lga10ksab_92242007.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-KSB
(Mark
One)
[X] ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934
For
the
fiscal year ended June 30, 2007
[
] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACTOF
1934
For
the
transition period from _________ to _________
Commission
file number 0-18113
LGA
HOLDINGS, INC.
(Exact
name of small business issuer in its charter)
Utah
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87-0405405
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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3380
North El Paso Street, Suite G, Colorado Springs,
Colorado 80907
(Address
of principal executive
offices) (Zip
Code)
Issuer's
telephone number (719)
630-3800
Securities
registered under Section 12(b) of the Exchange Act:
None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock
(Title
of
class)
Check
whether the issuer is not required to file reports pursuant to Section 13
or
15(d) of the Exchange Act.
Check
whether the issuer (1) filed all reports required to be filed by Section
13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter
period
that the registrant was required to file such reports), and (2) has been
subject
to such filing requirements for the past 90
days. Yes [X] No
[]
Check
if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained,
to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB or any amendment to this Form 10-KSB. [
]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [] No
[X]
State
issuer's revenues for its most recent fiscal year. $408,707
State
the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity
was
sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. August 31, 2007: $2,532,698
State
the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date. September 19,
2007: 9,072,960
DOCUMENTS
INCORPORATED BY REFERENCE
None
Transitional
Small Business Disclosure Format (Check one): Yes [ ] No
[X]
Certain
statements made herein are forward-looking statements under the Private
Securities Litigation Reform Act of 1995. They include statements based on
management's current expectations and estimates; actual results may differ
materially due to certain risks and uncertainties. For example, the ability
of
Let's Go Aero, Inc. to achieve expected results may be affected by external
factors such as competitive price pressures, conditions in the economy and
industry growth, and internal factors, such as future financing of the acquired
operations and the ability to control expenses.
PART
I
Item
1. Description of
Business.
LGA
Holdings, Inc., ("LGA" or the "Company")) is the sole owner of its operating
subsidiary, Let's Go Aero, Inc. ("Aero"). LGA acquired Aero effective June
30,
2004 through a stock for stock exchange under which the former shareholders
of
Aero were issued new LGA shares of common stock in exchange for all of Aero's
outstanding shares and $1,518,440 of debt. The former Aero shareholders and
debt
holders ended up with 85% of the outstanding common stock of LGA. Prior to
the
acquisition, LGA had no business or operations after having sold what business
it did have October 22, 2003, several months before the acquisition of Aero.
Therefore, at the time of the acquisition of Aero, LGA was what is known
as a
publicly held shell company. LGA changed its name to LGA, Inc. from Tenet
Information Services, Inc. by a vote of shareholders on May 27, 2005, but
the
name was not available according to the Utah Secretary of State. By consent
of
shareholders owning in excess of a majority of shares, the name was changed
to
LGA Holdings, Inc. in October, 2005. LGA was formed on February 24,
1984.
Upon
the
acquisition of Aero, two of LGA's three Directors resigned and two Directors
of
Aero were appointed to fill those positions. The third LGA director was and
is a
director of both companies. In addition, all of the officers of LGA resigned
and
members of Aero's management team were appointed to those positions. See
Item 9,
below. For accounting purposes, however, the transaction was deemed to have
been
an acquisition of LGA by Aero. Further information on the details of the
transaction can be had by reviewing LGA's Form 8-K filed July 21, 2004 and
Form
8-K/A filed October 20, 2004 available at the EDGAR website of the Securities
and Exchange Commission (www.sec.gov) or from LGA upon request. Copies may
also
be read and copied at the SEC's Public Reference Room, Headquarters Office,
100
F Street, N.E., Room 1580, Washington, DC 20549. Call (800) SEC-0330 for
further
information.
Let's
Go
Aero, Inc.
Aero,
LGA's wholly owned subsidiary, is LGA's only operating business. Aero is
in the
business of designing and selling gear management solutions for automotive,
recreation and commercial uses. Aero's family of products uses
patented designs, and includes the GearWagon(R) line of Sport Performance
Trailers(R), the GearSpace(TM) line of hitch-mount cargo carriers, the Silent
Hitch Pin line, the LittleGiant Trailer line and the GullWing line of RV
technology. Aero was formed in 1998.
Aero
was
founded as a product design, development and engineering company. It specializes
in providing novel solutions for vehicular cargo carrying enhancements. Aero
has
patents issued and pending that protect its intellectual property. These
patents
and claims relate to how cargo can be attached and carried on a vehicle's
hitch
receiver, frame, or body surface. Some examples are:
o
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Silent
Hitch Pin(TM) rigidly couples the connection between the trailer
hitch
receiver and any inserted ball mount or accessory;
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TwinTube(TM)
provides a universal mounting structure for carrying gear and equipment
with a receiver style hitch;
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The
fully-enclosed, encapsulated, and easy-opening designs of Aero's
product
enclosures for cargo safety, security, and accessibility;
and
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Extensive
designs for the use of C-Channel for making "Hardpoint(TM)" attachments
to
Aero's carriers, trailers, and all vehicular
surfaces.
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Aero
also
has numerous product extensions and accessories that complement and expand
these
core technologies.
Aero's
intellectual property has broad application in the automotive industry, and
several automotive Original Equipment Manufacturers are in various stages
of
integrating aspects of Aero's technology into their product lines. In May,
2002,
Aero licensed three pieces of its intellectual property to Sport Rack
International/Valley Industries, Inc., an affiliate of Thule, AB, the largest
supplier to automotive manufacturers worldwide of products similar to Aero's
products. Aero's product licenses with Sport Rack International/Valley
Industries, Inc. resulted in the payment to Aero of $300,000 in 2004 and
an
ongoing royalty of 10% of the revenues (after $300,000) Sport Rack generates
with the technology until May, 2007. The $300,000 is reflected in the
financial statements at $60,000 in 2006 and $55,000 in 2007. At June
30, 2007, no further deferred licensing revenue remains to be amortized under
this contract and the contract has expired. The company is presently
negotiating with Sport Rack for a new contract to replace the expired
one. The company anticipates that a new agreement generating
royalties from Sport Rack will be reached in 2008 because Sport Rack has
continued to sell Silent Hitch Pins since the contract expired, without paying
royalties, and hence is infringing on our patents. However, we can
give no assurance that any such new license agreement will be signed or any
further royalty revenues realized. See note 4 to Financial
Statements.
Aero
has
developed and will continue to develop intellectual property for the Automotive,
RV and commercial industries. It is Aero's intent to license its technology
to
the industry leaders that can most effectively bring the licensed technology
to
market. Aero plans to license the production and sales of its products for
an
up-front fee and an ongoing royalty based on unit sales.
Products
Aero
currently has several product lines that it has been selling for several
years
and other product lines that are emergent. These product lines are described
as
follows:
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GearWagon
125 Sport Performance Trailers(R). Aero's GearWagon(R) line of
Sport
Performance Trailers(R) are designed for carrying all types of
personal,
recreational, and commercial gear in an aerodynamic, weather-resistant,
secure and attractive transport.
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GearSpace(TM)
Carriers. The GearSpace(TM) hitch based carrier line consists of
two fully
enclosed cargo carrier models, GearSpace 34(TM) and GearSpace 20(TM),
with
three structural options to choose from for varying function while
on the
vehicle's hitch receiver. These designs offer versatility, security
and
safety.
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SILENT
HITCH PIN(TM). This anti-vibration device takes all movement out
of the
connection between the vehicle towing system and what's being towed
or
carried. In short, it freezes the attachment securely in place.
It works
with most consumer vehicle towing systems.
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TwinTube(TM)
System. The TwinTube(TM) ("TT(TM)") System is a patented design
that was
included in the technology licensed to Sport Rack International/Valley
Industries, Inc. as discussed above. TwinTube(TM) is a
universal mounting structure for carrying gear and equipment with
a hitch
receiver. TwinTube(TM) is also available as a UBI(TM) system
(U-Build-It).
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GearDeck(TM)
System. Incorporating Aero's novel TwinTube(TM) technology, GearDeck(TM)
is a modular carrier that functions as an open platform carrier
or a
fully-enclosed carrier through the use of a modular hardtop lid
enclosure
that is easily attached and removed. The open platform can carry
bicycles,
among many other large items; the full enclosure system carries
all kinds
of general cargo as well as items such as power
generators.
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GearCrate(TM)/LittleGiant
Trailer System(TM). New design for both a stand alone recyclable
shipping
crate, a stand alone utility trailer and the novel function of
a shipping
crate that can be easily converted into a trailer at destination
for the
device being shipped; for example, ATV's, motorcycles, generators,
welders, etc. The design debuted at the April, 2005, Canton Fair
in
Guangzhou, China.
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GullWing(TM)
camper. Derivative of Little Giant Trailer(TM). New design for
personal
motor sport and RV applications. The GullWing(TM) design allows
a cargo
trailer to convert into a new category of camping trailer. GullWing(TM)
intellectual property also has application for pickup toppers and
pickup
campers. On October 7, 2006 the U.S. Patent and Trade Office
notified LGA of its acceptance of LGA's GullWing claims, and the
patent
was issued on February 20, 2007. LGA is in discussions
with several RV Original Equipment Manufacturers regarding the
GullWing/Foldout intellectual property.
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TENTRIS(TM)
tent and portable structure. New design for tent and portable enclosure
applications.
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GearDeck
APU(TM). New derivative of Aero's GearDeck 17 system. APU is an
all-in-one
electrical generator storage, transportation and organization solution
designed initially for recreational vehicles. The APU system may
also have
application with the broader portable generator market.
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ONAN
JUICEBOX. During 2006, Aero completed a product development effort
with
the Onan division of Cummins, Inc. resulting in Onan's JuiceBox
product.
The licensed design is based on LGA's Silent Hitch Pin, TwinTube,
GearDeck
and LandingGear Intellectual Property. LGA began receiving
product royalties in July, 2006. During fiscal 2007, a formal
licensing agreement with Onan was signed that specifies per-unit
royalty
payments and the precise extent of licensing rights for Onan for
the life
of LGA’s patents. Since the signing of this agreement, revenues
resulting from it have been immaterial.
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HARDPOINT(TM)
Technology. Aero has patents issued and patents pending for the
integration of C-Channel onto vehicle surfaces, including pickup
truck
beds, vehicle roofs and trailers. The Hardpoint(TM) system is another
potential source of royalty revenue for Aero. See “Patent
Protection,” below.
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Business
History
The
impetus for Aero was a 1990 concept by its principal founder for a lightweight
aerodynamic trailer to carry recreational gear. This concept led to the creation
of a prototype product that was tested in 1997. In the fall of 1997, work
began
on what came to be the GearWagon(R) line of Sport Performance Trailers(R)
(SPT).
Aero was incorporated in April 1998, the first GearWagon(R) SPT hit the road
in
July, 1998, and Aero debuted two GearWagon(R) SPT's at the Interbike Trade
Show
in October, 1998.
During
the development of the GearWagon(R) product, several additional product
opportunities became apparent. The GearWagon(R) Hardpoint(TM) system was
designed using Unistrut(TM) and/or B-Line(TM) engineering C-Channel. The
Hardpoint(TM) system appeared to have great promise for use in the motor
vehicle
and recreation vehicle industries, and Aero filed patent claims for the
integration of C-Channel on vehicular surfaces in 1998. The original patent
claims for Hardpoint(TM) technology were issued in 2001. Aero has also filed
many continuation claims for this technology.
