. If we determine in the future that a transaction with an affil iate would be in our best interest, we are permitted by Florida law to enter into such a transaction if:
·
The material facts regarding the relationship or interest of the affiliate in the contract or transaction are disclosed or are known to the board of directors. The board authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors constitute less than a quorum; however, a single director may not authorize the contract or transaction; or
·
The material facts regarding the relationship or interest of the affiliate in the contract transaction are disclosed or are known to the stockholders entitled to vote on the transaction, and the contract or transaction is specifically approved by vote of the stockholders; or
·
The contract or transaction is fair to the Company at the time it is authorized, approved or ratified by the board of directors or the stockholders.
We expect that our due diligence will encompass, among other things, meetings with the target business’s incumbent management and inspection of its facilities, as necessary, as well as a review of financial and other i nformation which is made available to the Company. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage. Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target business before we consummate a business combination. We anticipate that we will rely upon funds provided by advances and/or loans from management and significant stockholders to conduct investigation and analysis of any potential target companies or businesses. We may also rely upon the issuance of our common stock in lieu of cash payments for services or expenses related to any analysis. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds available to us, would be desirable. We will be particularly dependent in making decisions u pon information provided by the promoters, owners, sponsors or other persons associated with the target business seeking our participation.
The time and costs required to select and evaluate a target business and to structure and complete a business combination cannot presently be ascertained with any degree of certainty. Any costs incurred with respect to the indemnification and evaluation of a prospective business combination that is not ultimately completed will result in a loss to the Company. Also, substantial fees are often paid in connection with the completion of all types of acquisitions, reorganizations or mergers, ranging from a small amount to as much as $600,000 or more. These fees are usually divided among promoters or founders or finders, after deduction of legal, accounting and other related expenses, and it is not unusual for a portion of these fees to be paid to members of management or to principal sto ckholders as consideration for their agreement to retire a portion of the shares of common stock owned by them. Management may actively negotiate or otherwise consent to the purchase of all or any portion of their common stock as a condition to, or in connection with, a proposed reorganization, merger or acquisition. It is not anticipated that any such opportunity will be afforded to other stockholders or that such other stockholders will be afforded the opportunity to approve or consent to any particular stock buy-out transaction. In the event that any such fees are paid, they may become a factor in negotiations regarding any potential acquisition or merger by us, and accordingly, may also present a conflict of interest for such individuals. We have no present arrangements or understandings respecting any of these types of fees or opportunities and we have not adopted any procedures or policies for the review, approval or ratification of related party transactions.
Our common stock is not publicly traded at this time and we cannot assure that a market will develop or that a stockholder ever will be able to liquidate his investments without considerable delay, if at all. If a market develops,
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our shares will likely be subject to the rules of the Penny Stock Suitability Reform Act of 1990. The liquidity of penny stock is affected by specific disclosure procedures required by this Act to be followed by all broker-dealers, including but not limited to, determining the suitability of the stock for a particular customer, and obtaining a written agreement from the customer to purchase the stock. This rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell our securities in any future market.
Form of Acquisition
The manner in which we participate in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of the Company and the promoters of the opportunity, and the relative negotiating strength of the Company and such promoters.
It is likely that we will acquire our participation in a business opportunity through the issuance of our common stock or other securities. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under Section 368(a) (1) of the Internal Revenue Code o f 1986, as amended (the "Code") depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Code, all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares of the surviving entity. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution to the equity of those persons who were our stockholders prior to such reorganization.
Our present stockholders will likely not have control of a majority of the voting securities of the Company following a reorganization transaction. &nbs p;As part of such a transaction, all or a majority of our directors may resign, and one or more new directors may be appointed, without any vote by stockholders.
In the case of an acquisition, the transaction may be accomplished upon the sole determination of management without any vote or approval by stockholders. In the case of a statutory merger or consolidation directly involving the Company, it will likely be necessary to call a stockholders' meeting and obtain the approval of the holders of a majority of the outstanding securities. The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, management will seek to structure any such transaction so as not to require stockholder approval.
It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs incurred in the related investigation might not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.
In addition, Form 8-K of the SEC regarding shell companies and transactions with shell companies requires the filing of all information about an acquired company that would have been required to have been filed had any such company filed a Form 10 Registratio n Statement with the SEC, along with required audited, interim and pro forma financial statements, within four business days of the closing of any such transaction; this may eliminate many of the perceived advantages of these types of transactions. These regulations also deny the use of Form S-8 for the registration of securities of a shell company, and limit the use of Form S-8 to a reorganized shell company until the expiration of 60 days from when any such entity is no longer considered to be a shell company. This prohibition could further restrict opportunities for us to acquire companies that may already have stock option plans in place that cover numerous employees. In such an instance, there may be no exemption from registration for the issuance of securities in any business combination to these employees, thereby necessitating the filing of a registration
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statement with the SEC to complete any such reorganization, and incurring the time and expense costs that are normally avoided by reverse reorganizations.
Competition
Additionally, we are in a highly competitive market for a small number of business opportunities which could reduce the likelihood of consummating a successful business combination. We are, and will continue to be, an insignificant participant in the business of seeking mergers with, joint ventures with and acquisitions of small private and public entities. A large number of established and well-financed entities, including small public companies and venture capital firms, are active in mergers and acquisitions of companies that may be desirable target candida tes for the Company. Nearly all these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do; consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. These competitive factors may reduce the likelihood of our identifying and consummating a business combination.
Effect of Existing or Probable Governmental Regulations on Business
Upon effectiveness of this registration statement, we will be subject to the Sarbanes-Oxley Act of 2002. This Act creates a strong and independent accounting oversight board to oversee the conduct of auditors, of public companies and to strengthen auditor independence. It also requires steps to enhance the direct responsibility of senior members of man agement for financial reporting and for the quality of financial disclosures made by public companies; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members’ appointment, and compensation and oversight of the work of public companies’ auditors; prohibits certain insider trading during pension fund blackout periods; and establishes a federal crime of securities fraud, among other provisions.
