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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10–Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2014

or

[   ] 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: 333-186321


LOAD GUARD LOGISTICS, INC.
(Exact name of registrant as specified in its charter)
 
 
 
Nevada
 
45-0692882
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
6317 SW 16th Street, Miami, FL 33155
(Address of principal executive offices)
 
(786) 505-4434
(Registrant's telephone number, including area code)
 
 
(Former name, former address and former fiscal year, if changed since last report)

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 [X]  No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated filer [  ]
 
Accelerated filer [  ]
 
 
 
Non-accelerated filer [  ]
 
Smaller reporting company [X]
(Do not check if a smaller reporting company)
 
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X ]

As of September 11, 2014 there were 3,623,500 shares of the issuer's common stock, par value $0.001, outstanding.
 
2

LOAD GUARD LOGISTICS, INC.

FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2014
TABLE OF CONTENTS


 
 
PAGE
 
 
 
PART I – FINANCIAL INFORMATION
 
 
ITEM 1.
3
 
ITEM 2.
17
 
ITEM 3.
20
 
ITEM 4.
20
PART II – OTHER INFORMATION
 
 
ITEM 1.
21
 
ITEM 1A.
21
 
ITEM 2.
21
 
ITEM 3.
21
 
ITEM 4.
21
 
ITEM 5.
21
 
ITEM 6.
22
23


3


PART I – FINANCIAL INFORMATION

ITEM 1.                          FINANCIAL STATEMENTS






INDEX TO INTERIM FINANCIAL STATEMENTS

For the Period Ended July 31, 2014:
(Unaudited)

 
Page
 
 
Consolidated Balance Sheets
4
 
 
Consolidated Statements of Operations
5
 
 
Consolidated Statements of Stockholders' Equity
6
 
 
Consolidated Statements of Cash Flows
7
 
 
Notes to the Consolidated Financial Statements
8
4

LOAD GUARD LOGISTICS, INC.
CONSOLIDATED BALANCE SHEETS
 
 
 
July 31,
   
October 31,
 
 
 
2014
   
2013
 
 
 
(Unaudited)
   
 
ASSETS
 
   
 
Current assets:
 
   
 
Cash and cash equivalents
 
$
39,236
   
$
52,186
 
Accounts receivable, less allowance of $0
   
26,528
     
25,338
 
Prepaid expenses
   
-
     
15,591
 
Notes receivable - current
   
12,827
     
13,019
 
Total current assets
   
78,591
     
106,134
 
 
               
Equipment, net of accumulated depreciation of $10,639 and $7,912, respectively
   
85,434
     
39,560
 
Note receivable - non-current
   
3,600
     
-
 
Total assets
 
$
167,625
   
$
145,694
 
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Accounts payable and accrued liabilities
 
$
6,048
   
$
15,079
 
Notes payable, related parties
   
30,772
     
47,238
 
Note payable - current portion
   
6,658
     
-
 
Total current liabilities
   
43,478
     
62,317
 
 
               
Note payable - non-current
   
43,006
         
Total liabilities
   
86,484
     
62,317
 
Stockholders' equity:
               
Preferred stock, $0.001 par value,20,000,000 shares authorized;
               
none issued and outstanding
   
-
     
-
 
Common stock, $0.001 par value, 100,000,000 shares authorized;
               
3,623,500 shares issued and outstanding
   
3,623
     
3,623
 
Additional paid-in capital
   
83,077
     
83,077
 
Accumulated deficit
   
(5,559
)
   
(3,323
)
Total stockholders' equity
   
81,141
     
83,377
 
Total liabilities and stockholders' equity
 
$
167,625
   
$
145,694
 

See Notes to the Interim Consolidated Financial Statements.
 