After
the
Interbike Show in the Fall of 1998, Aero began receiving orders for GearWagon(R)
trailers. Medallion Plastics in Elkhart, IN, became Aero's manufacturer of
GearWagon(R) trailers in January, 1999.
In
early
1999, Aero joined the Specialty Equipment Market Association (SEMA). SEMA
is the
largest trade organization for the automotive after-market industry. Basically,
SEMA is the entire automotive industry worldwide, less new vehicle sales.
Aero
displayed its products at SEMA's industry convention in November, 1999, as
a
debut to the automotive industry.
During
the development of the GearWagon(R) line, the Company developed a concept
for a
hitch based cargo carrier line that resulted in Aero's GearSpace(TM) product
line. The GearSpace(TM) 34 capsule also debuted at the 1999 SEMA
convention.
Aero
went
on to design the Silent Hitch Pin(TM). Aero's patent application for the
Silent
Hitch Pin(TM), which was filed in mid-2000, was granted in May,
2003.
After
the
SEMA 2001 convention, Aero entered into a relationship with J.S. Chamberlain
and
Associates. Chamberlain and Associates has been an automotive supplier developer
since the early 1960's. Through a series of meetings arranged by Chamberlain,
Aero and Sport Rack International/Valley Industries, Inc. agreed to a product
license for Aero's Silent Hitch Pin(TM) and Twin-Tube(TM) Technology in May,
2002.
At
the
SEMA 2002 convention Aero won the Best New SUV Accessory Idea from General
Motors Corporation for its TwinTube(TM) carrier system. At the SEMA
2003 convention Aero won the Best New Idea award from General Motors
Corporation for its GearBed surface attachment system. See “Patent
Protection,” below.
With
the
Tenet combination, Aero began redesigning and retooling its GearDeck, TwinTube,
GearSpace and GearWagon products in order to meet market pricing, durability,
assembly and shipping expectations. Retooled GearDeck production began in
early
2005, TwinTube production began in May, 2006, GearSpace production began
in
June, 2006, and the company began production and shipping of the retooled
GearWagon 125 product in May, 2007. Also in May, 2007, LGA began
shipping its new GearCage™ hitch mounted cargo carrier. In July, 2007
(subsequent to year-end), LGA began shipments of its new LGT-7 utility
trailer. LGA will be displaying these products, and others, at the
2007 SEMA show.
The
Future
LGA’s
basic product line is now substantially complete. A full line of
accessories to the basic products will be introduced during fiscal
2008. These accessories are anticipated to expand the market for
LGA’s basic products (e.g., soft-sided full enclosures for GearCage and
LGT-7). Two new product initiatives may also occur in fiscal 2008,
resources permitting. The company has patent protection on both a new
hitch mounted bicycle carrier technology called “Pixie,” and a new tent design
technology called “Tentris.” We will be looking for ways to bring
these products to market. The balance of our efforts in 2008 will
focus on streamlining and cost-cutting in our production and expansion of
our
marketing efforts. Aero's Hardpoint(TM) technology may also become a
significant royalty generator for Aero in the future.
Aero's
future focus is on market, partner and product development. There is a very
large consumer market for Aero's products, and Aero’s approach to this market is
to enter it through partnership arrangements with large existing
participants.
Aero
is
in discussions with various automotive and recreation vehicle Original Equipment
Manufacturers for custom versions of its products and technology that compliment
and extend the capabilities of the Original Equipment Manufacturers'
vehicles.
Objectives
and Sales
Objectives
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To
establish manufacturing, sales and marketing partners for
Aero's products domestically and
internationally
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To
continue product development and invention work where a clear payoff
is
predictable
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To
establish positive operating cash flow and
earnings
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Customer
Direct Sales
Close
to
80% of Aero's sales revenue currently comes from direct-to-customer sales
that
are the result of the customer finding Aero's web site. Aero has exhibited
products at several trade shows over the last five years. Primarily, Aero
has
attended the SEMA automotive trade show that is held annually in early November
in Las Vegas. Aero has also displayed its products at the Denver International
Auto Show and the Denver Sportsman’s Show.
Aero
has
promoted its products primarily through a "Public Relations" approach. As
a
result of these efforts, Aero has spent little on direct advertising, yet
has
been featured in many national magazines, newspapers, and TV and radio shows.
Because Aero's product designs are novel, publishers of magazines frequently
feature its products in the magazines "New Product Review" sections along
with
Aero's address and web site. This approach has been important to Aero's products
getting discovered, while keeping its promotional expenses low.
Aero's
customers also provide great leads for product sales. In addition to current
owners giving Aero positive reviews to prospective new owners, Aero's products
all feature its web site address on its product logo. Aero regularly gets
inquiries from individuals who have seen Aero products in the
field.
It
is
Aero's intent to establish a sales relationship with market partners or an
Original Equipment Manufacturer to promote, manage and distribute its product
lines for gear transport through the partners' established market
channels.
Market
for Products
For
many
years, people have been increasing their recreation time and recreation
interests. This trend has spurred a dramatic increase in the purchase of
sport
utility vehicles (SUV's), mini-vans, and pick-up trucks. The purchase of
these
style vehicles reflects, in part, the consumers' perceived need for increased
cargo capacity.
The
installed base of receiver style hitches presents a large latent market for
Aero's products. Further, Aero believes that the automotive Original Equipment
Manufacturers would like to migrate the accessories currently being carried
on
the roofs of SUVs to the receiver hitch in order to reduce the roll-over
risk of
SUVs and provide consumers with more convenient cargo carrying
solutions.
Competition
The
sport
equipment carrier market is a competitive environment with more than ten
participants that are larger than Aero and have the following advantages
relative to Aero:
Name
recognition
Several
competitors, like Yakima Products and Thule have established names with the
public. Aero is still relatively unknown. It can take years to establish
a Brand
name, and Aero is at the beginning of exposing its products and brand to
the
public. Aero’s success against these competitors can not be
assured.
Product
Lines
Several
competitors have broad product lines compared to Aero. Aero does not participate
in the roof top cargo carrier market and does not plan to participate in
this
market, except, potentially, in a limited way with a roof top version of
its
GearCage line.
In
terms
of product strength, Aero believes it has several distinct advantages over
the
competition:
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Large
cargo capacities and lightweight designs easily surpass the cargo
transport capabilities of roof top products and other receiver
based
products currently on the market.
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The
opening systems enable Aero products to enclose space more
efficiently.
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Aero
enclosed carrier products offer increased security over open
carriers.
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Aero
products are safer than rooftop carriers, their primary
competitors.
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Patent
filings protect Aero products' ergonomics and
efficiencies.
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Aero
products' aerodynamic efficiencies reduce impact on fuel
economy.
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Multiple
product offerings provide consumers with various options and price
consideration.
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Opening
Systems
Aero's
GearWagon(R) and GearSpace(TM) capsules represent a new category of container.
These containers have shells that are concave so that the lids open by dropping
and "nesting" under the base. This allows easy content access for customers.
When closed, the shells are "self-reinforcing" and very tough.
Content
Security
Aero's
GearWagon(R) and GearSpace(TM) carriers are lockable and fully enclosed so
the
owner's gear is in a water and dust free environment. When traveling, having
gear out of sight is one of the best theft-prevention steps to take. This
means
high-value, lightweight objects like cameras and computers can be stowed
out of
sight in Aero's carriers.
Safety
Factor
Safety
comes in many forms for Aero customers. When compared to roof-based systems,
Aero carriers do not raise a vehicle's center of gravity and therefore, when
compared to a similar weight on the roof of a vehicle, make the vehicle less
prone to rollover.
Aero's
carriers are also loaded by standing on the ground. Roof carriers are commonly
loaded by standing on a running board, a doorsill or a stepladder--all
precarious positions from which to be lifting and moving gear. Most roof
systems
are limited to 100 pounds of gear weight. Most SUV hitch receivers are rated
for
500 pounds of load carrying.
Patent
Protection
Starting
in 1998, Aero has been diligent at protecting its technology with "utility"
patent protection, which is the highest form of invention protection. Utility
patents are issued for truly novel technological achievements. The method
by
which Aero's product capsules open, the Hardpoints(TM) used on Aero's products,
the way Aero's GearSpace(TM) carrier platforms telescope and pivot, and the
features of the Silent Hitch Pin(TM) are all patented aspects of Aero's
products. All Aero's patents have at least 11 years remaining in their
respective terms. Aero has eight issued patents and nine pending
patents.
Aero
has
patents issued and patents pending protecting its GearBed intellectual
property. Nissan Motor Company has challenged certain GearBed claims
with the US Patent and Trademark Office. While Aero intends to pursue
its claims vigorously, it cannot forecast the outcome of the GearBed patent
review at this time.
Aerodynamic
Efficiencies and Fuel Economy
It
appears from informal evidence that Aero's GearWagon(R) line of Sport
Performance Trailers(R) is fuel efficient. It also appears from informal
evidence that Aero's GearSpace(TM) carriers have no noticeable effect on
fuel
economy. When used on an SUV, these carriers sit in the vehicle's
draft.
Volume
and Weight Advantages
Because
of Aero's capsular designs, its products offer high "space-to-weight" ratios
relative to other cargo carrying products currently on the
market. The GearWagon(R) 125 weighs in at 480 pounds empty, encloses
approximately 125 cubic feet and has a carrying capacity of 1,000 pounds.
A
standard "box" trailer with similar storage capability typically weighs close
to
1,000 pounds empty, meaning that a fully loaded GearWagon(R) 125 weighs only
480
pounds more than a comparable empty box trailer. Aero's GearSpace(TM)
line attaches to one of the strongest points on a vehicle, the hitch
receiver. Aero rates its GearSpace(TM) carriers for 300 pounds of
cargo carrying, which gives the owner of a standard SUV more than twice the
weight carrying ability of a typical roof top box.
Manufacturing
and Development
Manufacturing
Aero's
focus is on product and technology development. Aero has utilized
numerous vendors that have produced over 100,000 Silent Hitch Pins(TM). Aero
has
begun GearSpace 34 production with a Colorado based rotational molder. Aero
has
reduced the retail price of its GearSpace 34 by more than 25% with this
production technique change. Aero has also successfully converted the
production of GearWagon, with this vendor, from a thermoformed to a rotational
molded design.
Aero
recently began a contract manufacturing relationship with Red Horse Performance
(RHP) of Shanghai, China. RHP is currently one of Aero's TwinTube(TM) and
GearCage™ system vendors. Aero is evaluating RHP as a potential vendor for the
Silent Hitch Pin product line and the LittleGiant product line. Aero and
RHP
anticipate providing LGA's designs to known industry brands under private
label
supply agreements.
Aero
purchased its initial inventory of LGT-7 trailers from AutoTek China, and
anticipates a continuing and growing supplier relationship with Autotek
China. LGA and Autotek China are discussing an expanded licensing
agreement whereby Autotek China would have manufacturing and worldwide sales
rights to LGA’s LGT technology contained in the Little Giant trailer and
GearCage/GearCrate product lines. Beginning April 5, 2005, Chinese
citizens can now tow lightweight trailers (under 1,500 pound load) on China's
roads. Aero and AutoTek China displayed LGT's at the April, 2006,
Canton Fair in Guangzhou, China. AutoTek China is displaying LGT at the Canton
Fair starting October 15,
2007:http://www.cantonfair.org.cn/en/index.asp AutoTek China,
one of LGA's non-exclusive manufacturing partners, can be viewed at their
website:http://www.autotekchina.com/
Aero
is
actively engaged in specifying sources for all its assembly services, raw
materials and parts in order to ensure that its products meet its quality
and
performance standards. All specified raw materials and parts or acceptable
substitutions are available from many suppliers, and Aero does not rely on
any
one supplier the loss of which would cause any long term adverse consequences
to
Aero.