Section 14(a) of the Exchange Act requires all companies with securities registered pursuant to Section 12(g) of the Exchange Act to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to our stockholders at a special or annual meeting thereof or pursuant to a written consent will require us to provide our stockholders with the inform ation outlined in Schedules 14A or 14C of Regulation 14A; preliminary copies of this information must be submitted to the SEC at least 10 days prior to the date that definitive copies of this information are forwarded to our stockholders.
We will also be required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the SEC on a regular basis, and will be required to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on Form 8-K.
If we are acquired by a “non-reporting issuer” under the Exchange Act, we will be subject to the “back-door registration” requirements of the SEC that will require us to file a Current Report on Form 8-K that will include all informa tion about such “non-reporting issuer” as would have been required to be filed by that entity had it filed a Form 10 Registration Statement with the SEC.
We will also be prohibited from utilizing Form S-8 for the registration of our securities until we have not been a shell company for at least 60 days. Under subparagraph (i) of Rule 144, no sales of “restricted securities” issued by us while we are a shell company can be publicly sold for at least one year from when we file the Form 10 information about any acquisition, reorganization or merger that results in us no longer being considered to be a shell company.
Finally, the SEC, state securities commissions and NASAA (North American Securities Administrators Association) have expressed an interest in adopting policies that will streamline the registration process and make it easier fo r smaller reporting companies to have access to the public capital markets. The present laws, rules and regulations designed to promote availability to the smaller reporting company of these capital markets and similar
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laws, rules and regulations that may be adopted in the future will substantially limit the demand for blank check or shell companies like us, and may make the use of these companies obsolete.
Employees
We presently do not have employees. Our directors and officers are engaged in outside business activities and anticipate that they will devote to our business very limited time until the acquisition of a successful business opportunity has been identified. We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination.
Reports to Security Holders
Upon effectiveness of this registration statement, we will be required to comply with the reporting requirements of the Exchange Act. We will be required to file annual, quarterly and other reports with the SEC. We will also be subject to the proxy solicitation requirements of the Exchange Act and, accordingly, will furnish an annual report with audited financial statements to our stockholders. Copies of this registration statement may be inspected, without charge, at the SEC’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the opera tion of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Copies of this material also should be available through the Internet by using the SEC’s EDGAR Archive, which is located at http://www.sec.gov. As of the date of this filing, the Company does not have an Internet web site.
ITEM 1A. RISK FACTORS
AN INVESTMENT IN THE COMPANY IS HIGHLY SPECULATIVE IN NATURE AND INVOLVES A HIGH DEGREE OF RISK.
Risks Related to Our Business
We have extremely limited assets and no source of revenue.
We have virtually no assets and have had no revenues since inception. We will not receive revenues until we select an industry in which to commence business or complete an acquisition, reorganization or merger. We can provide no assurance that any selected or acquired business will produce any material revenues for us or our stockholders, or that any such business will operate on a profitable basis.
We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until the consummation of a merger or other business combination with a private company. This may result in our incurring a net operating loss that will increase unless we consummate a business combination with a profitable business. We cannot assure you that we can identify a suitable business opportunity and consummate a business combination, or that any such business will be profitable at the time of its acquisition by the Company or ever.
We face a number of risks associated with potential acquisitions, including the possibility that we may incur substantial debt which could adversely affect our financial condition.
We intend to use reasonable efforts to complete a merger or other business combination with an operating business. Such combination will be accompanied by risks commonly encountered in acquisitions, including, but not limited to, difficulties in integrating the operations, technologies, products and personnel of the acquired companies and insufficient revenues to offset increased expenses associated with acquisitions. Failure to manage and successfully integrate acquisitions we make could harm our business, our strategy and our oper ating results in a material way. Additionally, completing a business combination is likely to increase our expenses and it is possible that we may incur substantial debt in order to complete a business combination, which can adversely affect our financial condition. Incurring a substantial amount of debt may require us to use a significant portion of our cash flow to pay
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principal and interest on the debt, which will reduce the amount available to fund working capital, capital expenditures, and other general purposes. Our indebtedness may negatively impact our ability to operate our business and limit our ability to borrow additional funds by increasing our borrowing costs, and impact the terms, conditions, and restrictions contained in possibl e future debt agreements, including the addition of more restrictive covenants; impact our flexibility in planning for and reacting to changes in our business as covenants and restrictions contained in possible future debt arrangements may require that we meet certain financial tests and place restrictions on the incurrence of additional indebtedness and place us at a disadvantage compared to similar companies in our industry that have less debt.
Future success is highly dependent on the ability of management to locate and attract a suitable acquisition.
The nature of our operations is highly speculative, and there is a consequent risk of loss of an investment in the Company. The success of our plan of operation will depend to a great extent on the operations, financial condition and management of a yet to be identified business opportunity. W hile management intends to seek business combination(s) with entities having established operating histories, we cannot provide any assurance that we will be successful in locating candidates meeting that criterion. In the event we complete a business combination, the success of our operations may be dependent upon management of the successor firm or venture partner firm and numerous other factors beyond our control.
Management intends to devote only a limited amount of time to seeking a target company which may adversely impact our ability to identify a suitable acquisition candidate.
While seeking a business combination, management anticipates devoting limited time to our affairs. Our officers have not entered into written employment agreements with the Company and are not expected to do so in the foreseeable future. This limited commi tment may adversely impact our ability to identify and consummate a successful business combination.
There can be no assurance that we will successfully consummate a business combination.
We can give no assurances that we will successfully identify and evaluate suitable business opportunities or that we will conclude a business combination. Management has not identified any particular industry or specific business within an industry for evaluation. We cannot guarantee that we will be able to negotiate a business combination on favorable terms. At the date of this filing, we have no arrangement, agreement or understanding with respect to engaging in a merger with, joint venture with or acquisition of, a private or public entity. No assurances can be given that we will successfully identify and evaluate suitable business opportunitie s or that we will conclude a business combination.