5

LOAD GUARD LOGISTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
Three Months Ended July 31,
   
Nine Months Ended July 31,
 
 
 
2014
   
2013
   
2014
   
2013
 
 
 
   
   
   
 
Operating revenues
 
$
71,097
   
$
91,152
   
$
207,271
   
$
257,081
 
Operating expenses:
                               
Fuel and fuel taxes
   
19,417
     
31,874
     
63,546
     
100,043
 
Salaries and wages
   
21,469
     
22,485
     
61,342
     
67,295
 
Operations and maintenance
   
14,239
     
19,077
     
45,155
     
50,482
 
Professional fees
   
2,700
     
7,937
     
22,993
     
20,006
 
General and administrative
   
9,220
     
9,035
     
24,947
     
21,223
 
Total operating expenses
   
67,045
     
90,408
     
217,983
     
259,049
 
Operating income (loss)
   
4,052
     
744
     
(10,712
)
   
(1,968
)
Other income (expense)
                               
Interest expense
   
(776
)
   
(662
)
   
(1,493
)
   
(1,523
)
Interest income
   
587
     
94
     
1,219
     
398
 
Gain on insurance claim
   
-
     
-
     
4,853
     
6,506
 
Gain (loss) on disposal of equiment
   
3,897
     
(1,684
)
   
3,897
     
(1,684
)
Total other income (expense)
   
3,708
     
(2,252
)
   
8,476
     
3,697
 
Income (loss) before income taxes
   
7,760
     
(1,508
)
   
(2,236
)
   
1,729
 
Provision for income taxes
   
-
     
796
     
-
     
(342
)
Net income (loss)
 
$
7,760
   
$
(712
)
 
$
(2,236
)
 
$
1,387
 
 
                               
Basic and diluted income (loss) per common share
 
$
0.00
   
$
(0.00
)
 
$
(0.00
)
 
$
0.00
 
 
                               
Weighted-average number of common shares outstanding
   
3,623,500
     
3,147,500
     
3,623,500
     
3,085,495
 
 
See Notes to the Interim Consolidated Financial Statements.
 
6

LOAD GUARD LOGISTICS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OF OCTOBER 31, 2012 THROUGH JULY 31, 2014
 
 
 
   
   
   
   
   
   
Total
 
 
 
Preferred Stock
   
Common Stock
   
Additional
   
Accumulated
   
Stockholders'
 
 
 
Shares
   
Amount
   
Shares
   
Amount
   
Paid-in Capital
   
Deficit
   
Equity
 
 
 
   
   
   
   
   
   
 
BALANCE, October 31, 2012
   
-
   
$
-
     
2,527,500
   
$
2,527
   
$
35,573
   
$
459
   
$
38,559
 
 
                                                       
Common shares issued for cash at $0.04 per share on November 25, 2012
   
-
     
-
     
620,000
     
620
     
24,180
     
-
     
24,800
 
Common shares issued for cash at $0.05 per share on October 28, 2013
   
-
     
-
     
476,000
     
476
     
23,324
     
-
     
23,800
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
(3,782
)
   
(3,782
)
BALANCE, October 31, 2013
   
-
     
-
     
3,623,500
     
3,623
     
83,077
     
(3,323
)
   
83,377
 
 
                                                       
Net loss (unaudited)
   
-
     
-
     
-
     
-
     
-
     
(2,236
)
   
(2,236
)
BALANCE, July 31, 2014 (unaudited)
   
-
   
$
-
     
3,623,500
   
$
3,623
   
$
83,077
   
$
(5,559
)
 
$
81,141
 
 
 
See Notes to the Interim Consolidated Financial Statements.
 
7

LOAD GUARD LOGISTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
 
Nine Months Ended July 31,
 
 
 
2014
   
2013
 
Cash flows from operating activities:
 
   
 
Net income
 
$
(2,236
)
 
$
1,387
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
   
7,855
     
8,499
 
Loss on disposal of equipment
   
(3,897
)
   
1,684
 
Changes in certain working capital items:
               
Accounts receivable, net
   
(1,190
)
   
(21,760
)
Prepaid expenses
   
15,591
     
(3,808
)
Accounts payable and accrued liabilities
   
(9,031
)
   
8,259
 
Net cash used in operating activities
   
7,092
     
(5,739
)
Cash flows from investing activities:
               
Purchases of equipment
   
(67,832
)
   
(49,116
)
Proceeds from sale of equipment
   
-
     
11,000
 
Net cash used in investing activities
   
(67,832
)
   
(38,116
)
Cash flows from financing activities:
               