Shipping
The
shipping cost of Aero's products is reasonable considering some of the products'
sizes. Aero has shipped over 1,000 units from Elkhart, Indiana, to destinations
throughout the United States. Aero has had few freight claims for damaged
goods
and believes it has the packaging adequate to properly protect the
product.
Both
GearWagon(R) and GearSpace(TM) products have modest final assembly requirements
for the customer or dealer to complete.
Aero
utilizes the shipping services of Yellow, DATS, FedEx, National, LTL, and
Old
Dominion among others.
Research
and Development
Aero's
expenditures for research and development have been $13,779 and $94,095 for
the
fiscal years ended June 30 2006 and 2007, respectively. See Management's
Discussion and Analysis, below. Aero will continue product development and
invention work where a clear payoff is anticipated. Aero's staff is
considering numerous ways to branch and grow its current products depending
on
market opportunity and demand. Aero's staff continues to work on new product
designs and improvements to protect and expand Aero's existing intellectual
property.
Regulation
Aero
has
adopted all applicable standards from United States National Highway
Transportation Safety Administration regulations and maintains adherence
to
Society of Automotive Engineers guidelines and specifications. In addition,
both
federal and state authorities regulate the manufacturers and sellers of
recreational and family cargo transports. Aero is a licensed vehicle
manufacturer in the State of Colorado and has obtained the state permits,
licenses, and bonds required to operate.
Aero's
products have been independently tested for impact and temperature extremes.
Aero's Silent Hitch Pin(TM) and GearSpace(TM) Spine and Frame structural
systems
have been independently tested for load carrying strength.
Aero
has
had Corporate and Product Liability insurance for the last five years and
has
not had a product liability claim. Further, as Aero successfully licenses
its
designs, generally the licensee will be responsible for carrying manufacturer
and product liability insurance.
Aero
has
registered with or obtained memberships, licenses, permits, or certificates
from
the following organizations and agencies:
Society
of Automotive Engineers (SAE); National Highway Transportation Safety
Administration (NHTSA); Dealer Section of the Department of Motor Vehicles,
State of Colorado; and Specialty Equipment Market Association
(SEMA).
Aero
anticipates no material effects on its business from federal, state or local
environmental regulation.
Employees
Aero
currently has seven full-time employees including its officers, Marty Williams,
Sara Williams, and Eric Nickerson. Aero's Vice President of Engineering and
Board member, Matthew Drabczyk, who is also a major LGA shareholder, works
on a
project basis for Aero. Aero anticipates adding sales,
administrative, and production employees as needed.
Reports
Filed with the Securities and Exchange Commission.
LGA
is
registered with the SEC under the Securities Exchange Act of 1934. As a
registrant, LGA files annual (Form 10-KSB that contains audited financial
information) and quarterly reports (Form 10-QSB that contain unaudiuted
financial information). LGA also files proxy statements for its meetings
of
shareholders and reports of material current events (Form 8-K). This information
may be requested or read through sources described above in this Item 1 or
from
the Company free of charge. The Company does not maintain copies of
its Securities and Exchange Commission reports on its website,
www.letsgoaero.com, because the reports are easily available at
www.sec.gov. Although the Company is required to send annual
reports to security holders that contain audited financial information when
it
solicits proxies for annual meetings of security holders, LGA has not held
an
annual meeting since 2004. LGA has no policy of voluntarily sending
such reports to security holders.
Item
2.
Description of Property.
Aero
currently leases 7,500 square feet of combined office and warehouse space
at its
principal place of business in Colorado Springs, Colorado, that it uses for
storage of some inventory and light product assembly. Aero entered into this
lease in June, 2007, and expects its facilities will be sufficient for the
one-year term of the lease. We expect the lease to be renewable on
nearly unchanged terms should we choose to do so upon its
expiration. The lease rent is $5,500 per month. The space is
currently fully built out in good condition and Aero has no plans to renovate
it. Should Aero decide or be forced to move at expiration of the
current lease, comparable properties both smaller and larger are available
at
competitive rates in the same general area as the current facilities. The
current space is adequately covered by insurance.
Item
3.
Legal Proceedings.
None
Item
4.
Submission of Matters to a Vote of Security Holders.
None.
PART
II
Item
5.
Market for Common Equity and Related Stockholder Matters.
LGA's
common stock is currently thinly traded "over-the-counter" and is listed
in the
Pink Sheets(R) published by the National Quotation Bureau, Inc. as well as
on
the OTC Bulletin Board operated by the NASDAQ Stock Market, Inc. The following
table sets forth the high and low bid prices for LGA's common stock for each
of
the quarters ending on the indicated date.
|
Quarter
Ended
|
Low
Price
|
High
Price
|
|
September
30
|
.81
|
1.20
|
|
December
31
|
1.15
|
1.20
|
2006
|
March
31
|
1.15
|
1.40
|
|
June
30
|
1.10
|
2.25
|
|
September
30
|
1.00
|
2.95
|
|
December
31
|
.70
|
1.95
|
2007
|
March
31
|
1.01
|
1.65
|
|
June
30
|
1.01
|
1.65
|
The
quotations reflect inter-dealer prices, without markup, markdown or commission
and may not represent actual transactions. The source of prices were
Yahoo.com and BigCharts.com.
The
number of shareholders of record for LGA's common stock as of June 30, 2007,
was
345, which include depositories and broker/dealers who hold shares of common
stock in "nominee" or "street" names.
The
following table provides information as of the most recently completed fiscal
year with respect to compensation plans (including individual compensation
agreements) under which equity securities of the Company are authorized for
issuance.
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under compensation
plans (excluding securities reflected in column (a))
|
|
(a)
|
(b)
|
(c)
|
Equity
compensation plans approved by security holders
|
1,000,000
|
$0.70
|
1,000,000
|
Equity
plans not approved by security holders *
|
1,078,662
|
$.63
|
0
|
Total
|
2,078,662
|
$.66
|
1,000,000
|
Sales
of
Unregistered Securities
The
following table sets forth information regarding recent sales of unregistered
securities.
Sales
of Unregistered Securities
The
following table sets forth information regarding recent sales of unregistered
securities.
|
|
Shares
of Common
|
|
Date
|
|
Stock
Sold
|
|
|
Aggregate
Price
|
|
August
2005
|
|
|
43,148
|
|
|
$ |
29,987.86
|
|
January
2006
|
|
|
215,738
|
|
|
|
149,937.91
|
|
June
2006
|
|
|
215,000
|
|
|
|
150,500.00
|
|
December
2006
|
|
|
215,000
|
|
|
|
150,500.00
|
|
January
2007
|
|
|
100,000
|
|
|
|
70,000.00
|
|
March
2007
|
|
|
25,000
|
|
|
|
31,250.00
|
|
April
2007
|
|
|
40,000
|
|
|
|
50,000.00
|
|
July
2007
|
|
|
40,000
|
|
|
|
50,000.00
|
|
July
2007
|
|
|
60,000
|
|
|
|
75,000.00
|
|
September
2007
|
|
|
35,350
|
|
|
|
25,100.00
|
|
All
sales
were either negotiated and approved by the Company's Board of Directors,
or
accomplished pursuant to an option exercise at the contracted exercise
price. Each of the purchases, except those occurring in July, 2007,
was made by an individual investor who was an existing
shareholder. All purchasers represented that they were accredited
investors as defined in the United States securities laws. The sales were
exempt
from registration under Section 4(2) and/or 4(6) of the Securities Act of
1933,
as amended, and/or Rule 506 or Regulation D. The company is not aware of
any
open market purchases by affiliates.
Item
6 –
Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Selected
Operating Data
|
|
Fiscal
Year Ended
|
|
|
|
June
30,
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
408,707
|
|
|
|
336,721
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenue
|
|
|
261,996
|
|
|
|
183,163
|
|
|
|
|
|
|
|
|
|
|
S
G & A (excluding Share-based compensation)
|
|
|
414,713
|
|
|
|
309,589
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
|
295,800
|
|
|
|
---
|
|
|
|
|
|
|
|
|
|
|
Research
& Development
|
|
|
94,095
|
|
|
|
13,779
|
|
|
|
|
|
|
|
|
|
|
Embezzlement
(expense), net of recoveries
|
|
|
(44,764 |
) |
|
|
(72,801 |
) |
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
|
(708,180 |
) |
|
|
(261,477 |
) |
Year
Ended June 30, 2007, compared to Year Ended June 30, 2006.
During
Fiscal 2007, the Company’s revenue rose to $408,707 compared to $336,721 in
revenue for Fiscal 2006. The increase stemmed primarily from
increased inquiries generated by our website and customer
referrals. We have begun to detect some seasonality in our sales
directly to end users. Sales in the spring and early summer months,
and in the days leading up to the Christmas holidays are the
strongest. Our slowest period is the time from August through
October. Seasonality has been, and is anticipated to continue being,
more pronounced for our hitch mounted cargo carrier products than it is for
our
trailers. We anticipate a rising proportion of trailer to cargo
carrier sales in the future, a trend which would reduce overall
seasonality. We also anticipate that sales to distributors and
dealers will grow compared to end user sales in the future. If this
happens, our seasonality may shift forward as a result.
Cost
of
revenue for Fiscal 2007 was $261,996 compared to $183,163 for Fiscal
2006. Gross margin declined from 45% to 36%, due to proportional
increases in sales to dealers and distributors compared to relatively higher
margin sales direct to end users. The company anticipated this
decline in gross margin percentage as a logical result of our efforts to
shift
our marketing focus towards distributors and dealers and away from end
users. The benefit of this strategy is an increase in unit sales
volumes that makes possible meaningful decreases in per-unit production
costs.
Selling,
General & Administrative expenses (excluding Share-based compensation)
increased to $414,713 for Fiscal 2007, compared to $309,589 for Fiscal
2006. The increase is primarily attributable to one-time costs
associated with a former employee’s embezzlement of Company resources (aside
from the direct embezzlement expense, net of recoveries), and higher marketing
costs. The Company expects S G & A expenses associated with
embezzlement to be immaterial during Fiscal 2008. Advertising costs
rose materially in 2007 compared to 2006 due to the substantial upgrade of
our
website, classified as an advertising expense, and to expanded email and
print
mail advertising. Management committed these added advertising
expenditures in the belief that our substantially expanded product line called
for an expanded effort to alert the buying public.
Share-based
compensation (included as a component of S G & A in the accompanying
Statement of Operations) is the cost to the Company of non-qualified stock
options awarded during the Fiscal Year, valued in accordance with the
Black-Scholes option pricing formula. The options were awarded to
non-management associates of the Company as incentive for services anticipated
to be rendered beyond the current period indefinitely into the
future. The value of the awards should not be considered indicative
of future option award values.
Research
and Development expense for Fiscal 2007 was $94,095 compared to $13,779 for
the
prior year. The increase is attributable to the one-time expensing of
accumulated prototype product not necessarily intended to be resold and the
allocation to R & D of office and employee overhead used in the creative
process. In addition, R & D expenses rose due to expanded
development efforts in preparing several new products for market.
The
Company suffered an embezzlement of $72,801 during the year ended June 30,
2006
and an additional $44,764 for the period from July 2006 through September
28,
2006, the day the embezzlement was discovered. Approximately $17,000
of the embezzled funds have been recovered, and we anticipate no further
recoveries. We have implemented internal control procedures which we
believe will prevent any future losses.