The terms for any future business combination that involve related parties or affiliates may not be on terms that are comparable to what could be obtained from unaffiliated third parties.
Our management and affiliates will play an integral role in establishing the terms for any future business combination. We do not have policies and procedures in place to govern transactions with related parties or affiliates, accordingly, these transactions may be negotiated between related parties without “arms length” bargaining and, as a result, the terms of these transactions may be different than transactions negotiated between unrelated persons.
Reporting requirements under the Exchange Act and compliance with the S arbanes-Oxley Act of 2002, including establishing and maintaining acceptable internal controls over financial reporting, are costly.
The Company currently has no business that produces revenues; however, the rules and regulations pursuant to the Exchange Act require a public company to provide periodic reports which will require the Company to engage legal, accounting and auditing services. The engagement of such services can be costly and the Company is likely to incur losses which may adversely affect the Company’s ability to continue as a going concern. Additionally, the
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Sarbanes-Oxley Act of 2002 will require the Company to establish and maintain adequate internal contr ols and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act of 2002 and the limited time that management will devote to the Company may make it difficult for the Company to establish and maintain adequate internal controls over financial reporting. In the event the Company fails to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our financial condition and result in loss of investor confidence and a decline in our share price.
The time and cost of preparing a private company to become a public reporting company may preclude us from entering into a merger or acquisition with the most attractive private companies.
Target companies that fail to comply with SEC repo rting requirements may delay or preclude acquisition. Sections 13 and 15(d) of the Exchange Act require reporting companies to provide certain information about significant acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare these statements may significantly delay or essentially preclude consummation of an acquisition. Otherwise suitable acquisition prospects that do not have or are unable to obtain the required audited statements may be inappropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.
Any potential acquisition or merger with a foreign company may subject us to additional risks.
If we enter into a business combination with a foreign company, we will be subject to risks inherent in business operations outside of the United States. These risks include, for example, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargos, risks related to shipment of raw materials and finished goods across national borders and cultural and language differences. Foreign economies may differ favorably or unfavorably from the United States economy in growth of gross national product, rate of inflation, market development, rate of savings, and capital investment, resource self-sufficiency and balance of payments positions, and in other respects.
Risks Related to Our Stockholders and Shares of Common Stock
There is currently no trading market for our common stock, and liquidity of shares of our comm on stock is limited.
Shares of our common stock are not registered under the securities laws of any state or other jurisdiction, and accordingly there is no public trading market for the common stock. Further, no public trading market is expected to develop in the foreseeable future unless and until we complete a business combination with an operating business or the Company files and obtains effectiveness of a registration statement under the Securities Act of 1933, as amended (the “Securities Act”). Therefore, outstanding shares of common stock cannot be offered, sold, pledged or otherwise transferred unless subsequently registered pursuant to, or exempt from registration under, the Securities Act and any other applicable federal or state securities laws or regulations. Stockholders may rely on the exemption from registration provided by Rule 144 of the Securities Act (“Rule 144”), subject t o certain restrictions; namely, common stock may not be sold until one year after:
(i) the completion of a business combination with a private company in a reverse merger or reverse takeover transaction after which the Company would cease to be a “shell company” (as defined in Rule 12b-2 under the Exchange Act) and
(ii) the disclosure of certain information on a Current Report on Form 8-K within four business days thereafter, and only if the Company has been current in all of its periodic SEC filings for the 12 months preceding the contemplated sale of stock.
Compliance with the criteria for securing exemptions under federal securities laws and the securities laws of the various states is extremely complex, especially in respect of those exemptions affording flexibility and the e limination of trading restrictions in respect of securities received in exempt transactions and subsequently disposed of without registration under the Securities Act or state securities laws.
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We have never paid dividends on our common stock.
We have never paid dividends on our common stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available for payment of dividends will be re-invested into the Company to further our business strategy.
We cannot assure you that following a business combination with an operating business, our common st ock will be listed on NASDAQ or any other securities exchange.
Following a business combination, we may seek the listing of our common stock on NASDAQ or the NYSE AMEX. However, we cannot assure you that following such a transaction, we will be able to meet the initial listing standards of either of those or any other stock exchange. After completing a business combination, until our common stock is listed on the NASDAQ or another stock exchange, we expect that our common stock would be eligible to trade on the OTC Bulletin Board, another over-the-counter quotation system, or on the “pink sheets,” where our stockholders may find it more difficult to dispose of shares or obtain accurate quotations as to the market value of our common stock. In addition, we would be subject to an SEC rule that, if we failed to meet the criteria set forth in such rule, imposes various practice requirements on broker-dealer s who sell securities governed by the rule to persons other than established customers and accredited investors. Consequently, such rule may deter broker-dealers from recommending or selling our common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital following a business combination.
It is likely that our common stock will be considered “penny stock,” which may make it more difficult for investors to sell their shares due to suitability requirements.
Our common stock may be deemed to be “penny stock” as that term is defined under the Exchange Act. Penny stocks generally are equity securities with a price of less than $5.00. Penny stock rules impose additional sales practice requirements on broker-dealers who sell to persons other than establ ished customers and “accredited investors.” The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000 jointly with their spouse.
The penny stock rules require a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. A broker/dealer must receive a written agreement to the transaction from the investor setting forth the identity and quantity of the penny stock to be purchased. These requirement s may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.
We expect to issue more shares in a merger or acquisition, which will result in substantial dilution.
Our Articles of Incorporation authorize the Company to issue an aggregate of 120,000,000 shares of capital stock, of which 100,000,000 are shares of common stock and 20,000,000 are shares of preferred stock. Any merger or acquisition effected by the Company may result in the issuance of additional securities without stockholder approval and may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. Moreover, our commo n stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm’s-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders. Our board of directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or preferred stock are issued in connection with a business combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of common stock might be materially adversely affected.