Issuance of notes receivable
   
(6,639
)
   
(7,500
)
Payments received from notes receivable
   
21,231
     
10,641
 
Proceeds from loans
   
50,000
     
32,000
 
Repayments on loans
   
(16,802
)
   
(5,339
)
Proceeds from issuance of common stock
   
-
     
24,800
 
Net cash provided by financing activities
   
47,790
     
54,602
 
Net increase (decrease) in cash and cash equivalents
   
(12,950
)
   
10,747
 
Cash and cash equivalents, beginning of period
   
52,186
     
26,404
 
Cash and cash equivalents, end of the period
 
$
39,236
   
$
37,151
 
 
               
Supplemental cash flow disclosure:
               
Interest paid
 
$
1,493
   
$
1,523
 
Income taxes paid
 
$
-
   
$
-
 
 
               
Non-cash transactions
               
Purchase of equipment in exchange for note payable
 
$
-
   
$
25,000
 
Sale of equipment for exchange of note receivable
 
$
18,000
   
$
11,000
 
 
 
See Notes to the Interim Consolidated Financial Statements.
 
8

LOAD GUARD LOGISTICS, INC.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
July 31, 2014
(Unaudited)

NOTE 1 -   ORGANIZATION AND DESCRIPTION OF BUSINESS

Load Guard Logistics, Inc. (the "Company") is a Nevada corporation incorporated on March 16, 2011, and is based in Miami, FL.  The company was originally incorporated as Load Guard Transportation, Inc. and changed its name to Load Guard Logistics, Inc. on November 6, 2012.  The Company incorporated a wholly-owned subsidiary, "LGT, Inc." in Florida on March 18, 2011.  The Company's fiscal year end is October 31.

The Company operates as a transportation and delivery services company.  We generate revenues from the actual movement of freight from shippers to consignees as well as serving as a logistics provider by arranging for others to provide the transportation services.

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

These financial statements include the accounts of the Company and the wholly-owned subsidiary, LGT, Inc.  All material intercompany balances and transactions have been eliminated.

Basis of Presentation

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America.  The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the Company's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended July 31, 2014 are not necessarily indicative of the results for the full years. While management of the Company believes that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read in conjunction with the audited combined financial statements and the footnotes thereto for the year ended October 31, 2013 filed Form 10-K on January 27, 2014.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.   These reclassifications had no effect on reported income.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of three months or less.  The Company had $39,236 and $52,186 in cash and cash equivalents at July 31, 2014 and October 31, 2013, respectively.

9

Accounts Receivable

The Company extends credit to its customers in the normal course of business.  The Company performs ongoing credit evaluations and generally does not require collateral.  Trade accounts receivable are recorded at their invoiced amounts, net of allowance for doubtful accounts.  The Company evaluates the adequacy of its allowance for doubtful accounts quarterly.  Accounts outstanding longer than contractual payment terms are considered past due and are reviewed individually for collectability.  The Company maintains reserves for potential credit losses based upon its loss history and specific receivables aging analysis.  Receivable balances are written off when collection is deemed unlikely.  Management's evaluation of outstanding balances determined that an allowance, as of July 31, 2014 and October 31, 2013 was not considered necessary, based on history and its subsequent collections.

Concentration Risk

For the period ending July 31, 2014, the Company recognized revenues from one customer, in the amount of approximately $90,166 or 44% of total revenues.   The same customer accounts for approximately $8,516 or 32% of total receivables.

Equipment

Property and equipment is stated at cost.  Depreciation is computed by the straight-line method over estimated useful lives (5 years).  Historical costs are reviewed and evaluated for their net realizable value of the assets.  The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation period or the unamortized balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of property and equipment existed at July 31, 2014 and October 31, 2013.

Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable.  When required impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  We did not recognize any impairment losses for any periods presented.

