10-Q 1 lzgi113018form10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended November 30, 2018

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___ to ___

 

Commission file number: 000-53994

 

LZG INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

 

FLORIDA 98-0234906
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
153 WEST BURTON AVENUE, SALT LAKE CITY, UTAH 84115
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (801) 323-2395

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒  No☐ The registrant does not have a Web site.

 

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

 

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☒
Emerging growth company ☒  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☒  No ☐

 

The number of shares outstanding of the registrant’s common stock as of January 11, 2019 was 250,556.

 

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TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Unaudited Condensed Balance Sheets 4
  Unaudited Condensed Statements of Operations 5
  Unaudited Condensed Statements of Cash Flows 6
  Notes to the Unaudited Condensed Financial Statements 7
Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
Item 4. Controls and Procedures 10
     
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 1A. Risk Factors 11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 11
Item 3. Defaults upon Senior Securities 11
Item 4. Mine Safety Disclosures 11
Item 5. Other Information 11
Item 6. Exhibits 12
Signatures   13

 

 2 
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

 

 

 

 

LZG INTERNATIONAL, INC.

 

For the Three and Six Months Ended

 

November 30, 2018

 

(Unaudited)

 

 

 

 

 3 
 

 

LZG International, Inc.

Condensed Balance Sheets

(Unaudited)

 

   November 30,
2018
  May 31,
2018
ASSETS          
CURRENT ASSETS          
Cash  $1,084   $539 
Total Current Assets   1,084    539 
TOTAL ASSETS  $1,084   $539 
           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
CURRENT LIABILITIES          
Accounts Payable  $800   $325 
Accounts Payable -- related party   9,400    6,100 
Note Payable -- related party   92,500    92,500 
Notes Payable   56,700    51,100 
Accrued Interest – related party   3,700    —   
Accrued Interest   17,929    15,810 
Total Current Liabilities   181,029    165,835 
LONG-TERM LIABILITIES          
Notes Payable – related party   23,500    23,500 
Accrued Interest – related party   16,517    15,577 
Total Long-term Liabilities   40,017    39,077 
TOTAL LIABILITIES   221,046    204,912 
           
STOCKHOLDERS' EQUITY (DEFICIT)          
Preferred Stock, $.001 par value, 20,000,000 shares authorized, none issued and outstanding   —      —   
Common Stock, $.001 par value, 100,000,000 shares authorized, 250,556 shares issued and outstanding   251    251 
Additional Paid-in Capital   3,063,134    3,063,134 
Accumulated Deficit   (3,283,347)   (3,267,758)
Total Stockholders' Equity (Deficit)   (219,962)   (204,373)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  $1,084   $539 

 

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

 

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LZG International, Inc.

Condensed Statements of Operations

(Unaudited)

 

   THREE MONTHS ENDED
NOV 30,
2018
  THREE MONTHS ENDED
NOV 30,
2017
 

SIX

MONTHS ENDED
NOV 30,
2018

 

SIX

MONTHS ENDED
NOV 30,
2017

REVENUES  $ —      $ —      $ —      $ —    
             
EXPENSES                    
General and administrative   3,990    2,625    8,830    7,649 
TOTAL EXPENSES   3,990    2,625    8,830    7,649 
Net Operating Loss Before Other Expense   (3,990)   (2,625)   (8,830)   (7,649)
                     
OTHER INCOME (EXPENSE)                    
Interest expense   (1,097)   (952)   (2,119)   (1,881)
Interest expense – related party   (2,320)   (470)   (4,640)   (940)
TOTAL OTHER INCOME (EXPENSE)   (3,417)   (1,422)   (6,759)   (2,821)
                     
LOSS BEFORE INCOME TAXES   (7,407)   (4,047)   (15,589)   (10,470)
                     
INCOME TAXES   —      —      —      —   
                     
NET LOSS  $(7,407)  $(4,047)  $(15,589)  $(10,470)
                     
Net Loss Per Share– basic and diluted  $(0.03)  $(0.02)  $(0.06)  $(0.04)
Weighted average shares outstanding– basic and diluted   250,556    250,556    250,556    250,556 

  

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

 

 5 
 

 

LZG International, Inc.