11
ITEM 2. FINANCIA L INFORMATION
Management’s Discussion and Analysis of Financial Condition and Results of Operation
We are currently a development stage company and have not recorded revenues from operations to date. We have not established an ongoing source of revenues sufficient to cover our operating costs. These conditions raise substantial doubt about our ability to continue as a going concern. We are currently devoting our efforts to obtain capital from management and significant stockholders to cover minimal expenses; however, there is no assurance that additional funding will be available. Our ability to continue as a going concern during the long term is dependent upon our ability to find a suitable company and acquire or enter into a merger with such company.
For the year ended May 31, 2010, we had $11,750 cash and total liabilities of $31,603 compared to $464 cash and total liabilities of $11,230 at the year ended May 31, 2009. During the past two years, we have relied on loans from management to fund our operations (See Item 7, below) and we have incurred debt.
During the next 12 months we anticipate incurring costs related to the filing of Exchange Act reports, and investigating, analyzing and consummating an acquisition. We believe we will be able to meet these costs through funds provided by management and significant stockholders.
The type of business opportunity with which we acquire or merge will affect our profitability for long term. We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new p roducts or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur through a public offering.
Our management has not had any preliminary contact or discussions with any representative of any other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event , we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, be cause it will not permit us to offset potential losses from one venture against gains from another.
We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which
12
will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capi tal resources and would be considered material to investors.
ITEM 3. PROPERTIES
We neither rent nor own any properties. We utilize the office space and equipment of our President, Mr. Popp, without charge. We currently have no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial Ownership
The following tables set forth the beneficial ownership of our outstanding common stock by our management and each person or group known by us to own beneficially more than 5% of our voting stock. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act, and generally includes voting or investment power with respect to the securities. Except as indicated by footnote, the persons named in the table below have sole voting power and investment power with respect to all shares of common stock shown as beneficially owned by them. The percentage of beneficial ownership is based on 250,556 shares of common stock outstanding as of July 19, 2010.
CERTAIN BENEFICIAL OWNERS | |||
Title of class | Name and address of beneficial owner | Amount and nature of be neficial ownership | Percent of class |
Common | Pierre Bosse 302-88 Murray Street Ottawa, Ontario Canada K1N5M6 | 15,044 | 6.00 |
Common | Ben Bjarnason 2302-470 Laurier Ave . W Ottawa, Ontario Canada K1R7W9 | 15,044 | 6.00 |
Common | Steve Biro 20 Basfard Cres. Stittsville, Ontario Canada, K2S1G7 | 15,044 | 6.00 |
Common | First Equity Holdings Corp. 2157 S. Lincoln Street Salt Lake City, UT 84106 | 50,310 | 20.08 |
13
MANAGEMENT | |||
Title of class | Name of beneficial owner | Amount and nature of beneficial ownership | Percent of class |
Common | Greg L. Popp | 12,000 | 4.79 |
Common | Directors and officers as a group | 12,000 | 4.79 |
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers and their respective ages, positions, and biographical information are set forth below. Our bylaws require a minimum of one director and our current directors serve until our next annual meeting or until each is replaced by a qualified director. Our executi ve officers are chosen by our board of directors and serve at its discretion. There are no existing family relationships between or among any of our executive officers or directors.
Name | Age | Position Held | Term of Director |
Greg L. Popp | 41 | Director and President | August 5, 2008 until next annual meeting |
L. Lee Perry | 66 | Director and Secretary/Treasurer | A ugust 5, 2008 until next annual meeting |
Greg L. Popp: From April 2005 to the present, Mr. Popp is the President of Marine Life Sciences, LLC, a Nevada company that wholesales and retails neutraceutical products to companies. In addition, during the past five years he has also served as Director and President of Investrio, Inc., a Utah corporation which has developed a software platform and educational products for consumers. Neither Marine Life Sciences nor Investrio, Inc. is an affiliate or subsidiary of LZG.
His professional qualifications include an MBA and extensive experience with small company operations along with experience as a director and President of Wings & Things, Inc., a blank check company that has a class of securities registered with the SEC pursuant to Section 12.
He has not been involved in any legal proceedings during the past ten years that are material to an evaluation of his ability or integrity.
L. Lee Perry: Ms. Perry serves as President of Business Builders, Inc., a privately held Utah corporation that provides business consulting for small businesses which she co-founded in 1997. Her business experience includes operating a small business and experience as a director and Secretary/Treasurer of Globalwise Investments, Inc., a blank check company that has a class of securities registered with the SEC pursuant to Section 12. Until March 2008, she served as a director of Wings & Things, Inc., a reporting company.
She has not been involved in any legal proceedings during the past ten years that are material to an evaluation of her ability or integrity.
ITEM 6. EXECUTIVE COMPENSATION
Executive Officer Compensation
Our principal executive officer, Mr. Popp, did not receive compensation during the past fiscal year ended May 31, 2010. None of our named executive officers received any cash or non-cash compensation during the past three fiscal years or had outstanding equity awards at year end. We have not entered into employment contracts with our executive officers and their compensation, if any, will be determined at the discretion of our board of directors.
14
We currently do not have a compensation committee and during the last completed fiscal year our board of directors did not consider or approve any executive officer compensation.
We do not offer retirement benefit plans to our executive officers, nor have we entered into any contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to a named executive officer at, or in connection with, the resignation, retirement or other termination of a named executive officer, or a change in control of the company or a change in the named executive officer’s responsibilities following a change in control.
Director Compensation
We do not have any standard arrangement for compen sation of our directors for any services provided as director, including services for committee participation or for special assignments.
As of the date of this filing, we do not have a Chairman of the Board because we have only two directors and our operations are minimal. In addition, we do not have any independent board members. Also, it is the responsibility of our board of directors to oversee and consider all relevant credit, liquidity and operational risks.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions with Related Parties
The following inform ation summarizes transactions we have either engaged in for the past three fiscal years, or propose to engage in, involving our executive officers, directors, more than 5% stockholders, or immediate family members of these persons. These transactions were negotiated between related parties without “arms length” bargaining and, as a result, the terms of these transactions may be different than transactions negotiated between unrelated persons.