Net
loss
for Fiscal 2007 increased to ($708,180) or ($0.08) per share compared to
($261,477) or ($0.03) in the prior year primarily due to the reasons discussed
above.
LIQUIDITY
AND CAPITAL RESOURCES
The
Company’s cash position was $-0- at both June 30, 2007 and June 30,
2006. Occasional reductions of our cash balance to $-0-, called an
“overdraft” condition, have all been for brief periods in immaterial amounts and
have generated no interest expenses. The company has met all of its
financial obligations in a timely manner. During Fiscal 2007, the
Company used $436,256 to fund operating activities.
LGA
Capital Requirements
During
Fiscal 2007, the Company raised operating capital from investors through
the
following transactions: In October, 2006, an affiliated investor (the
Company President) loaned the Company $60,000 on an unsecured promissory
note
carrying 8% annual interest, maturing June 30, 2010. Without this
immediate capital infusion, the company would not have been able to continue
operations in the wake of the embezzlement discussed in Note 8 to the Financial
Statements. In December, 2006, an affiliated investor purchased
215,000 units, for $150,000. Each unit was comprised of one share of
restricted common stock and one 5-year warrant exercisable at
$1.00. This purchase completed the Company’s existing private
placement offering. In January, 2007, an unaffiliated existing
shareholder exercised 100,000 options for 100,000 restricted common shares
for
$70,000 or $0.70 per share. In March, 2007, an
unaffiliated investor purchased 25,000 shares of restricted common
stock for $31,250 or $1.25 per share in a private placement. In
April, 2007, an unaffiliated investor purchased 40,000 shares on the
same terms, for $50,000. In July, 2007 (subsequent to year-end),
another unaffiliated investor purchased 60,000 shares on the same
terms, for $75,000, the April purchaser bought another 40,000 shares, again
from
the same offering, for $50,000, and a director loaned the Company $36,000
in the
form of an unsecured demand note carrying 8% annual interest. In
September, 2007, the January purchaser exercised options for 35,350 restricted
common shares for $24,745, and an affiliate loaned the Company $88,056 on
an
unsecured note carrying 8% interest maturing December 15, 2007. No
commissions were paid on these transactions.
At
June
30, 2007, the Company has substantially completed initial production and
inventory acquisition of three new products, all of which began selling to
dealers and end users during 2007’s fourth fiscal quarter. These
products are the LGT-7 trailer, GearWagon 125 trailer, and GearCage hitch
mounted cargo carrier. Some necessary accessories to these products
will be brought into the product lineup early in Fiscal 2008, and will occasion
further (but significantly smaller) capital commitments for initial inventory
acquisition. The Company anticipates that sales rates for the
GearWagon 125 trailer may increase during Fiscal 2008 to levels that would
require investment in cast tools for more rapid production of the product’s
roto-molded plastic parts. The anticipated increased sales would most
likely go to a single major distributor with whom the company is in advanced
discussions. The required tooling, costing approximately
$125,000, would most likely be financed by the major distributor. No
other significant tooling costs are anticipated for Fiscal 2008.
The
Company is in active discussion on several product licensing and distribution
opportunities with larger companies that, if completed, have the potential
to
generate significant additional revenues and to evolve our business model
in
significant ways. We have signed a letter of intent with a nationwide
discount hardware retailer. Under the proposed terms, this retailer
would have a non-exclusive license to manufacture and sell the Company’s LGT-7
trailer through its retail stores. The Company would have rights to
purchase LGT-7’s for our own sales channels from the retailer’s manufacturing
facilities with preferred pricing. We are in advanced discussions
with a major outdoor recreational equipment company to test market the Company’s
GearWagon 125 sport utility trailer. The trailers are to be sold
through several stores of another major company, a nationwide recreational
product retailer. The Company is in advanced discussion with a
leading purveyor of convalescent transportation equipment to market the
convalescent transport version of our GearCage hitch mounted cargo carrier
through the purveyor’s retail stores.
No
assurance can be given as to whether our letter of intent mentioned above,
or
any other of our plans or discussions will result in a completed transaction,
nor can the Company give any assurance as to the timing or financial magnitude
of these transactions. To the extent these initiatives do come to
fruition, the Company would anticipate them to cause higher total revenues
and
lower purchase costs due to improved economies of scale, netting improved
gross
margin percentages. Offsetting these positive effects to some extent
could be reductions of overall gross margin percentage resulting from an
increased proportion of our sales going to distributors and dealers rather
than
to end users. Even though the Company anticipates increasing revenue
in all sales channels going forward, it is not able to forecast when its
sales
volumes will be sufficient to cover the Company’s operating
expenses.
Our
auditor expresses substantial doubt as to the company’s ability to continue as a
going concern. He bases this doubt on our history of operating losses
and present (as of June 30, 2007) negative working capital
position. We have experienced negative cash flow from operations
since our inception and we have expended, and expect to continue to expend,
substantial funds to continue our research and development and marketing
efforts. As a result, we have suffered recurring losses through June 30,
2007. Based on our current operating plans, management believes
that proceeds from future revenues and futures sales of common stock will
be
sufficient to meet operating needs for the foreseeable future. The actual
funds
that we will need to operate during this period will be determined by many
factors, some of which are beyond our control. Lower than anticipated sales
of
our products or higher than anticipated expenses could require us to need
additional financing sooner than expected. There is no
assurance that we will be successful in selling additional shares of common
stock to the public.
While
a
portion of total liabilities, approximately $262,000, is owed to present
officers and/or directors, there can be no assurance that these
officers/directors will not seek payment in the near term.
Inflation
has not had a significant impact on the Company’s operations.
Item
7. Financial Statements.
LGA
HOLDINGS, INC.
Financial
Statements
June
30, 2007
(with
Report of Independent Registered Public Accounting Firm Thereon)
LGA
HOLDINGS, INC.
Index
to Financial Statements
|
|
Page
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
|
|
Balance
Sheet at June 30, 2007
|
F-3
|
|
|
|
Statements
of Operations, for the years ended
|
|
|
June
30, 2007 and 2006
|
F-4
|
|
|
|
Statement
of Changes in Shareholders' Equity for the period from
|
|
|
July
1, 2005 through June 30, 2007
|
F-5
|
|
|
|
Statements
of Cash Flows, for the years ended
|
|
|
June
30, 2007 and 2006
|
F-6
|
|
|
|
Notes
to financial statements
|
F-7
|
Report
of Independent Registered Public Accounting Firm
The
Board
of Directors and Shareholders
LGA
Holdings, Inc.:
We
have
audited the accompanying balance sheet of LGA Holdings, Inc. as of June
30, 2007, and the related statements of operations, changes in
shareholders’ equity, and cash flows for the years ended June 30, 2007 and
2006. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Companies
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In
our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of LGA Holdings, Inc. as of June
30,
2007, and the results of its operations and its cash flows for the years ended
June 30, 2007 and 2006 in conformity with accounting principles generally
accepted in the United States.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred recurring operating losses and
has a working capital deficit at June 30, 2007, which raises substantial doubt
about its ability to continue as a going concern. Management’s plans
regarding those matters also are described in Note 1. The financial
statements do not include any adjustments that might result from the outcome
of
this uncertainty.
/s/
Cordovano and Honeck LLP
Cordovano
and Honeck LLP
Englewood,
Colorado
September
19, 2007
LGA
HOLDINGS, INC.
Balance
Sheet
June
30, 2007
|
|
Current
assets:
|
|
|
|
Accounts
receivable (Note 1)
|
|
$ |
9,683
|
|
Inventory,
at lower of cost or market (Note 3)
|
|
|
165,851
|
|
Prepaid
expenses
|
|
|
20,084
|
|
Total
current assets
|
|
|
195,618
|
|
|
|
|
|
|
Property
and equipment, at cost,
|
|
|
|
|
net
of accumulated depreciation of $140,860 (Note 3)
|
|
|
135,709
|
|
Intangible
assets (Note 3)
|
|
|
97,777
|
|
Other
assets
|
|
|
2,605
|
|
|
|
|
|
|
Total
assets
|
|
$ |
431,709
|
|
|
|
|
|
|
Liabilities
and Shareholders’ Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Bank
overdraft
|
|
$ |
238
|
|
Accounts
payable
|
|
|
93,199
|
|
Accrued
payroll
|
|
|
123,161
|
|
Accrued
interest, related party (Note 2)
|
|
|
2,804
|
|
Total
current liabilities
|
|
|
219,402
|
|
|
|
|
|
|
Long-term
debt, related party (Note 2)
|
|
|
60,000
|
|
|
|
|
|
|
Total
liabilities
|
|
|
279,402
|
|
|
|
|
|
|
Commitments
and contingencies (Note 6)
|
|
|
—
|
|
|
|
|
|
|
Shareholders’
equity (Notes 2 and 5):
|
|
|
|
|
Common
stock, $.001 par value; authorized 100,000,000
shares,
|
|
|
|
|
issued
and outstanding, 8,972,960 shares
|
|
|
8,973
|
|
Additional
paid-in capital
|
|
|
1,754,066
|
|
Retained
deficit
|
|
|
(1,610,732 |
) |
|
|
|
|
|
Total
shareholders' equity
|
|
|
152,307
|
|
|
|
|
|
|
Total
liabilities and shareholders' equity
|
|
$ |
431,709
|
|
See
accompanying notes to financial statements
LGA
HOLDINGS, INC.
Statements
of Operations
|
|
For
the Years Ended
|
|
|
|
June
30,
|
|
|
|
2007
|
|
|
2006
|
|
Sales
and revenue:
|
|
|
|
|
|
|
Product
sales
|
|
$ |
345,411
|
|
|
$ |
270,719
|
|
Royalty
revenue
|
|
|
63,296
|
|
|
|
66,002
|
|
|
|
|
|
|
|
|
|
|
Total
sales and revenues
|
|
|
408,707
|
|
|
|
336,721
|
|
|
|
|
|
|
|
|
|
|
Costs
and expenses:
|
|
|
|
|
|
|
|
|
Costs
of sales and revenue
|
|
|
261,996
|
|
|
|
183,163
|
|
Research
and development
|
|
|
94,095
|
|
|
|
13,779
|
|
General
and administrative
|
|
|
710,513
|
|
|
|
309,589
|
|
|
|
|
|
|
|
|
|
|
Total
costs and expenses
|
|
|
1,066,604
|
|
|
|
506,531
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(657,897 |
) |
|
|
(169,810 |
) |
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
229
|
|
|
|
834
|
|
Interest
expense
|
|
|
(5,748 |
) |
|
|
(19,700 |
) |
Embezzlement
expense, net of recoveries (Note 8)
|
|
|
(44,764 |
) |
|
|
(72,801 |
) |
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
|
|
(708,180 |
) |
|
|
(261,477 |
) |
|
|
|
|
|
|
|
|
|
Income
tax provision (Notes 1 and 7)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(708,180 |
) |
|
$ |
(261,477 |
) |
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share
|
|
$ |
(0.08 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
8,703,345
|
|
|
|
8,216,424
|
|
See
accompanying notes to financial statements
LGA
HOLDINGS, INC.