Condensed Statements of Cash Flows

(Unaudited)

 

   SIX
MONTHS ENDED
NOV 30,
2018
 

SIX

MONTHS ENDED

NOV 30,

2017

Cash Flows from Operating Activities          
Net Loss  $(15,589)  $(10,470)
Adjustment to reconcile net (loss) to cash provided (used) by operating activities:          
Changes in assets and liabilities:          
Accounts payable – related party   3,300    3,100 
Accounts payable   475    1,125 
Accrued interest   2,119    1,881 
Accrued interest - related party   4,640    940 
Net Cash Provided (Used) by Operating Activities   (5,055)   (3,424)
           
Cash Flows From Investing Activities   —      —   
           
Cash Flows from Financing Activities:          
Proceeds from notes payable   5,600    2,500 
Net Cash Provided by Financing Activities   5,600    2,500 
           
Increase (Decrease) in Cash   545    (924)
           
Cash and Cash Equivalents, Beginning of Period   539    1,013 
           
Cash and Cash Equivalents, End of Period  $1,084   $89 
           
Supplemental Cash Flow Information:          
Cash Paid For:          
Interest  $—     $—   
Income Taxes  $—     $—   

 

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

 

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LZG International, Inc.

Notes to the Condensed Financial Statements

November 30, 2018

(Unaudited)

 

 

NOTE 1 – BASIS OF FINANCIAL STATEMENT PRESENTATION

 

The accompanying unaudited condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed financial statements be read in conjunction with the Company’s audited financial statements and notes thereto included in its May 31, 2018 Annual Report on Form 10-K. Operating results for the six months ended November 30, 2018 are not necessarily indicative of the results to be expected for year ending May 31, 2019.

 

NOTE 2 – GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has limited assets, has incurred losses since inception, has negative cash flows from operations, and has no revenue-generating activities. Its activities have been limited for the past several years and it is dependent upon financing to continue operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plan to acquire or merge with other operating companies.

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

The financial statements include related party transactions, which as of November 30, 2018, included loans from an officer of the company totaling $23,500. The loans had an original due date of June 30, 2014, but principal and interest maturities and have been extended to June 30, 2020. The loans are not collateralized, and bear interest at 8% per annum. Interest expense was $940 for the six months ended November 30, 2018, resulting in accrued interest of $16,517 and $15,577 at November 30, 2018 and May 31, 2018, respectively.

 

During the six months ended November 30, 2018, a stockholder, paid for administrative and professional services totaling $3,300, resulting in amounts payable to the stockholder of $9,400 and $6,100 as of November 30, 2018 and May 31, 2018, respectively. On May 31, 2018 the stockholder converted $92,500 of its accounts payable to a promissory note, which bears interest at 8% per annum and is due on demand. Accrued interest and interest expense as of and for the six months ended November 30, 2018 was $3,700.

 

NOTE 4 – LOAN PAYABLE

 

The Company borrowed $56,700 from a third party. The loan is due on demand, is not collateralized, and bears interest at 8% per annum. Interest expense was $2,119 for the six months ended November 30, 2018, resulting in accrued interest of $17,929 and $15,810 at November 30, 2018 and May 31, 2018, respectively.

 

NOTE 5 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and has determined that there are no such events that would have a material impact on the financial statements.

 

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In this report references to “LZG International,” “the Company,” “we,” “us,” and “our” refer to LZG International, Inc.

 

FORWARD LOOKING STATEMENTS

 

The U.S. Securities and Exchange Commission (“SEC”) encourages reporting companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as “may,” “intend,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Executive Overview

 

We have not recorded revenues from operations since inception and lack revenues to cover our operating costs. These conditions raise substantial doubt about our ability to continue as a going concern. We are currently devoting our efforts to obtain capital from management, significant stockholders and/or third parties to cover minimal expenses; however, there is no assurance that additional funding will be available. Our ability to continue as a going concern during the long term is dependent upon our ability to find a suitable company and acquire or enter into a merger with such company.

 

The type of business opportunity we acquire or with which we merge will affect our profitability for long term. We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur through a public offering.

 

Our management has not had any preliminary contact or discussions with any representative of any other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.

 

Our management anticipates that we will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.

 

 8 

 

 

We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

 

Liquidity and Capital Resources

 

At November 30, 2018, we had cash of $1,084 and total liabilities of $221,046 compared to cash of $539 and total liabilities of $204,912 at May 31, 2018. We have not established an ongoing source of revenue sufficient to cover our operating costs. During the six month period ended November 30, 2018 (“2019 six month period”) and 2017 (“2018 six month period”), we relied upon a stockholder for administrative and professional services totaling $3,300 and $3,100, respectively, as well as proceeds from notes payable of $5,600 and $2,500, respectively.

 

During the six month period ended November 30, 2018 (“2019 six month period”) we relied upon a stockholder for administrative and professional services totaling $3,300.

 

These conditions raise substantial doubt about our ability to continue as a going concern. We are currently devoting our efforts to obtaining capital from management, significant stockholders and/or third parties to cover minimal operations; however, there is no assurance that additional funding will be available. Our ability to continue as a going concern during the long term is dependent upon our ability to find a suitable business opportunity and acquire or enter into a merger with such a company.