During the year ended May 31, 2009, our Director and President, Greg L. Popp, loaned $2,500 to the Company on November 7, 2008 and on February 9, 2009, he loaned an additional $3,500. These loans carried 4% interest per annum, had no repayment terms and were not collateralized. These funds were used for operational expenses.
During the year ended May 31, 2010, Mr. Popp loaned the Company an additional $ 17,500 . He loaned $5, 000 on December 9, 2009 , $2,500 on February 12, 2010 and $10,000 on April 20, 2010. These loans carried 4% interest per annum, had no repayment terms and were not collateralized. These funds were and are being used for operational expenses. On April 20, 2010, all of the foregoing loans were combined into one promissory note which carries interest at 5% and matures in June 2012.
Director Independence
None of our directors are independent directors as defined by NASDAQ Stock Market Rule 4200(a) (15). This rule defines persons as “independent” who are neither officers nor employees of the company and have no relationships that, in the opinion of the board, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors.
ITEM 8. LEGAL PROCEEDINGS
We are not a party to any proceedings or threatened proceedings as of the date of this filing.
15
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock is not listed to trade on any publi c trading market. We do not have any outstanding options or warrants to purchase our securities or securities convertible into our common stock. Stockholders may rely on the exemption from the registration requirements provided by Rule 144 of the Securities Act (“Rule 144”), subject to certain restrictions; namely, our common stock may not be sold under Rule 144 until starting one year after:
(i) the completion of a business combination with a private company in a reverse merger or reverse takeover transaction after which the Company ceases to be a “shell company” (as defined in Rule 12b-2 under the Exchange Act), and
(ii) the disclosure of certain information on a Current Report on Form 8-K within four business days thereafter, and only if the Company has been current in all of its periodic SEC filings for the 12 months preceding the conte mplated sale of stock.
Holders
We have 58 stockholders of record of our common stock as of July 19, 2010. The Company has not issued any shares of its preferred stock.
Dividends
We have not declared dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future. We anticipate that any funds available for payment of dividends will be re-invested into the Company to further its business strategy.
Securities Authorized under Equity Compensation Plans
We do not have any equity compensation plans and any securities authorized to be issued under such a plan.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
The following discussion describes all securities sold by the Company within the past three years without registration.
On June 19, 2008, pursuant to a court order by the Third District Court, State of Utah, Salt Lake Department, 158,310 post-split shares, valued at $1,000, were sold in a sheriff’s sale to ten persons to partially satisfy a judgment against the Company from January 2002. We relied on the exemption from the registration requirements provided by Section 4(1) of the Securities Act.
ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED
Capital Stock
The Company has 120,000,000 shares of authorized capital stock described as follows:
Common Stock: We intend to register our common stock pursuant to Section 12(g) of the Exchange Act. The Company is authorized to issue 100,000,000 shares of common stock, par value $.001, of which 250,556 were issued and outstanding as of July 19, 2010. All shares of common stock have equal rights and privileges with respect to voting, liquidation and dividend rights. Each share of common stock is entitled to one vote on all matters
16
submitted to a vote of the stockholders. Upon issuance of preferred stock, the common stock may have junior rights as compared to the preferred stock. Stockholders of the Company have no preemptive rights to acquire additional shares of common stock or any other securities. All outstanding shares of common stock are fully paid and non-assessable.
Preferred Stock: The Company has authorized 20,000,000 shares of preferred stock with $.001 par value to be issued in five (5) series. Our board of directors is authorized to establish the number of shares to be included in each series and the preferences, rights of conversion, limitations and other relative rights of each series. As of the date of this filing, our bo ard of directors has not authorized a series nor issued any preferred stock.
Other Securities
As of the date of this filing, we do not have any debt securities, warrants or options outstanding.
Transfer Agent
Our transfer agent is Standard Registrar & Transfer Company, Inc., located in Draper, Utah.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our bylaws provide for the indemnification of present and former directors subject to a determination that the director cond ucted himself in good faith and reasonably believed that his conduct was in, or not opposed to, the best interest of the Company. In a criminal action he must not have had a reasonable cause to believe his conduct was unlawful.
The Company will indemnify a director so long as the expenses are reasonable, we have the financial ability to make the payment, and in the opinion of our board of directors the financial resources should be devoted to this use rather than to some other use by the Company.
We will not indemnify a director in connection with a proceeding in which the director was adjudged liable to the Company or received improper personal benefit.
Our board of directors may indemnify and advance expenses to any officer, employee, or agent of the Company to the same extent as a director. And the board of directors may purchase and maintain insurance on behalf of our directors and officers.
17
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LZG International, Inc.
(A Development Stage Company)
Financial Statements
May 31, 2010 and 2009
CONTENTS
Report of Independent Registered Public Accounting Firm
19
Balance Sheets
20
Statements of Operations
21
Statements of Stockholders’ Deficit
22
Statements of Cash Flows
23
Notes to the Financial Statements
24
18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of LZG International, Inc.
I have audited the accompanying balance sheets of LZG International, Inc. (“LZG”) as of May 31, 2010 and 2009, and the related statements of operations, stockholders’ deficit, and cash flows for the years ended May 31, 2010 and 2009. LZG’s management is responsible for these financial statements. My responsibility is to express an opinion on these financial statements based on my audits. The financial statements of LZG for the period from inception on May 22, 2000 through May 31, 2008 were audited by other auditors whose report, dated May 19, 2010, on those statements included an explanatory paragraph that described conditions which raised substantial doubt about the ability of the company to continue as a going concern.