Statement
of Changes in Shareholders' Equity
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Retained
|
|
|
|
|
|
|
Shares
|
|
|
Par
Value
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at July 1, 2005
|
|
|
8,119,074
|
|
|
$ |
8,119
|
|
|
$ |
620,966
|
|
|
$ |
(653,135 |
) |
|
$ |
(24,050 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
exercised
at $.695 per share (Note 2)
|
|
|
258,886
|
|
|
|
259
|
|
|
|
179,667
|
|
|
|
—
|
|
|
|
179,926
|
|
Sale
of call option (Note 2)
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
—
|
|
|
|
200,000
|
|
Sale
of units at $.70 per unit (Note 5)
|
|
|
215,000
|
|
|
|
215
|
|
|
|
150,285
|
|
|
|
—
|
|
|
|
150,500
|
|
Net
loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(261,477 |
) |
|
|
(261,477 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at June 30, 2006
|
|
|
8,592,960
|
|
|
|
8,593
|
|
|
|
1,150,918
|
|
|
|
(914,612 |
) |
|
|
244,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment
for uncorrected immaterial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financial
statement differences (Note 9)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,060
|
|
|
|
12,060
|
|
Contributed
interest (Note 2)
|
|
|
—
|
|
|
|
—
|
|
|
|
6,478
|
|
|
|
—
|
|
|
|
6,478
|
|
Common
stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
exercised
at $.70 per share (Note 5)
|
|
|
100,000
|
|
|
|
100
|
|
|
|
69,900
|
|
|
|
—
|
|
|
|
70,000
|
|
Sale
of units at $.70 per unit (Note 2)
|
|
|
215,000
|
|
|
|
215
|
|
|
|
149,785
|
|
|
|
—
|
|
|
|
150,000
|
|
Sale
of common stock at $1.25 per share (Note 5)
|
|
|
65,000
|
|
|
|
65
|
|
|
|
81,185
|
|
|
|
—
|
|
|
|
81,250
|
|
Stock
options granted (Notes 2 and 5)
|
|
|
—
|
|
|
|
—
|
|
|
|
295,800
|
|
|
|
—
|
|
|
|
295,800
|
|
Net
loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(708,180 |
) |
|
|
(708,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at June 30, 2007
|
|
|
8,972,960
|
|
|
$ |
8,973
|
|
|
$ |
1,754,066
|
|
|
$ |
(1,610,732 |
) |
|
$ |
152,307
|
|
See
accompanying notes to financial statements
LGA
HOLDINGS, INC.
Statements
of Cash flows
|
|
For
the Years Ended
|
|
|
|
June
30,
|
|
|
|
2007
|
|
|
2006
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(708,180 |
) |
|
$ |
(261,477 |
) |
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
used
in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
31,638
|
|
|
|
15,872
|
|
Share-based
payment (Notes 2 and 5)
|
|
|
295,800
|
|
|
|
—
|
|
Contributed
interest (Note 2)
|
|
|
6,478
|
|
|
|
—
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Receivables,
inventory and other assets
|
|
|
12,243
|
|
|
|
(65,990 |
) |
Payables,
deferred income and other liabilities
|
|
|
(74,235 |
) |
|
|
1,818
|
|
Net
cash used in
|
|
|
|
|
|
|
operating
activities
|
|
|
(436,256 |
) |
|
|
(309,777 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase
of equipment and other assets
|
|
|
(75,494 |
) |
|
|
(96,031 |
) |
Net
cash used in
|
|
|
|
|
|
|
|
|
investing
activities
|
|
|
(75,494 |
) |
|
|
(96,031 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds
from related party debt (Note 2)
|
|
|
60,000
|
|
|
|
—
|
|
Proceeds
from collection of stock
|
|
|
|
|
|
|
|
|
subscription
receivable (Note 5)
|
|
|
150,500
|
|
|
|
—
|
|
Proceeds
from sale of common stock (Notes 2 and 5)
|
|
|
301,250
|
|
|
|
179,926
|
|
Proceeds
from sale of call option (Note 5)
|
|
|
—
|
|
|
|
200,000
|
|
Net
cash provided by
|
|
|
|
|
|
|
financing
activities
|
|
|
511,750
|
|
|
|
379,926
|
|
Net
change in cash and
|
|
|
|
|
|
|
cash
equivalents
|
|
|
—
|
|
|
|
(25,882 |
) |
|
|
|
|
|
|
|
Cash
and cash equivalents:
|
|
|
|
|
|
|
Beginning
of year
|
|
|
—
|
|
|
|
25,882
|
|
|
|
|
|
|
|
|
|
|
End of year
|
|
$ |
—
|
|
|
$ |
—
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash
paid during the year for:
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$ |
—
|
|
|
$ |
—
|
|
Interest
|
|
$ |
—
|
|
|
$ |
—
|
|
|
|
|
|
|
|
|
|
|
Noncash
investing and financing transactions:
|
|
|
|
|
|
|
|
|
Debt
converted to accrued payroll (Note 2)
|
|
$ |
106,408
|
|
|
$ |
—
|
|
Accrued
salaries and interest converted to debt
|
|
$ |
—
|
|
|
$ |
106,408
|
|
See
accompanying notes to financial statements
LGA
HOLDINGS, INC.
Notes
to Financial Statements
(1)
Organization and summary of significant accounting
policies
Organization,
basis of presentation and Liquidity
LGA
Holdings, Inc. (“LGA”, “We”, “Us” or “Our”) was incorporated in Colorado on
April 14, 1998 as Let’s Go Aero, Inc. We develop intellectual property for the
automotive, recreation vehicle and recreation industries. We also
manufacture and distribute various types of specialty trailers and cargo
carrying enhancements as well as related parts, accessories and services
for the
automobile, recreational vehicle and recreational equipment industries. Our
specialty trailers are manufactured by third party vendors and assembled
in our
facilities in Colorado Springs. We sell our products directly
to distributors, dealers, and end-user customers.
Going
Concern
Inherent
in our business are various risks and uncertainties, including historical
operating losses and dependence upon strategic alliances. 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.
We
have
experienced negative cash flow from operations since our inception and we have
expended, and expect to continue to expend, substantial funds to continue our
research and development and marketing efforts. As a result, we have suffered
recurring losses through June 30, 2007. Based on our current
operating plans, management believes that proceeds from future revenues and
futures sales of common stock will be sufficient to meet operating needs for
the
foreseeable future. The actual funds that we will need to operate during this
period will be determined by many factors, some of which are beyond our control.
Lower than anticipated sales of our products or higher than anticipated expenses
could require us to need additional financing sooner than
expected. There is no assurance that we will be
successful in selling additional shares of common stock to the
public. Our business plan projects profits during fiscal
2008.
Fair
Values of Financial Instruments
Statement
of Financial Accounting Standards No. 107 (“SFAS 107”), Disclosures about
Fair Value of Financial Instruments requires disclosure of the fair value
of financial instruments held by the Company. SFAS 107 defines the fair value
of
financial instruments as the amount at which the instrument could be exchanged
in a current transaction between willing parties. The carrying value of
financial instruments including cash, receivables, prepaid expenses, and
accounts payable approximates their fair value at the reporting balance sheet
date due to the relatively short-term nature of these instruments. The
fair market value of long-term debt cannot be determined due to a lack of
comparability of similar market instruments.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
The more significant estimates are used for such items as: recoverability of
inventory and property and equipment, valuation allowance for doubtful accounts,
reserves for warranty, and fair valuation of stock options. As better
information becomes available or as actual amounts are determinable, the
recorded estimates are revised. Ultimate results could differ from these
estimates.
LGA
HOLDINGS, INC.
Notes
to Financial Statements
Cash
and Cash Equivalents
We
consider all highly liquid securities with original maturities of three months
or less when acquired to be cash equivalents. At June 30, 2007, there
were no cash equivalents.
Concentrations
We
purchase our plastic shells from two suppliers. The purchases represented
approximately 20% and 50% of cost of sales for the years ended June 30, 2007
and
2006, respectively. Although there are a limited number of manufacturers of
plastic shells, management believes that other suppliers could provide similar
shells on comparable terms.
Accounts
Receivable
Trade
receivable consists of amounts due from customers, which are mainly end-users
and dealers. We generally consider accounts more than 30 days old to be past
due. We allow for estimated losses on accounts receivable based on prior bad
debt experience and a review of existing receivables. Bad debt
recoveries are charged against the allowance account as realized. At
June 30, 2007, we considered accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required.
Inventories
Inventories
are stated at the lower of cost, as determined on average cost basis, or
market. Raw materials consist of the cost of materials required to
produce trailers and accessories and to support parts sales and
service.
Prepaid
expenses
Prepaid
expenses primarily include the unamortized portion of annual casualty and third
party liability insurance premiums. These premiums are amortized to expense
over
the insurance year.
Property
and Equipment
Property
and equipment are stated at cost. Expenditures that extend the useful
lives of assets are capitalized. Repairs, maintenance and renewals
that do not extend the useful lives of the assets are expensed as
incurred. Depreciation is provided for financial
reporting purposes using straight-line method over estimated useful lives
ranging from 3 to 7 years for machinery, tooling, furniture and
equipment.
Certain
tooling used to make our plastic shells is held for use at our subcontractors’
facilities in Denver, Colorado and Middlebury, Indiana.
Intangible
Assets
We
have
patents issued and pending to protect our intellectual
property. These patents relate to how cargo can be attached and
carried on a vehicle’s hitch receiver, frame, or body surface. Patent
costs are amortized on a straight-line basis and charged to amortization expense
over the expected useful life of the patent. Costs of patent
applications are deferred until the patent is granted. We will
begin amortization when the patent is granted.
LGA
HOLDINGS, INC.
Notes
to Financial Statements
Impairment
of Long-Lived Assets
In
accordance with Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, we evaluate
our
long-lived assets, including related intangibles, of identifiable business
activities for impairment when events or changes in circumstances indicate,
in
management's judgment, that the carrying value of such assets may not be
recoverable. The determination of whether impairment has occurred is based
on
management's estimate of undiscounted future cash flows attributable to the
assets as compared to the carrying value of the assets. If impairment has
occurred, estimating the fair value for the assets and recording a provision
for
loss if the carrying value is greater than fair value determine the amount
of
the impairment recognized. For assets identified to be disposed of in the
future, the carrying value of these assets is compared to the estimated fair
value less the cost to sell to determine if impairment is required. Until the
assets are disposed of, an estimate of the fair value is re-determined when
related events or circumstances change.
When
determining whether impairment of one of our long-lived assets has occurred,
we
must estimate the undiscounted cash flows attributable to the asset or asset
group. Our estimate of cash flows is based on assumptions that could change
in
the future.
Any
significant variance in any of the above assumptions or factors could materially
affect our cash flows, which could require us to record an impairment of an
asset. No impairment charges were recognized during each of the years ended
June
30, 2007 and 2006.
Revenue
Recognition
We
recognize revenue from the sale of trailers and accessories when there is
persuasive evidence that title and risks of ownership are transferred to the
customer, which generally is upon shipment or customer pick-up. Accordingly,
no
provision for sales allowances or returns is normally required except in unusual
circumstances.
Revenue
from sales of parts is recognized when the part has been shipped. Revenues
related to shipping and deliveries are included as a component of net sales
and
the related shipping costs are included as a component of cost of
sales.
Royalty
income is recognized based on the terms specified in contractual settlement
agreements.
Product
Warranty
Our
products are covered by product warranties for one year after the date of sale.
At the time of sale, the Company recognizes estimated warranty costs, based
on
prior history and expected future claims, by a charge to cost of sales and
records an accrued liability. The accrued liability is reduced as actual
warranty costs are paid and is evaluated periodically to validate previous
estimates and known requirements and adjusted as necessary. At June
30, 2007, we have not accrued a reserve for warranty expense as management
determined the amount to be immaterial with respect to overall operations and
financial position.