Net Income (Loss) Per Share of Common Stock

The Company follows ASC 260, "Earnings per Share," ("EPS") which requires presentation of basic EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation.  In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

The following table sets forth the computation of basic and diluted earnings per share, for the periods ended July 31, 2014 and 2013:

 
 
Three Months Ended July 31,
   
Nine Months Ended July 31,
 
 
 
2014
   
2013
   
2014
   
2013
 
 
 
   
   
   
 
Net income (loss)
 
$
7,760
   
$
(712
)
 
$
(2,236
)
 
$
1,387
 
 
                               
Weighted average common shares outstanding (Basic)
   
3,623,500
     
3,147,500
     
3,623,500
     
3,085,495
 
 
                               
Net income (loss) per share (Basic)
 
$
0.00
   
$
(0.00
)
 
$
(0.00
)
 
$
0.00
 

The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.

10

Concentrations of Credit Risk

The Company's financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future.  The Company places its cash and cash equivalents with financial institutions of high credit worthiness.  At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.  The Company's management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.

Financial Instruments

The Company's balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

ASC 820, "Fair Value Measurements and Disclosures," defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

·
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities

·
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

·
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
 
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of July 31, 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

11

Level 2
 
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's financial instruments consist principally of cash, accounts receivable; related party notes payable; and, accounts payable and accrued liabilities.

Revenue Recognition

The Company recognizes revenue from the sale of services in accordance with ASC 605, "Revenue Recognition."  The Company recognizes revenue only when all of the following criteria have been met:

i)
Persuasive evidence for an agreement exists;
ii)
Service has been provided;
iii)
The fee is fixed or determinable; and
iv)
Collection is reasonably assured.

Recent Accounting Pronouncements

In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers.   The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition.  Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted for public entities.  The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the financial statements.

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.  A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award's grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved.  The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted.  Management has reviewed the ASU and believes that they currently account for these awards in a manner consistent with the new guidance, therefore there is no anticipation of any effect to the financial statements.

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern.    Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events.  The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.  The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met conditions which would subject these financial statements for additional disclosure.

12

We have reviewed the FASB issued Accounting Standards Update ("ASU") accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

NOTE 3 -GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  As of July 31, 2014, the Company had a net loss from operations of $10,712 and cash flows provided from operations of $7,092.  The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending October 31, 2014.
 
The ability of the Company to fully commence its operations is dependent upon, among other things, obtaining additional financing to continue operations, and execution of its business plan.  In response to these concerns, management intends to raise additional funds through public or private placement offerings and through loans from officers and directors.

These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management's plan will be successful.

NOTE 4 - EQUIPMENT

The following table shows the Company's equipment detail as of July 31, 2014 and October 31, 2013:

 
 
2014
   
2013
 
Tractor
 
$
28,241
   
$
28,241
 
Trailer
   
67,832
     
19,231
 
     Gross equipment at cost
   
96,073
     
47,472
 
Accumulated depreciation and amortization
   
(10,639
)
   
(7,912
)
     Net equipment
 
$
85,434
   
$
39,560
 

Depreciation expense totaled $7,855 and $8,499 for the periods ended July 31, 2014 and 2013, respectively.

13

NOTE 5 -   NOTES RECEIVABLE

Cash was issued in exchange for promissory notes from unrelated contractors, for the specific purpose of purchasing truck and trailers to be used in operations of Load Guard Transportation.

 
 
July 31, 2014
   
October 31, 2013
 
 
 
   
 
On May 13, 2014, we issued an eighteen month, secured $18,000 fixed rate Promissory Note (the "note") to an independent contractor, with an interest rate of 10%, which matures in November 2015.  The note was issued for the financing of a trailer we sold for $18,000. The note calls for weekly payments of $258.75, until the balance and accrued interest is paid in full, and can be repaid before maturity in whole or part, without penalty.
 
$
15,975
   
$
-
 
 
               
On May 2, 2014, we issued an un-secured $4,300 non-interest bearing Promissory Note to an independent contractor.  The note calls for weekly payments of $268.75, until the balance is paid in full, and can be repaid before maturity in whole or part, without penalty
 
$
452
   
$
-
 
 
               
On July 8, 2013, we issued a one-year, secured $11,000 fixed rate Promissory Note (the "note") to an independent contractor, with an interest rate of 8%, which matures in July 2014.  The note was issued for the financing of a tractor and trailer we sold for $22,000. The note calls for weekly payments of $228.46, until the balance and accrued interest is paid in full, and can be repaid before maturity in whole or part, without penalty.
 