I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, I express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, t he financial statements referred to above present fairly, in all material respects, the financial position of LZG as of May 31, 2010 and 2009, and the results of its operations and its cash flows for the years ended May 31, 2010 and 2009 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the company will continue as a going concern. As discussed in Note 2 to the financial statements, the company has limited assets, has incurred losses since inception, has negative cash flows from operations, and has no revenue-generating activities, which raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments th at might result from the outcome of this uncertainty.
/s/ Michael J. Larsen
Michael J. Larsen
Sandy, Utah
July 16, 2010
19
LZG International, Inc. (A Development Stage Company) Balance Sheets
| ||||
|
| May 31, 2010 |
| May 31, 2009 |
ASSETS |
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Cash |
| $ 11,750 |
| $ 464 |
Total Current Assets |
| 11,750 |
| 464 |
|
|
|
|
|
TOTAL ASSETS |
| $ 11,750 |
| $ 464 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Accounts payable |
| $ 7,566 |
| $ 5,125 |
Accrued interest - related party |
| - |
| 105 |
Loan payable - officer |
| - |
| 6,000 |
Total Current Liabilities |
| 7,566 |
| 11,230 |
LONG-TERM LIABILITIES |
|
|
|
|
Loan payable - officer | &nbs p; | 23,500 |
| - |
Accrued interest - related party |
| 537 |
| - |
Total Long-term Liabilities |
| 24,037 |
| - |
Total Liabilities |
| 31,603 |
| 11,230 |
STOCKHOLDERS' DEFICIT |
|
|
|
|
Preferred stock, $.001 par value, 20,000,000 shares authorized, none issued and outstanding |
| - |
| - |
Common stock, $.001 par value; 100,000,000 shares authorized, 250,556 shares issued and outstanding |
| 251 |
| 251 |
Additional paid in capital |
| 3,063,134 |
| 3,062,874 |
Deficit accumulated during the development stage |
| (3,083,238) |
| (3,073,891) |
Total Stockholders' Deficit |
| (19,853) |
| (10,766) |
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ 11,750 |
| $ 464 |
The accompanying notes are an integral part of these financial statements
20
LZG International, Inc. | ||||||
(A Development Stage Company) | ||||||
Statements of Operations | ||||||
| ||||||
|
|
|
|
|
| From |
|
|
|
|
|
| Inception on |
|
| For the Years Ended |
| May 22, 2000 | ||
|
| May 31, |
| To May 31, | ||
|
| 2010 |
| 2009 |
| 2010 |
|
|
|
|
|
|
|
REVENUES |
| $ - |
| $ - |
| $ - |
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
General and administrative |
| 8,655 |
| 5,536 |
| 20,316 |
|
|
|
|
|
|
|
Total expenses |
| 8,655 |
| 5,536 |
| 20,316 |
|
|
|
|
|
|
|
Net operating loss before other expense |
| (8,655) |
| (5,536) |
| (20,316) |
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
Interest (expense) – related party |
| (692) |
| (105) |
| (797) |
|
|
|
|
|
|
|
Total other expense |
| (692) |
| (105) |
| (797) |
|
|
|
|
|
|
|
Loss from continuing operations before income taxes | (9,347) |
| (5,641) |
| (21,113) | |
Income taxes |
| - |
| - |
| - |
|
|
|
|
|
|
|
Loss from continuing operations |
| (9,347) |
| (5,641) |
| (21,113) |
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
|
|
|
Loss from discontinued operations |
| -- |
| -- |
| (3,062,125) |
|
|
|
|
|
|
|
NET LOSS |
| $ (9,347) |
| $ (5,641) |
| $ (3,083,238) |
|
|
|
|
|
|
|
Basic and diluted net loss per share |
| $ (0.04) |
| $ (0.02) |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
| 250,556 |
| 231,472 |
|
|
The accompanying notes are an integral part of these financial statements.
21
LZG International, Inc. | |||||||||
(A Development Stage Company) | |||||||||
Statements of Stockholders' Deficit | |||||||||
From Inception on May 22, 2000 through May 31, 2010 | |||||||||
|
|
|
|
|
| Deficit |
| Accumulated |
|
|
|
|
|
|
| Accumulated |
| Deferred |
|
|
|
|
|
| Additional | During the | Other | Stock Based |
|
|
| Common Stock |
| Paid in | Development | Comprehensive | Consulting |
| |
|
| Shares | Amount | Capital | Stage | Income | Fees | Total | |
Balance, May 22, 2000 |
| - | $ - |
| $ - | $ - | $ - | $ - | $ - |
Common stock issued for cash |
| 46,289 | 46 |
| 9,212 | - | - | - | 9,258 |
Common stock issued for services |
| 27,358 | 28 |
| 1,805,610 | - | - | (1,805,638) | - |
In-kin d contribution of services by stockholders |
| - | - |
| 54,360 | - | - | - | 54,360 |
Foreign currency translation adjustment |
| - | - |
| - | - | 2,687 | - | 2,687 |
Net (loss) for the year ended M ay 31, 2000 |
| - | - |
| - | (168,538) | - | - | (168,538) |
Balance - May 31, 2000 |
| 73,647 | 74 |
| 1,869,182 | (168,538) | 2,687 | (1,805,638) | (102,233) |
Common stock issued for cash at $66.67 per share |
| 3,000 | 3 |
| 199,997 | - | - | - | 200,000 |
Common stock issued for services valued at $66.00 per share |
| 15,043 | 15 |
| 992,854 | - | - | - | 992,869 |
Recognize balance of deferred stock fees |
| - | - |
| - | (1,805,638) | - | 1,805,638 | - |
Foreign currency translation adjustment |
| - | - |
| - | - | 1,179 | - | 1,179 |
Net (loss) for the year ended May 31, 2001 |
| - | - |
| - | (1,221,926) | - | - | (1,221,926) |
Balance - May 31, 2001 |
| 91,690 | 92 |
| 3,062,033 | (3,196,102) | 3,866 | - | (130,111) |
Transfer comprehensive income to accumulated deficit for discontinued subsidiary |