LGA
HOLDINGS, INC.
Notes
to Financial Statements
Advertising
Costs
All
advertising costs are expensed as incurred. Advertising expenses were $60,896
and $13,046 for the years ended June 30, 2007 and 2006,
respectively.
Research
and Development Expenses
Research
and development expenses were incurred in fiscal 2007 and 2006 and totaled
$94,106 and $13,779, respectively. R&D costs are expensed as
incurred.
Income
Taxes
We
account for income taxes under the provisions of Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS No.
109). SFAS No. 109 requires recognition of deferred tax liabilities
and assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Stock-based
Compensation
Effective
July 1, 2005, the Company adopted SFAS No. 123 (Revised 2004),
Share-Based Payment, which requires that compensation related to all
stock-based awards, including stock options, be recognized in the financial
statements based on their estimated grant-date fair value. We have previously
recorded stock compensation pursuant to the intrinsic value method under APB
Opinion No. 25, whereby compensation was recorded related to performance
share and unrestricted share awards and no compensation was recognized for
most
stock option awards. We are using the modified prospective application method
of
adopting SFAS No. 123R, whereby the estimated fair value of unvested stock
awards granted prior to July 1, 2005 will be recognized as compensation expense
in periods subsequent to June 30, 2005, based on the same valuation method
used
in our prior pro forma disclosures. We have estimated expected forfeitures,
as
required by SFAS No. 123R, and we are recognizing compensation expense only
for those awards expected to vest. Compensation expense is amortized over the
estimated service period, which is the shorter of the award’s time vesting
period or the derived service period as implied by any accelerated vesting
provisions when the common stock price reaches specified levels. All
compensation must be recognized by the time the award vests. The cumulative
effect of initially adopting SFAS No. 123R was immaterial.
Loss
Per Share
SFAS
128,
Earnings Per Share, requires presentation of “basic” and “diluted”
earnings per share on the face of the statements of operations for
all entities
with complex capital structures. Basic earnings per share are computed by
dividing net income by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflect the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted during the period. Dilutive securities having
an anti-dilutive effect on diluted earnings per share are excluded from the
calculation. At June 30, 2007, the company has options outstanding
that could be exercised representing a total of 2,742,595 additional
shares. All have been excluded from the weighted average share
calculation because they would be anti-dilutive.
The
weighted average number of common shares outstanding was calculated based upon
post-split shares for all periods presented.
LGA
HOLDINGS, INC.
Notes
to Financial Statements
New
Accounting Pronouncements
In
June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes” (“FIN 48”). FIN 48, which is an interpretation of
SFAS No. 109, “Accounting for Income Taxes,” provides guidance on the
manner in which tax positions taken or to be taken on tax returns should be
reflected in an entity’s financial statements prior to their resolution with
taxing authorities. The Company is required to adopt FIN 48 during the first
quarter of fiscal 2008. The Company is currently evaluating the requirements
of
FIN 48 and has not yet determined the impact, if any; this interpretation may
have on its financial statements.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (“SFAS 157”). This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. The provisions of SFAS
157 apply under other accounting pronouncements that require or permit fair
value measurements. We are required to adopt SFAS 157 effective for our fiscal
year 2009. The impact on our financial statements has not been
determined.
In
February 2007, the FASB issued SFAS No.159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS 159”). This statement permits
companies to measure many financial instruments and certain other items at
fair
value. We are required to adopt SFAS 159 effective for our fiscal year 2009.
The
impact on our financial statements has not been determined.
(2)
Related Party Transactions
During
the year ended June 30, 2007, the Company signed promissory notes totaling
$60,000 payable to its President, for working capital
purposes. The promissory notes bear interest rates of 8% per
annum and are due on June 30, 2010. We incurred interest expense of
$2,804 on the notes for the year ended June 30, 2007. At June 30,
2007, accrued interest related to the promissory notes totaled $2,804 and
is
reflected in the accompanying financial statements.
In
March
2007, we granted to one of our directors an option to purchase a total of
100,000 shares of the Company’s common stock. The option carries an
exercise price of $1.75 per share and vested at the date of grant. We
determined the fair value of the options at $1.65 per share and recorded
share-based payment $165,000 in accordance with SFAS 123R. See
footnote 5.
In
December 2006, we conducted a private placement offering whereby we sold 215,000
units to an affiliate at $.70 per unit or $150,000. Each unit
comprised of one share of the Company’s common stock and one option to purchase
the Company’s common stock at $1.00 per share.
In
September 2006, our Board of Directors approved the reclassification of $106,408
from notes payable to officers to accrued payroll. Accrued interest
related to the notes payable in the amount of $6,478 as of June 30, 3006 was
forgiven by the officers and recorded as contributed capital and is shown in
the
accompanying financial statements.
In
December 2004, we sold 1,250,000 shares of our restricted common stock, callable
at $.40 per share through November 2006, to an affiliate for $.20 per share
or
$250,000. In April 2006, the parties involved determined that the
Company’s share price increased to $1.15, which gave our affiliate the incentive
to retain the shares. As a result, we sold the call option on the
1,250,000 shares for $200,000 to our affiliate. We recorded the gain
of $200,000 as contributed capital in the accompanying financial statements,
as
the transaction was with a substantial shareholder of the
Company
LGA
HOLDINGS, INC.
Notes
to Financial Statements
During
the year ended June 30, 2006, an affiliate exercised options to purchase 258,886
restricted shares of common stock at the price of $.695 or
$179,926.
(3)
Balance Sheet Components
Inventory
At
June
30, 2007, inventory consisted of:
Raw
materials
|
|
$ |
93,126
|
|
Finished
goods
|
|
|
72,725
|
|
|
|
$ |
165,851
|
|
Property
and Equipment
At
June
30, 2007, major classes of property and equipment were:
Leasehold
improvements
|
|
$ |
4,212
|
|
Furniture
and fixtures
|
|
|
25,377
|
|
Equipment
|
|
|
92,321
|
|
Tooling,
held offsite
|
|
|
154,659
|
|
|
|
|
276,569
|
|
Less:
accumulated depreciation
|
|
|
(140,860 |
) |
|
|
$ |
135,709
|
|
Depreciation
expense during the years ended June 30, 2007 and 2006 totaled $30,050 and
$13,558, respectively.
Intangible
Assets
At
June
30, 2007, intangible assets consisted of:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Amortization
|
|
|
|
Total
|
|
|
Period
|
|
Patents,
net of $20,501 in accumulated
|
|
|
|
|
|
|
amortization
|
|
$ |
46,557
|
|
|
13
years
|
|
Deferred
patent application costs
|
|
|
51,220
|
|
|
|
n/a
|
|
|
|
$ |
97,777
|
|
|
|
|
|
LGA
HOLDINGS, INC.
Notes
to Financial Statements
Estimated
annual amortization expenses are as follows for years ending June
30:
2008
|
|
$ |
3,172
|
|
2009
|
|
$ |
3,172
|
|
2010
|
|
$ |
3,172
|
|
2011
|
|
$ |
3,172
|
|
2012
|
|
$ |
3,172
|
|
Amortization
expense during the years ended June 30, 2007 and 2006 totaled $1,588 and $2,314,
respectively.
(4)
Unearned Revenue
In
May
2002, we licensed certain intellectual property to Advanced Accessory Systems,
LLC, (AAS) for five years. We received an upfront payment against
future royalties of $300,000, which we deferred. For accounting
purposes, we reflect the payment in royalty income, pro-rata, over the life
of
the licenses. In fiscal years 2007 and 2006, respectively, we
recognized $55,000 and $60,000 in royalty revenue related to this
license. The balance of unearned revenue was $-0- as of June 30,
2007.
(5)
Shareholders’ Deficit
Features
of Preferred Stock
Our
preferred stock may be issued from time-to-time in one or more
series. Our Board of Directors is authorized to (1) divide the
preferred stock into series; (2) establish the number of preferred shares in
a
series; and (3) fix and determine the relative rights and preferences of any
series of our preferred stock.
Sale
of Common Stock
In
fiscal
year 2007, we commenced a private placement offering of 240,000 of our common
shares priced at $1.25 per share. As of June 30, 2007, we sold 65,000
shares of common stock at the price of $1.25 per share or
$81,250. No commissions were paid in connection with this
transaction.
In
January 2007, a former employee exercised options to purchase 100,000 shares
of
the Company’s common stock for proceeds of $70,000.
In
June
2006, we conducted a private placement offering whereby we sold 215,000 units
to
two unaffiliated investors at $.70 per unit or $150,500. Each unit
comprised of one share of our common stock and one option to purchase the
Company’s common stock at $1.00 per share. No commissions were paid
in connection with this transaction.
Stock
Options
A
summary
of changes in the number of stock options outstanding for the years ended June
30, 2007 and 2006 is as follows:
LGA
HOLDINGS, INC.
Notes
to Financial Statements
|
|
|
|
|
|
Weighted
|
|
Weighted
|
|
|
|
|
|
|
|
|
Average
|
|
Average
|
|
|
|
|
|
|
|
|
Exercise
|
|
Remaining
|
|
Aggregate
|
|
|
|
|
|
|
Price
|
|
Contractual
|
|
Intrinsic
|
|
|
|
|
Shares
|
|
Per
Share
|
|
Life
|
|
Value
|
Outstanding
at June 30, 2005
|
3,276,008
|
|
$0.67
|
|
6.39
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
215,000
|
|
$1.00
|
|
5.08
years
|
|
|
Exercised
|
(258,886)
|
|
$0.70
|
|
N/A
|
|
|
Cancelled/Expired
|
(679,575)
|
|
$0.70
|
|
N/A
|
|
|
Outstanding
at June 30, 2006
|
2,552,547
|
|
$0.70
|
|
6.28
years
|
|
|
Granted
|
395,000
|
|
$1.34
|
|
6.6
|
|
|
Exercised
|
(100,000)
|
|
$0.70
|
|
N/A
|
|
|
Cancelled/Expired
|
(104,952)
|
|
$0.70
|
|
N/A
|
|
|
Outstanding
at June 30, 2007
|
2,742,595
|
|
$0.79
|
|
5.8
years
|
|
$ 333,250
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at June 30, 2007
|
2,742,595
|
|
$0.79
|
|
5.8
years
|
|
$ 333,250
|
The
weighted-average grant-date fair value of options granted during the years
ended
June 30, 2007 and 2006 were $1.64 and $-0-, respectively. The total
intrinsic value of options exercised during the years ended June 30, 2007 and
2006 were $-0- and $-0-, respectively.
In
March
2007, the Company granted to a director options to purchase an aggregate of
100,000 shares of the Company’s common stock at an exercise price of $1.75 per
share. The options vested on the date of grant and expire on March 31, 2017.
The
quoted market price of the stock on the date of grant was $1.65 per share.
The
Company valued the option at $1.65 per share, or $165,000, in accordance with
SFAS 123(R). The expense of $165,000 was recorded as share-based payments
in the accompanying financial statements.
In
January 2007, the Company granted an employee options to purchase an aggregate
of 5,000 shares of the Company’s common stock at an exercise price of $1.50 per
share. The options vested on the date of grant and expire on January 15, 2012.
The quoted market price of the stock on the date of grant was $1.41 per share.
The Company valued the option at $1.41 per share, or $7,050, in accordance
with
SFAS 123(R). The expense of $7,050 was recorded as share-based payments in
the accompanying financial statements.