$
-
   
$
7,827
 
 
               
On July 8, 2013, we issued a one-year, secured $7,500 fixed rate Promissory Note (the "note") to an independent contractor, with an interest rate of 10%, which matures in July 2014.  The note was issued for the financing of a trailer valued at $7,500. The note calls for weekly payments of $144.23, until the balance and accrued interest is paid in full, and can be repaid before maturity in whole or part, without penalty.
   
-
     
5,192
 
 
               
Total notes receivable
 
$
16,427
   
$
13,019
 
Less current portion of notes receivable
   
(12,827
)
   
(13,019
)
 
               
Long-term portion of notes receivable
 
$
3,600
   
$
-
 

During the periods ended July 31, 2014 and 2013, the Company earned interest revenue of $1,219 and $398, respectively.

NOTE 6 -   NOTE PAYABLE
 
 
 
July 31, 2014
   
October 31, 2013
 
 
 
   
 
On May 19, 2014, we issued a 72 month, $50,000 fixed rate note payable (the "note") with an interest rate of 8.75%, which matures on June 5, 2020.  The note was issued for the financing of a trailer, to be used for the benefit of the Company. The note calls for monthly payments of $895.09, until the balance and accrued interest is paid in full, and can be repaid before maturity in whole or part, without penalty.
 
$
49,664
   
$
-
 
 
               
Total note payable
 
$
49,664
   
$
-
 
Less current portion of note payable
   
(6,658
)
   
-
 
 
               
Long-term portion of note payable
 
$
43,006
   
$
-
 


14


NOTE 7 -  RELATED PARTY  TRANSACTIONS

Notes Payable – Related Party

Notes payable, from related parties, at July 31, 2014 and October 31, 2013 consisted of:

 
 
July 31, 2014
   
October 31, 2013
 
On March 13, 2013 an officer, director, and shareholder of the Company sold his tractor and trailer to the Company for a $25,000 unsecured, non-interest bearing Promissory Note, due March 12, 2015
 
$
22,400
   
$
25,000
 
 
               
On January 11, 2013 and as extended on June 11, 2014, we issued an eighteen-month, $32,000 fixed rate Promissory Note payable (the "note") to a Director, who is also an Officer and shareholder, with an interest rate of 8%, which matures on June 10, 2015.  The note was issued for the financing of a tractor and trailer, to be used for the benefit of the Company. The note calls for monthly payments of $1,829.49, until the balance and accrued interest is paid in full, and can be repaid before maturity in whole or part, without penalty.
   
8,372
     
22,238
 
 
               
Total notes payable
 
$
30,772
   
$
47,238
 
Less current portion of notes payable
   
(30,772
)
   
(47,238
)
 
               
Long-term portion of notes payable
 
$
-
   
$
-
 

During the periods ended July 31, 2014 and 2013, the Company recorded interest expense of $1,493 and made $1,523 in payments on the notes.

Other

The officers and directors of the Company may be involved in other business activities and may, in the future, become involved in other business opportunities that become available. He may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.

The Company does not own or lease property or lease office space. The office space used by the Company was arranged by the founder of the Company to use at no charge.

The Company does not have employment contracts with its two key employees, the controlling shareholders, who are officers and directors of the Company.

The controlling shareholders and management have pledged support to fund continuing operations through temporary loans to meet the Company's cash flow requirements; however there is no written commitment to this effect.  The Company is dependent upon the continued support of these parties until such time that the Company receives adequate equity capital or other long-term financing.

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

15

NOTE 8 -   EQUITY

Preferred Stock

The Company has authorized 20,000,000 preferred shares with a par value of $0.001 per share.  The Board of Directors are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.  No rights or preferences have been adopted and there are no dividend or liquidation rights.

There were no preferred shares issued and outstanding as of July 31, 2014 and October 31, 2013.