 

During the next 12 months we anticipate incurring costs related to the filing of Exchange Act reports, and possibly investigating, analyzing and consummating an acquisition. We believe we will be able to meet these costs through funds provided by management, significant stockholders and third parties.

 

Results of Operations

 

We did not record revenues in the 2019 or 2018 fiscal years. General and administrative expenses represented consulting, administrative, professional services and out-of-pocket costs. General and administrative expenses increased to $3,990 for the three month period ended November 30, 2018 (“2019 second quarter”) compared to $2,625 for the three month period ended November 30, 2017 (“2018 second quarter”). General and administrative expenses increased to $8,830 for the 2019 six month period compared to $7,649 for the 2018 six month period. The increase of general and administrative expenses for the 2019 six month period is primarily due to increased consulting and administrative fees.

 

Total other expense increased to $3,417 for the 2019 second quarter compared to $1,422 for the 2018 second quarter, and increased to $6,759 for the 2019 six month period compared to $2,821 for the 2018 six month period as a result of accrued interest on loans.

 

Our net loss increased to $7,407 for the 2019 second quarter compared to $4,047 for the 2018 second quarter. Net loss increased to $15,589 for the 2019 six month period compared to $10,470 for the 2018 six month period. Management expects net losses to continue until we acquire or merge with a business opportunity.

 

 9 

 

 

Commitments and Obligations

 

We have relied upon loans and advances to fund our operational expenses. During the years ended May 31, 2009 and 2010, our Director and President, Greg L. Popp, loaned an aggregate of $23,500 to the Company. On April 20, 2010, these loans were combined into one promissory note which carries interest at 8% and is not collateralized. The original promissory note had a due date of June 30, 2012; however, Mr. Popp agreed to extend the due date of this note and interest to June 30, 2020. The total interest due at November 30, 2018 was $16,517.

 

At November 30, 2018 we had borrowed funds for operating expenses from a third party totaling $56,700, with accrued interest of $17,929. These loans are payable upon demand, are not collateralized and bear interest at 8% per annum.

 

During the 2019 six month period First Equity Holdings Corp (“First Equity”), a stockholder, paid for administrative and professional services totaling $3,300. At November 30, 2018 we owed First Equity $9,400. On May 31, 2018, the Company owed First Equity $92,500 and the Company converted those accounts payable to a promissory note which bears interest at 8% per annum and is due on demand. The total interest due on that note at November 30, 2018 was $3,700.

 

Off-Balance Sheet Arrangements

 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

 

Emerging Growth Company

 

We qualify as an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). A company qualifies as an emerging growth company if it has total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year and, as of December 8, 2011, had not sold common equity securities under a registration statement. Under the JOBS Act we are permitted to, and intend to, rely on exemptions from certain disclosure requirements

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable to smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated to allow our management to make timely decisions regarding required disclosure. Our President, who serves as our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and he determined that our disclosure controls and procedures were ineffective due to a control deficiency. During the period we did not have additional personnel to allow segregation of duties to ensure the completeness or accuracy of our information. Due to the size and operations of the Company we are unable to remediate this deficiency until we acquire or merge with another company.

 

 10 

 

 

Changes to Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an evaluation of our internal control over financial reporting and determined that there were no changes made in our internal control over financial reporting during the quarter ended November 30, 2018 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

 

ITEM 1. LEGAL PROCEEDINGS

 

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

 

ITEM 1A.  RISK FACTORS

 

A smaller reporting company is not required to provide the information required by this Item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

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ITEM 6. EXHIBITS

 

Part I Exhibits

No. Description
31.1 Principal Executive Officer Certification
31.2 Principal Financial Officer Certification
32.1 Section 1350 Certification

 

Part II Exhibits

 

No. Description
3(i).1 Articles of Incorporation of LazyGrocer.Com, Inc., dated May 17, 2000 (Incorporated by reference to exhibit 3.1 to Form 10 filed May 26, 2010)
3(i).2 Amendment to Articles of Incorporation of LazyGrocer.Com, Inc., dated August 28, 2009 (Incorporated by reference to exhibit 3.1.2 to Form 10 filed May 26, 2010)
3(ii) Bylaws of LZG International, Inc., effective January 28, 2010 (Incorporated by reference to exhibit 3.2 to Form 10 filed May 26, 2010)
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Label Linkbase Document
101.PRE XBRL Taxonomy Presentation Linkbase Document
   
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

  LZG INTERNATIONAL, INC.
     
Date: January 11, 2019   By: /s/ Greg L. Popp
    Greg L. Popp
    President and Director
    Principal Executive and Financial Officer

 

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