In
March
2007, the Company granted two consultants options to purchase an aggregate
of
75,000 shares of the Company’s common stock at an exercise price of $1.75 per
share. The options vested on the date of grant and expire on March 31, 2017.
The
quoted market price of the stock on the date of grant was $1.65 per share.
The
Company valued the option at $1.65 per share, or $123,750, in accordance with
SFAS 123(R). The expense of $123,750 was recorded as share-based payments
in the accompanying financial statements.
The
fair
value for these options was estimated at the date of grant using the
Black-Scholes option-pricing model with the following
assumptions:
LGA
HOLDINGS, INC.
Notes
to Financial Statements
|
Risk-free
interest rate
|
|
4.74%
|
|
|
Dividend
yield
|
|
0.00%
|
|
|
Volatility
factor
|
|
286.850%
|
|
|
Weighted
average expected life
|
|
5
to 10 years
|
|
Total
compensation cost for share-based payment arrangements at June 30, 2007 and
2006:
|
|
2007
|
|
|
2006
|
|
Stock
options, related party
|
|
$ |
165,000
|
|
|
$ |
—
|
|
Stock
options, other
|
|
|
130,800
|
|
|
|
—
|
|
Total
compensation cost
|
|
|
295,800
|
|
|
|
—
|
|
Income
tax
|
|
|
—
|
|
|
|
—
|
|
Net
compensation cost
|
|
$ |
295,800
|
|
|
$ |
—
|
|
At
June
30, 2007, all compensation costs have been recognized, as all options granted
were fully vested on the grant date.
(6)
Commitments
We
lease
our office space under a non-cancelable operating lease through May
2008. Future minimum lease payments for the year ending June 30 2008
is $48,952.
We
recorded rent expense in the amount of $57,291 and $48,167 for the years ended
June 30, 2007 and 2006, respectively.
(7)
Income Taxes
A
reconciliation of U.S. statutory federal income tax rate to the effective rate
follows for the years ended June 30, 2007 and 2006:
|
|
June
30,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
U.S.
statutory federal rate
|
|
|
34.00 |
% |
|
|
30.49 |
% |
State
income tax rate
|
|
|
3.06 |
% |
|
|
3.22 |
% |
Deferred
income
|
|
|
0.00 |
% |
|
|
-7.09 |
% |
Net
operating loss for which no tax
|
|
|
|
|
|
|
|
|
benefit
is currently available
|
|
|
-37.06 |
% |
|
|
-26.62 |
% |
|
|
|
0.00 |
% |
|
|
0.00 |
% |
At
June
30, 2007, deferred tax assets consisted of net tax asset of $259,809 due to
net
operating loss carryforward for federal income tax purposes of approximately
$1,552,930, which was fully allowed for in the valuation allowance of
$259,809. The valuation allowance offsets the net deferred tax asset
for which there is no assurance of recovery. The change in the
valuation allowance for the year ended June 30, 2007 was
$190,201. The net operating loss carryforward will expire through
2027.
LGA
HOLDINGS, INC.
Notes
to Financial Statements
The
valuation allowance is evaluated at the end of each year, considering positive
and negative evidence about whether the deferred tax asset will be
realized. At that time, the allowance will either be increased or
reduced; reduction could result in the complete elimination of the allowance
if
positive evidence indicates that the value of the deferred tax assets is no
longer impaired and the allowance is no longer required.
(8) Embezzlement
The
Company suffered an embezzlement of $72,801 during the year ended June 30,
2006
and an additional $44,764 for the period from July 2006 through September 28,
2006, the day the embezzlement was discovered. We have implemented
internal control procedures which we believe will prevent any future
losses.
(9) Adjustment
for Immaterial Uncorrected Financial Statement Differences
During
the year ended June 30, 2007, we evaluated and quantified accumulated immaterial
uncorrected financial statement differences through June 20, 2006, in accordance
with SAB 108, as follows:
|
|
Financial
Statements Effect
|
|
|
|
Amount
of Over (Under) Statement of:
|
|
|
|
Total
Assets
|
|
|
Total
Liabilities
|
|
|
Loss
Before Taxes
|
|
|
Net
Loss
|
|
|
Net
Loss Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
|
|
$ |
(7,658 |
) |
|
$ |
-
|
|
|
$ |
7,658
|
|
|
$ |
7,658
|
|
|
$ |
0.00
|
|
Accrued
interest
|
|
|
-
|
|
|
|
12,062
|
|
|
|
(12,062 |
) |
|
|
(12,062 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,658 |
) |
|
|
12,062
|
|
|
|
(4,404 |
) |
|
|
(4,404 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Unadjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit
Differences—June 30, 2006
|
|
|
(7,658 |
) |
|
|
12,062
|
|
|
|
(4,404 |
) |
|
|
(4,404 |
) |
|
$ |
(0.00 |
) |
Net
Audit Differences
|
|
$ |
(7,658 |
) |
|
$ |
12,062
|
|
|
$ |
(4,404 |
) |
|
$ |
(4,404 |
) |
|
$ |
(0.00 |
) |
During
the year ended June 30, 2006, basic accounting errors were made and were left
uncorrected as they were considered immaterial to our overall financial
statements. The overstatement of interest expense is corrected in the
current year as an adjustment to the opening balance of retained earnings in
the
accompanying condensed financial statement. The difference in
inventory was subsequently adjusted through our physical inventory count during
the year ended June 30, 2007.
(10) Subsequent
Events- Financing
In
September 2007, an affiliate loaned the Company $88,056 in the form of an
unsecured note carrying 8% annual interest maturing December 15,
2007.
In
July
2007, we sold an additional 100,000 shares of common stock to two unaffiliated
investors at $1.25 per share, as part of the private placement discussed in
Note
5. Total cash proceeds received were $125,000. No
commissions were paid in connection with this transaction.
In
July
2007, a director loaned the Company $36,000 in the form of an unsecured demand
note carrying 8% annual interest.
Item
8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
Not
Applicable
Item
8A. Controls and Procedures.
Prior
to
September, 2006, LGA’s internal disclosure controls and procedures (as defined
in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) and internal
control
over financial reporting(as defined in Rule 13a-15(f) or Rule 15d-15(f) under
the Exchange Act) were not effective. As part of the audit of the
June 30, 2006, financial statements, the auditors discovered indications
of
embezzlement by the Company’s bookkeeper. The embezzled amount was
approximately $134,000 and occurred between June, 2005, and October,
2006.
Internal
control over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f)
under the Exchange Act) should be adequate and effective to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles and include those policies and procedures
that:
(1)
Pertain to the maintenance of records that in reasonable detail accurately
and
fairly reflect the transactions and dispositions of the assets of the
issuer;
(2)
Provide reasonable assurance that transactions are recorded as necessary
to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the issuer are
being made only in accordance with authorizations of management and directors
of
the issuer; and
(3)
Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the issuer's assets that
could
have a material effect on the financial statements.
LGA
did
not have formal internal control over financial reporting (as defined in
Rule
13a-15(e) or Rule 15d-15(e) under the Exchange Act) as of June 30, 2006,
and
through September, 2006, when the embezzlement was discovered. The
weaknesses in internal controls and procedures that were exploited by the
Company’s bookkeeper were (1) a lack of segregation of duties over cash
management (including credit cards) and (2) insufficient supervision by
management over accounting functions.
Management
is responsible for establishing and maintaining adequate internal control
over
financial reporting. Internal controls over financial reporting were
implemented in late 2006 and the Company’s principal executive officer and
principal financial officer have concluded that they are now
effective.
The
Company’s principal executive officer and principal financial officer have
concluded that disclosure controls and procedures are minimal, but also
effective due to the Company’s small size and the regular communications among
its seven full-time employees.
Item
8B. Other Information.
None
Part
III
Item
9.
Directors, Executive Officers, Promoters and Control Persons; Compliance
With
Section 16(a) of the Exchange Act.
Directors
serve terms of 1 year or until his or her successor has been elected and
qualified.
Name
|
Age
|
Position
|
Director
Since
|
|
|
|
|
|
|
Marty
Williams*
|
47
|
Chief
Executive Officer,
|
June
2004
|
|
|
|
President
Director
|
|
|
|
|
|
|
|
Sara
Williams*
|
38
|
Secretary,
Treasurer,
|
June
2004
|
|
|
|
Director
|
|
|
|
|
|
|
|
Eric
Nickerson
|
56
|
Director
|
June
1990
|
|
|
|
|
|
|
Matthew
Drabczyk
|
48
|
Vice
President Engineering,
|
May
2006
|
|
|
|
Director
|
|
|
__________
*
Marty
Williams and Sara Williams are husband and wife.
MARTY
WILLIAMS, Chief Executive Officer, President, Director. Mr. Williams was
appointed to his positions upon the acquisition of Aero by LGA effective
June
30, 2004. Mr. Williams has been Chief Executive Officer, President and a
Director of Aero since its inception in 1998. At Aero he is responsible for
establishing and maintaining the corporate mission and culture. He is
responsible for product creation, strategic planning, and the entrepreneurial
spirit. He also directs and coordinates Aero's financing to provide funding
for
new and continuing operations. Mr. Williams' professional experience includes
many different areas in the securities industry where he applied his knowledge
of small business operations, finance, strategic development and business
modeling. As an independent broker at Schneider Securities, Inc., Denver,
Colorado, from 1988 to 1991 and again from 1993 to 1999, Marty was principally
involved in development of private placement offerings for early stage companies
and the subsequent sales of those offerings. From 1991 to 1993 he was a stock
broker with RAF Financial, Denver, Colorado. He has a Bachelor of Science
in
Business Administration, University of South Dakota.
SARA
WILLIAMS, Secretary, Treasurer, Director. Ms. Williams was appointed to her
positions upon the acquisition of Aero by LGA effective June 30, 2004. Ms.
Williams has been Treasurer and a Director of Aero since its inception in
1998.
She has been Secretary of Aero since June 30, 2004. At Aero Ms. Williams
manages
daily business flow, business development, product inquiries, marketing,
promotions, account management, dealer relations, sales and customer service,
order fulfillment, shipping and accounting. Mrs. Williams' professional
experience includes many areas in sales, advertising, software development,
operations, and product development. She has been involved in direct sales,
account management and start-up business management in the areas of print
advertising, new business development, customer relations, and marketing.
At
Sunset Publishing Corporation, Menlo Park, California, as a Direct Sales
Representative from 1993 to 1995 and 1996 to 1998, Mrs. Williams was responsible
for generating sales of new advertising programs and account management.
While
working for Saligent, Inc., Colorado Spring, Colorado for a short period
in
1995, Mrs. Williams was occupied with inside sales management, program
development, supervision and training. She has a Bachelor of Arts in Political
Science, The Colorado College.
ERIC
J.
NICKERSON has served as a Director of LGA since June of 1990 and as a Director
of Aero since April 2001. Mr. Nickerson joined the Company in the
position of Controller in November, 2006. Mr. Nickerson was a member
of the faculty of the United States Military Academy at West Point, New York
from 1989 to 1993. In June 1993, Mr. Nickerson retired as a United States
Air
Force officer. Currently, Mr. Nickerson is a private investor and directs
personal accounts in an investing partnership, Third Century II. Third Century
II is a major shareholder in LGA.
MATTHEW
DRABCZYK has served as Vice President and Director of LGA since May,
2006. Mr. Drabczyk has been President of Restaurant Interiors, Inc.
for more than five years where he is responsible for sales, engineering and
accounting. Restaurant Interiors constructs and installs commercial
dining facilities.