Common Stock

The Company has authorized 100,000,000 common shares with a par value of $0.001 per share.  Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.  Holders have equal ratable rights to dividends from funds legally available and are entitled to share in assets available for distribution upon liquidation.  Holders do not have preemptive, subscriptive, conversion or cumulative voting rights, and there are no redemption or sinking find provisions or rights.  Holders of common stock have the right to approve any amendment of the Articles of Incorporation, elect directors, approve any plan of merger and approve a plan for the sale, lease or exchange of all of the Company's assets as proposed by the Board of Directors.

Since March 16, 2011 (Inception) to October 31, 2014, the Company has issued 3,623,500 common shares for $86,700 in cash.

There were 3,623,500 common shares issued and outstanding at July 31, 2014 and October 31, 2013, respectively.

The Company has no stock option plan, warrants or other dilutive securities.

NOTE 9 -  PROVISION FOR INCOME TAXES

The Company follows ASC 740, Income Taxes.  ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse.  ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34% to the net income before provision for income taxes for the following reasons:

 
 
July 31, 2014
   
October 31, 2013
 
Income tax (benefit)  expense at statutory rate
 
$
(760
)
 
$
(1,300
)
Valuation allowance
   
760
     
1,300
 
Income tax expense per books
 
$
-
   
$
-
 

There are no net operating losses to apply against future income. The Internal Revenue Service may audit tax returns for six years from their respective filing date.  Our initial tax return was for the fiscal year ended October 31, 2011 and each subsequent year through October 31, 2013 remain open. 

NOTE 10 -  COMMITMENTS AND CONTINGENCIES

The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.  There were no commitments or contingencies as of July 31, 2014 and October 31, 2013.
16

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses.  Such forward-looking statements include, among others, those statements including the words "expects," "anticipates," "intends," "believes" and similar language.  Our actual results may differ significantly from those projected in the forward-looking statements.  Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the "Description of Business – Risk Factors" section in our Annual Report on Form 10-K, as filed on January 27, 2014.  You should carefully review the risks described in our 10-K and in other documents we file from time to time with the Securities and Exchange Commission.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

All references in this Form 10-Q to the "Company," "Load Guard," "we," "us," or "our" are to Load Guard Logistics, Inc.

Critical Accounting Policies

We prepare our condensed consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the condensed consolidated financial statements are prepared. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions.  On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our condensed consolidated financial statements.

While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

Results of Operations

The following summary of our results of operations, for the three and nine month periods ended July 31, 2014 and 2013, should be read in conjunction with our audited consolidated financial statements, for the year ended October 31, 2013, as included in our Form 10-K.

Our financial results for the three and nine month periods ended July 31, 2014 and 2013 are summarized as follows:

 
 
Three Months Ended July 31,
   
Nine Months Ended July 31,
 
 
 
2014
   
2013
   
2014
   
2013
 
Operating revenues
 
$
71,097
   
$
91,152
   
$
207,271
   
$
257,081
 
Operating expenses
   
67,045
     
90,408
     
217,983
     
259,049
 
Operating income (loss)
   
4,052
     
744
     
(10,712
)
   
(1,968
)
Other income (expense)
   
3,708
     
(2,252
)
   
8,476
     
3,697
 
Provision for income tax
   
-
     
796
     
-
     
(342
)
Net Income (Loss)
 
$
7,760
   
$
(712
)
 
$
(2,236
)
 
$
1,387
 

17

Revenue

Revenue commenced during October 2012 and is solely from our trucking and brokerage operations through our subsidiary LGT, Inc. We earn direct trucking revenues from our one company owned and operated tractor and trailer and brokerage income from commissions we charge to our independent contractors. We earned revenues of $71,097 for the three months ended July 31, 2014, compared to revenues of $91,152 for the three months ended July 31, 2013.  We earned revenues of $207,271 for the nine months ended July 31, 2014, compared to revenues of $257,081 for the nine months ended July 31, 2013.

For the nine months ended July 31, 2014, we earned $158,401 from direct trucking revenues and $48,870 in brokerage income from our independent contractors, as compared to $231,538 from trucking and $25,543 in brokerage for the nine months ended July 31, 2013.  Our revenues from trucking decreased $73,137 or 32% due to a reduction in drivers. During 2013 we had as many as three drivers, whereas for 2014 we had one full time driver and for periods one part-time driver.  Our revenues from brokerage income increased $23,327 or 91% due to adding independent contractors in the current period, as compared to the previous period when we had one independent contractor.