| - | - |
| - | 3,866 | (3,866) | - | - |
Write off balance of assets on books at 10-31-2000 |
| - | - |
| - | (20,599) | - | - | (20,599) |
Write off balance of liabilities on books at 10-31-2000 |
| - | - |
| - | 150,710 | - | - | 150,710 |
Net (loss) for the year ended May 31, 2002 |
| - | - |
| - | (1,736) | - | - | (1,736) |
Balance - May 31, 2002 |
| 91,690 | 92 |
| 3,062,033 | (3,063,861) | - | - | (1,736) |
Net (loss) for the year ended May 31, 2003 |
| - | - |
| - | - | - | - | - |
Balance - May 31, 2003 |
| 91,690 | 92 |
| 3,062,033 | (3,063,861) | - | - | (1,736) |
Net (loss) for the year ended May 31, 2004 |
| - | - |
| - | - | - | - | - |
Balance - May 31, 2004 |
| 91,690 | 92 |
| 3,062,033 | (3,063,861) | - | - | (1,736) |
Net (loss) for the year ended May 31, 2005 |
| - | - |
| - | - | - | - | - |
Balance - May 31, 2005 |
| 91,690 | 92 |
| 3,062,033 | (3,063,861) | - | - | (1,736) |
Net (loss) for the year ended May 31, 2006 |
| - | - |
| - | - | - | - | - |
Balance - May 31, 2006 |
| 91,690 | 92 |
| 3,062,033 | (3,063,861) | - | - | (1,736) |
Net (loss) for the year ended May 31, 2007 |
| - | - |
| - | (2,686) | - | - | (2,686) |
Balance - May 31, 2007 |
| 91,690 | 92 |
| 3,062,033 | (3,066,547) | - | - | (4,422) |
Net (loss) for the year ended May 31, 2008 |
| - | - |
| - | (1,703) | - | - | (1,703) |
Balance - May 31, 2008 |
| 91,690 | 92 |
| 3,062,033 | (3,068,250) | - | - | (6,125) |
Common stock issued in settleme nt of debt |
| 158,310 | 159 |
| 841 | - | - | - | 1,000 |
Adjustment for fractional shares issued with reverse stock split |
| 556 | - |
| - | - | - | - | - |
Net (loss) for the year ende d May 31, 2009 |
| - | - |
| - | (5,641) | - | - | (5,641) |
Balance - May 31, 2009 |
| 250,556 | 251 |
| 3,062,874 | (3,073,891) | - | - | (10,766) |
Capital contribution from imputed interest |
| - | - |
| 260 | - | - | - | 260 |
Net (loss) for the year ended May 31, 2010 |
| - | - |
| - | (9,347) | - | - | (9,347) |
Balance – May 31, 2010 |
| 250,556 | $ 251 |
| $ 3,063,134 | $ (3,083,238) | $ - | $ - | $ (19,853) |
The accompanying notes are an integral part of these financial statements
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LZG International, Inc. (A Development Stage Company) Statements of Cash Flows | |||||
|
|
|
|
| From |
|
|
|
|
| Inception on |
| For the Years Ended |
| May 22, 2000 | ||
| May 31, |
| Through | ||
| 2010 |
| 2009 |
| May 31, 2010 |
Cash Flows from Operating Activities |
|
|
|
|
|
Net Loss | $ (9,347) |
| $ (5,641) |
| $ (3,083,238) |
Adjustment to reconcile net (loss) to cash provided (used) by operating activities: |
|
|
|
|
|
Imputed interest | 260 |
| - |
| 260 |
Stock issued for services | - |
| - |
| 2,852,867 |
Changes in assets and liabilities: |
|
|
|
|
|
Increase (decrease) in accounts payable | 2,441 |
| - |
| 8,566 |
Accrued interest - related party | 432 |
| 105 |
| 537 |
|
|
|
|
|
|
Net Cash Provided (Used) by Operating Activities | (6,214) |
| (5,536) |
| (221,008) |
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
Proceeds from stock issuances | - |
| - |
| 209,258 |
Loans from officer | 17,500 |
| 6,000 |
| 23,500 |
|
|
|
|
|
|
Net cash Provided by Financing Activities | 17,500 |
| 6,000 |
| 232,758 |
|
|
|
|
|
|
Increase (Decrease) in Cash | 11,286 |
| 464 |
| 11,750 |
|
|
|
|
|
|
Cash and Cash Equivalents, Beginning of Period | 464 |
| - |
| - |
|
|
|
|
|
|
Cash and Cash Equivalents, End of Period | $ 11,750 |
| $ 464 |
| $ 11,750 |
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
|
| &n bsp; |
|
Issuance of stock in settlement of debt | $ - |
| $ 1,000 |
| $ 1,000 |
|
|
|
|
|
|
Cash Paid For: |
|
|
|
|
|
Interest | $ - |
| $ - |
| $ - |
Income taxes | $ - |
| $ - |
| $ - |
The accompanying notes are an integral part of these financial statements
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LZG International, Inc.
(A Development Stage Company)
Notes to the Financial Statements
May 31, 2010 and 2009
NOTE 1 - Organization and Summary of Significant Accounting Policies
(A) Organization
LZG International, Inc. (the Company) is a Florida development stage company that was incorporated on May 22, 2000. The Company has not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors. The Company business model intended to establish an online grocery solution. A wholly-owned Canadian subsidiary, LazyGrocer.Com Corp., was es tablished as part of this model, but it was dissolved in 2001.
Activities during the development stage have included raising capital and development of the Company’s business plan, Securities and Exchange Commission filings and limited operations.
(B) Use of Estimates
In preparing financial statements, management is required 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 revenues and expenses during the reportin g period. Actual results may differ from these estimates.
(C) Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
(D) Income Taxes
No provision for income taxes has been recorded due to net operating loss carryforwards totaling $14,451 at May 31, 2010 that will be offset against future taxable income. T hese NOL carryforwards begin to expire in the year 2029. No tax benefit has been reported in the financial statements because the Company believes there is a 50% or greater chance the carryforwards will expire unused.