Legal
Proceedings
None.
Audit
Committee
LGA
does
not have an audit committee and neither LGA nor Aero have a financial expert
on
their respective Boards of Directors or as an employee. LGA's Board of Directors
acts as its audit committee. LGA is a company with annual revenue of less
than
$500,000 and its accounting is relatively simple. Therefore, the Company's
management did not believe having a financial expert offered shareholders
much
benefit considering the costs that would have been involved. See Item
8A, above. None of the Board of Directors is independent as defined
in Rule 10A-3 of the Exchange Act.
Section
16(a) Beneficial Ownership Reporting Compliance
The
following table sets forth information determined by LGA with respect to
the
indicated person's requirements to file Forms 3, 4 and 5 for LGA's most recent
fiscal year.
Name
|
Number
of
Late
Reports
|
Number
of Transactions
That
Were Not Reported
|
Known
Failures to File
|
|
|
|
|
Eric
Nickerson
|
1
|
1
|
1
|
|
|
|
|
Third
Century II
|
1
|
1
|
1
|
|
|
|
|
Code
of
Ethics
LGA
has
not adopted a code of ethics that applies to its principal executive officer,
principal financial officer, principal accounting officer or controller,
or
persons performing similar functions. The Company has only 7 full time employees
and limited revenues. Its two principal officers, majority shareholders and
half
of the Board of directors are husband and wife. Mr. & Mrs. Williams do not
believe that the Company presently needs written standards that are reasonably
designed to deter wrongdoing and to promote:
(1) Honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
(2) Full,
fair, accurate, timely, and understandable disclosure in reports and documents
that a small business issuer files with, or submits to, the
Commission and in other public communications made by the small business
issuer;
(3) Compliance
with applicable governmental laws, rules and regulations;
(4) The
prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code; and
(5) Accountability
for adherence to the code.
Mr.
&
Mrs. Williams believe that they act ethically with respect to the above
categories despite the lack of a written code of ethics.
Item
10.
Executive Compensation.
The
following table sets forth information with respect to all officers of LGA
and
Aero who received $100,000 or more of annual compensation for all services
rendered in all capacities in the three most recent fiscal years and for
the CEO
regardless of compensation.
Summary
Compensation Table
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Nonequity
Incentive Plan Compensation
|
Nonqualified
Deferred Compensation Earnings
|
All
Other Compensation
|
Total
|
Marty
Williams
CEO,
President, Director
|
2007
|
48,000
|
0
|
0
|
0
|
0
|
0
|
0
|
48,000
|
|
2006
|
48,000
|
0
|
0
|
0
|
0
|
0
|
0
|
48,000
|
|
|
|
|
|
|
|
|
|
|
Matthew
Drabczyk, Vice President Engineering, Director
|
2007
|
0
|
0
|
0
|
165,000
|
0
|
0
|
0
|
165,000
|
|
2006
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
The
following table contains information regarding equity awards outstanding
at the
end of the last completed fiscal year held by the named executive
officers.
Outstanding
Equity Awards at fiscal Year End
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration
Date
|
Number
of Shares or Units of Stock That Have Not Vested (#)
|
Market
Value of Shares of Units of Stock That Have Not Vested ($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or
Other Rights That Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned
Shares, Units or Other Rights That Have Not Vested ($)
|
Marty
Williams
|
500,000
|
0
|
0
|
0.70
|
2010
|
0
|
0
|
0
|
0
|
Sara
Williams
|
500,000
|
0
|
0
|
0.70
|
2010
|
0
|
0
|
0
|
0
|
Matthew
Drabczyk
|
250,000
|
0
|
0
|
0.70
|
2015
|
0
|
0
|
0
|
0
|
Matthew
Drabczyk
|
100,000
|
0
|
0
|
1.75
|
2017
|
0
|
0
|
0
|
0
|
Third
Century II
|
215,000
|
0
|
0
|
1.00
|
2012
|
0
|
0
|
0
|
0
|
Director
Compensation
Directors
as a group are currently not compensated as such for their
services. The following table provides information regarding
compensation received by persons who are directors.
Name
|
Fees
Earned or Paid in Cash ($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-equity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensation Earnings ($)
|
All
Other Compensation ($)
|
Total
($)
|
Matthew
Drabczyk
|
$0
|
|
165,000
|
|
|
|
165,000
|
Item
11.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The
following table contains information as of September 24, 2007, summarizing
the
beneficial ownership of LGA common stock by (1) each person known to LGA
to be
the beneficial owner of more than 5% of its issued and outstanding common
stock,
(2) LGA's executive officers and directors individually, and (3) all LGA's
executive officers and directors as a group. Except as stated in the footnotes
to the table, each of these persons exercises sole voting and investment
power
over the shares of common stock listed for that person.
Name
and Address
|
Position
|
Number
of LGA
Common
Shares
Held
|
Percentage
of
Outstanding
Share
Held
|
|
|
|
|
|
|
|
|
Marty
Williams (1), (2)
|
President,
Chief
|
2,854,999
|
28.2%
|
5565
Teakwood Terrace
|
Executive
Officer,
|
|
|
Colorado
Springs, CO 80918
|
Director
|
|
|
|
|
|
|
Sara
Williams 1, (3)
|
Secretary,
|
|
|
5565
Teakwood Terrace
|
Treasurer,
|
2,854,999
|
28.2%
|
Colorado
Springs, CO 80918
|
Director
|
|
|
|
|
|
|
Eric
J. Nickerson (4)
|
|
|
|
1711
Chateau Ct.
|
Director
|
3,813,560
|
40.9%
|
Fallston,
MD 21047
|
|
|
|
|
|
|
|
Matthew
Drabczyk (5)
|
Vice
President
|
|
|
Restaurant
Interiors
|
Engineering,
|
|
|
5530
Joliet St.
|
Director
|
608,886
|
6.4%
|
Denver,
CO 80239
|
|
|
|
|
|
|
|
All
Officers and Directors
as a
Group (3 persons) (6)
|
NA
|
7,277,445
|
68.2%
|
|
|
|
|
Floyd
Murray
|
|
|
|
13020
Caraway Dr.
|
NA
|
2,069,069
|
22%
|
Sun
City West, AZ 85375
|
|
|
|
|
|
|
|
Third
Century II
|
|
|
|
1711
Chateau Ct. (7)
|
NA
|
3,659,403
|
39.3%
|
Falston,
MD 21047
|
|
|
|
|
|
|
|
Notes
to
Table:
(1) Sara
Williams and Marty Williams are husband and wife.
(2) Includes
1,854,999 shares owned as joint tenant with Sara Williams, options to acquire
500,000 shares and options to acquire 500,000 shares owned by Sara
Williams.
(3) Includes
1,854,999 shares owned as joint tenant with Marty Williams, options to acquire
500,000 shares and options to acquire 500,000 shares owned by Marty
Williams.
(4)
Includes 3,659,403 shares deemed owned by Third Century II. Mr. Nickerson
is
Senior Partner of the investment company Third Century II. Mr. Nickerson
disclaims beneficial ownership of all of the shares and options owned by
Third
Century II.
(5) Includes
options to acquire 350,000 shares.
(6) The
Directors are Marty Williams, Sara Williams, Eric J. Nickerson and Matthew
Drabczyk and includes the shares deemed directly or indirectly beneficially
owned by each of them.
(7) Includes
options to acquire 215,000 shares.
Note:
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares subject to options, warrants and
convertible notes currently exercisable or convertible, or exercisable or
convertible within 60 days are deemed outstanding for computing the percentage
of the person or entity holding such securities, but are not outstanding
for
computing the percentage of any other person or entity. Except as indicated
by
footnote, and subject to community property laws where applicable, the persons
named in the table above have sole voting and investment power with respect
to
all shares shown as beneficially owned by them.
Item
12.
Certain Relationships and Related Transactions.
Please
refer to Note 2 to the Financial Statements and Management’s Discussion and
Analysis of Financial Condition and Results of Operations.
During
the year ended June 30, 2007, Mr. Williams, the Company’s Chief Executive
Officer, President and an Officer, loaned the Company $60,000 at 8% interest
with principal and interest due June 30, 2010.
In
September 2006, the Company reclassified $106,408 from a note payable to
Marty
and Sara Williams to accrued payroll. This was a reversal of an
earlier transaction in order to avoid having to restate earlier financial
statements that incorrectly described the transaction. The accrued
interest of $6,478 was forgiven by the Williams and deemed a contribution
to the
Company’s capital.
The
grant
of 100,000 options described in note 2 to the financial statements was to
Matt
Drabczyk.
The
sale
of 215,000 units described in note 2 to the financial statements was to Third
Century II. This transaction was part of a private placement that was
available to other investors on the same terms. Mr. Nickerson,
Controller and a Director of the Company, is Senior Partner of Third Century
II. The sale of the call option described in note 2 to the financial
statements was to Third Century II.
Item
13.
Exhibits.
31.1 -
A Rule 13a-14(a)/15d-14(a) Certifications
31.2 -
A
Rule 13a-14(a)/15d-14(a) Certifications
33.1 -
A Certification Pursuant To 18 U.S.C. Section. 1350
33.2 - A
Certification Pursuant To 18 U.S.C. Section. 1350
Item
14.
Principal Accountant Fees and Services.
Audit
Fees
The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of LGA's and
Aero's
annual financial statements and review of financial statements included in
the
registrant's Form 10-QSB or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years were $16,269 for 2006 and $37,900 for
2007. This amount is a substantial increase over 2006 and is a result
of costs involved in the embezzlement.
Audit-Related
Fees
The
aggregate fees billed in each of the last two fiscal years for assurance
and
related services by the principal accountant that are reasonably related
to the
performance of the audit or review of the registrant's financial statements
and
are not reported under Item 9(e)(1) of Schedule 14A were $-0- for 2006 and
$-0-
for 2007.
Tax
Fees
The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning were $-0- for 2006 and $-0- for 2007.
All
Other
Fees
The
aggregate fees billed in each of the last two fiscal years for products and
services provided by the principal accountant, other than the services reported
in Items 9(e)(1) through 9(e)(3) of Schedule 14A were $-0-for 2006 and $-0-
for
2007.
Audit
Committee Policies
Neither
LGA nor Aero has an audit committee. Such authority is exercised by the full
Boards of Directors of each company. The board has delegated hiring
authority to the Company President. All directors are intimately
involved with the day-to-day operations of the Company, which include its
financial operations. Therefore, all Directors are aware of and
involved with the engagement of the auditor. Neither Board currently has
any
pre-approval policies and procedures described in paragraph (c)(7)(i) of
Rule
2-01 of Regulation S-X; or (ii) approved any services described in each of
Items
9(e)(2) through 9(e)(4) of Schedule 14A that were subject to approval by
the
audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation
S-X.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LGA
Holdings, Inc.
(Registrant)
By:
/s/ Marty Williams
Marty
Williams, Chief Executive Officer, President
Date
September 28, 2007
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the
dates indicated.
By: /s/
Marty Williams
Marty
Williams, Chief Executive Office, Director
Date
September 28, 2007
By:
/s/ Sara Williams
Sara
Williams, Treasurer (principal financial officer), Director
Date
September 28, 2007
By: /s/
Eric Nickerson
Eric
Nickerson, Director
Date
September 28, 2007
By: /s/
Matthew Drabczyk
Matthew
Drabczyk, Director
Date
September 28, 2007