For the three months ended July 31, 2014, we earned $52,527 from direct trucking revenues and $18,570 in brokerage income from our independent contractors, as compared to $79,141 from trucking and $12,011 in brokerage for the three months ended July 31, 2013.  Our revenues from trucking decreased $26,614 or 34% due to a reduction in drivers. During 2013 we had as many as three drivers, whereas for 2014 we had one full time driver for the entire three month period.  Our revenues form brokerage income increased $6,559 or 55% due to adding independent contractors in the current period, as compared to the previous period.

Expenses

Our total operating expenses for the three and nine month periods ended July 31, 2014 and 2013 are outlined in the table below:

 
 
Three Months Ended July 31,
   
Nine Months Ended July 31,
 
 
 
2014
   
2013
   
2014
   
2013
 
Fuel and fuel taxes
 
$
19,417
   
$
31,874
   
$
63,546
   
$
100,043
 
Salaries and wages
   
21,469
     
22,485
     
61,342
     
67,295
 
Operations and maintenance
   
14,239
     
19,077
     
45,155
     
50,482
 
Professional fees
   
2,700
     
7,937
     
22,993
     
20,006
 
General and administrative
   
9,220
     
9,035
     
24,947
     
21,223
 
Total
 
$
67,045
   
$
90,408
   
$
217,983
   
$
259,049
 

Expenses for the three and nine month periods ended July 31, 2014, decreased as compared to the periods in 2013 as a result of reducing company drivers and shifting the focus more to managing independent contractors.

Nine Months

Our fuel costs represented 40% and 43% of trucking revenues for the nine months ended July 31, 2014 and 2013, respectively. Fuel for the periods was high, as a percentage of revenue, mainly as a result of our trucking revenues being low on a per mileage basis, due to the competitive tender system of dealing with freight brokers.  Fuel is our highest direct trucking expense. Wages of $61,342 and 67,295, or 39% and 29% of trucking revenue for nine months ended July 31, 2014 and 2013, respectively, represents the wages paid for company drivers and fees paid to an officer and director of the company, who is also a driver. During 2014, we operated only one company tractor and trailer, and primary driver is also an officer of the company, therefore wages were lower during 2014 as compared to 2013 as we had up to three drivers during the previous period.  Operations and maintenance costs of $45,155 and 50,482, or 29% and 22% of trucking revenue for the nine months ended July 31, 2014 and 2013, respectively, represents cost related to parts and maintenance of our tractors and trailers as well as general operational expenses, such as for insurance, tolls, and scales. Maintenance costs, as a percentage of revenues, are expected to be consistent in future periods. Professional fees increased $2,987 or 15% for the nine months ended July 31, 2014 as compared to $20,006 for 2013, primarily due to costs to report with the Securities and Exchange Commission ("SEC").  We expect continued professional fees, mainly from legal and accounting, due to ongoing SEC reporting requirements.  Our general and administrative fees are for general office expenses and other operating costs not directly related to our trucking business.   General and administrative fees increased $3,724 for the nine months ended July 31, 2014, from the comparative period ended July 31, 2013.

18

Three Months

Our fuel costs represented 37% and 40% of trucking revenues for the three months ended July 31, 2014 and 2013, respectively. Wages of $21,469 and $22,485, which represent 41% and 28% of trucking revenue for the three months ended July 31, 2014 and 2013, respectively.  Operations and maintenance costs of $14,239 and $19,077, or 27% and 24% of trucking revenue for the three months ended July 31, 2014 and 2013, respectively. Professional fees decreased $5,237 or 66% for the three months ended July 31, 2014 as compared to $7,937 for 2013.  General and administrative fees increased $185 for the three months ended July 31, 2014 from the comparative period ended July 31, 2013.