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LZG International, Inc.
(A Development Stage Company)
Notes to the Financial Statements
May 31, 2010 and 2009
NOTE 1 - Organization and Summary of Significant Accounting Policies (Continued)
Deferred tax asset and the valuation account are as follows at May 31, 2010 and 2009:
| May 31, | ||
| 2010 |
| 2009 |
NOL carryforward | $ 2,167 |
| $ 830 |
Accrued related party interest | 81 |
| 16 |
Valuation allowance | (2,248) |
| (846) |
|
|
|
|
Deferred tax asset | $ - |
| $ - |
The change in the valuation allowance was $1,402 during the year ended May 31, 2010.
(E) Fair Value of Financial Instruments
It is not practicable to estimate the fair value of related party loans because there is no established market for these loans and it is inappropriate to estimate future cash flows, which are largely dependent on the Company establishing or acquiring operations at some future point. No financial instruments are held for trading purposes.
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has limited assets, has incurred losses since inception, has negative cash flows from operations, and has no revenue-generating activities. Its activities have been limited for the past several years and it is dependent upon financing to continue operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plan to acquire or merge with other operating companies.
NOTE 3 - Development Stage Company
The Company has no significant operations and is considered a development stage company. It is concentrating substantially all of its efforts in raising capital and searching for a business operation with which to merge, or assets to acquire, in order to generate significant operations.
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LZG International, Inc.
(A Development Stage Company)
Notes to the Financial Statements
May 31, 2010 and 2009
NOTE 4 - Capitalization
In 2000, the Company issued 46,289 shares of common stock for cash of $9,258 ($.20 per share). In 2000, the Company issued 27,358 shares of common stock for services valued at $1,805,638 ($66.00 per share).
In 2000, the Company issued 3,000 shares of common stock for cash of $200,000 ($66.67 per share).
In August, 2000, the Company issued 15,043 shares of common stock for services valued at $992,869 ($66.00 per share).
In July 2008, the Company issued 158,310 shares of common stock to settle $1,000 in accounts payable ($.0063 per share).
On August 5, 2008, the stockholders approved a 1 for 200 reverse stock split effective August 25, 2008. The reverse resulted in the issuance of an additional 556 share s for rounding up of fractional shares. The financial statements and accompanying notes have been restated to reflect the reverse stock split.
NOTE 5 - Related Party Transactions
The financial statements include related party transactions which, as of May 31, 2010, were loans from an officer of the Company totaling $23,500. The loans are due in June 2012, are not collateralized, and bear interest at 5% per annum. An adjustment has been made to record imputed interest in the financial statements at the rate of 8% to reflect current market interest rates. The difference between 5% and 8% is reflected as a contribution to capital and an increase in interest expense.
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ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On July 14, 2010, LZG International, Inc. dismissed Child, Van Wagoner & Bradshaw, PLLC as our independent registered public accounting firm. Child, Van Wagoner & Bradshaw, PLLC had audited our financial statements for the fiscal years ended May 31, 2009 and 2008 and its report dated May 19, 2010 w as modified only as to the uncertainty of our ability to continue as a going concern. Except for this modification, the report did not contain an adverse opinion, disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.
Our board of directors approved the dismissal of Child, Van Wagoner & Bradshaw, PLLC and there were no disagreements between LZG International, Inc. and Child, Van Wagoner & Bradshaw, PLLC on any matter regarding accounting principles or practices, financial statement disclosure, or auditing scope or procedure during the two fiscal years ended May 31, 2010 and 2009 or any subsequent interim period preceding the date of dismissal.
There were no reportable events (as that term is used in Item 304(a)(1)(v) of Regulation S-K) between LZG International, Inc. and Child, Van Wagone r & Bradshaw, PLLC occurring during the two fiscal years ended May 31, 2010 and 2009 or any subsequent interim period preceding the date of dismissal.
On July 14, 2010, LZG International, Inc. engaged Michael J. Larsen, Certified Public Accountant, as our independent registered accounting firm. The decision to engage Michael J. Larsen was approved by our board of directors and Michael J. Larsen has been engaged to audit our financial statements for the years ended May 31, 2010 and 2009. During the two most recent fiscal years ended May 31, 2010 and 2009, and through the date of engagement, neither we nor anyone on our behalf consulted with Michael J. Larsen regarding either:
(i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial stateme nts, and neither a written report was provided to us nor oral advice was provided that Michael J. Larsen concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or
(ii) any matter that was either the subject of a disagreement or a reportable event.
We provided a copy of this amended Form 10 to Child, Van Wagoner & Bradshaw, PLLC prior to filing this amended registration statement and we requested that Child, Van Wagoner & Bradshaw, PLLC furnish a letter addressed to the SEC stating whether or not it agrees with the statements made in this amended Form 10. Child, Van Wagoner & Bradshaw, PLLC has furnished the requested letter and it is attached as exhibit 16.1
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a)
Financial Statements
The financial statements for LZG International, Inc. are included in this registration statement under Item 13, above, starting on page 18.
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(b)
Exhibits
No. | Description |
3.1 | Articles of Incorporation of LazyGrocer.Com, Inc., dated May 17, 2000 (Filed May 26, 2010) |
3.1.2 | Amendment to Articles of Incorporation of LazyGrocer.Com, Inc., dated August 28, 2009 (Filed May 26, 2010) |
3.2 | Bylaws of LZG International, Inc., effective January 28, 2010 (Filed May 26, 2010) |
10.1 | Promissory Note, dated April 20, 2010 |
16.1 | Letter of agreement from Child, Van Wagoner & Bradshaw, PLLC, dated July 17, 2010 |
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 22, 2010 | LZG INTERNATIONAL, INC., Registrant By: /s/ Greg L. Popp Greg L. Popp President and Director Principal Executive and Financial Officer |
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