Liquidity and Capital Resources

General

As of July 31, 2014, the Company had $39,236 in cash and cash equivalents.  The Company expects current cash and operating income to be sufficient to meet its financial needs for continuing operations over the next twelve months.  To meet our need for cash we raised money from our recent Offering.  We sold 476,000 shares for total proceeds of $23,800, prior to closing the Offering on November 1, 2013.  Additionally, our officers and directors have loaned us funds for the purchase of property and equipment.  As of July 31, 2014, Francisco Mendez, our corporate Secretary, is owed $22,400 for the sale of his tractor to the Company.  This loan is non-interest bearing.  Yosbani Mendez, our President, loaned the Company $32,000 for the purchase of a tractor and trailer.  The loan carries an interest rate of 8%.  As of July 31, 2014, $8,322 is outstanding on this loan.

Liquidity and Financial Condition

Working Capital
 
   
   
 
 
 
At
   
At
   
 
 
 
July 31,
   
October 31,
   
Increase/
 
 
 
2014
   
2013
   
(Decrease)
 
Current Assets
 
$
78,591
   
$
106,134
   
$
(27,543
)
Current Liabilities
 
$
43,478
   
$
62,317
   
$
(18,839
)
Working Capital
 
$
35,113
   
$
43,817
   
$
(8704
)

Cash Flows
 
   
 
 
 
Nine Months Ended July 31,
 
 
 
2014
   
2013
 
Net Cash Provided by (Used in) Operating Activities
 
$
7,092
   
$
(5,739
)
Net Cash Used in Investing Activities
 
$
(67,832
)
 
$
(38,116
)
Net Cash Provided by Financing Activities
 
$
47,790
   
$
54,602
 
Net Increase (decrease) in Cash During the Period
 
$
(12,950
)
 
$
10,747
 

19

Limited Operating History; Need for Additional Capital

There is limited historical financial information about us on which to base an evaluation of our performance.  We were previously a development stage company and have generated minimal revenues from operations.  We cannot guarantee we will be successful in our business operations.  Our business is subject to risks inherent in the establishment of a new business enterprise in a highly competitive industry, including limited capital resources, and possible cost overruns due to the price and cost increases in supplies and services.

The Company believes it has enough cash on hand or will be able to generate enough income from operations to pay operating costs for the next twelve months.  However, should there be any unforeseen circumstances, the officers and directors have generally indicated a willingness to provide services and financial contributions if necessary.

We have no plans to undertake any product research and development during the next twelve months.  There are also no plans or expectations to acquire or sell any plant or plant equipment in the next year of operations.

Liquidity

We have no known demands or commitments and are not aware of any events or uncertainties as of July 31, 2014 that will result in or that are reasonably likely to materially increase or decrease our current liquidity.

Capital Resources

We had no material commitments for capital expenditures as of July 31, 2014 and October 31, 2013.

Off-Balance Sheet Arrangements

We do not have 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 that is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a "smaller reporting company", we are not required to provide the information required by this Item.

ITEM 4.                           CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of July 31, 2014, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

20

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) management dominated by two individuals without adequate compensating controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officer in connection with the review of our financial statements as of July 31, 2014.

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

Changes in Internal Controls

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the three months ended July 31, 2014 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

As a "smaller reporting company", we are not required to provide the information required by this Item.

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

We did not issue unregistered equity securities during the quarter ended July 31, 2014.

ITEM 3.                          DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.                          MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.                          OTHER INFORMATION

None.
21


ITEM 6.                          EXHIBITS

Exhibit Number
Description
 
 (3)
(i) Articles of incorporation, (ii) Bylaws
3.1
Articles of Incorporation (Incorporated by reference to our Registration Statement on Form S-1 filed on January 30, 2013)
3.2
Bylaws (Incorporated by reference to our Registration Statement on Form S-1 filed on January 30, 2013)
(31)
Rule 13a-14(d)/15d-14(d) Certifications
31.1*
(32)
Section 1350 Certifications
32.1*
101**
Interactive Data Files
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
*
Filed herewith
**
Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.
22

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.

 
LOAD GUARD LOGISTICS, INC.
 
 
Dated:  September 15, 2014
/s/ Yosbani Mendez
 
                                                                       
 
Yosbani Mendez,
 
President and Chief Financial Officer.
 
Principle Executive Officer
 
Principle Financial Officer