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, 2019

 

☐ 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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

 

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

Yes ☒  No ☐

 

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

Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “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 10, 2020, was 250,556.

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Unaudited Condensed Balance Sheets	4
	Unaudited Condensed Statements of Operations	5
	Unaudited Condensed Statement of Stockholders Deficit	6
	Unaudited Condensed Statements of Cash Flows	7
	Notes to the Unaudited Condensed Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	12
Item 4.	Controls and Procedures	12
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	13
Item 1A.	Risk Factors	13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3.	Defaults upon Senior Securities	13
Item 4.	Mine Safety Disclosures	13
Item 5.	Other Information	13
Item 6.	Exhibits	13
Signatures		14

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

 

 

 

 

LZG INTERNATIONAL, INC.

 

For the Six Months Ended

 

November 30, 2019

 

(Unaudited)

 

 

LZG International, Inc.

Condensed Balance Sheets

(Unaudited)

 

		November 30, 2019				MAY 31, 2019
ASSETS
CURRENT ASSETS
Cash		$	209			$	434
Total Current Assets			209				434
TOTAL ASSETS		$	209			$	434
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable		$	1,225			$	—
Accounts Payable --related party			9,100				6,100
Note Payable -- related party			101,900				98,800
Notes Payable			59,100				59,100
Accrued Interest – related party			11,516				7,526
Accrued Interest			22,577				20,213
Total Current Liabilities			205,418				191,739
LONG-TERM LIABILITIES
Notes Payable – related party			23,500				23,500
Accrued Interest – related party			18,397				17,457
Total Long-term Liabilities			41,897				40,957
TOTAL LIABILITIES			247,315				232,696
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			(3,310,491	)			(3,295,647	)
Total Stockholders' Equity (Deficit)			(247,106	)			(232,262	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)		$	209			$	434

  

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

 

 

LZG International, Inc.

Condensed Statements of Operations

(Unaudited)

 

		THREE MONTHS ENDED NOV 30, 2019				THREE MONTHS ENDED NOV 30, 2018				SIX MONTHS ENDED NOV 30, 2019				SIX MONTHS ENDED NOV 30, 2018
REVENUES		$	—			$	—			$	—			$	—
EXPENSES
General and administrative			2,725				3,990				7,550				8,830
TOTAL EXPENSES			2,725				3,990				7,550				8,830
Net Operating Loss Before Other Expense			(2,725	)			(3,990	)			(7,550	)			(8,830	)
OTHER INCOME (EXPENSE)
Interest expense			(1,182	)			(1,097	)			(2,364	)			(2,119	)
Interest expense – related party			(2,484	)			(2,320	)			(4,930	)			(4,640	)
TOTAL OTHER EXPENSE			(3,666	)			(3,417	)			(7,294	)			(6,759	)
LOSS BEFORE INCOME TAXES			(6,391	)			(7,407	)			(14,844	)			(15,589	)
INCOME TAXES			—				—				—				—
NET LOSS		$	(6,391	)		$	(7,407	)		$	(14,844	)		$	(15,589	)
Net Loss Per Share		$	(0.03	)		$	(0.03	)		$	(0.06	)		$	(0.06	)
Weighted average shares outstanding			250,556				250,556				250,556				250,556

 

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

 

 

LZG International, Inc.

Condensed Statement of Stockholders Deficit

For the three and six months ended November 30, 2018 and 2019

(Unaudited)

 

		Common  Stock
		Shares				Amount				Additional Paid in Capital				Accumulated Deficit				Total
Balance – May 31, 2018			250,556			$	251			$	3,063,134			$	(3,267,758	)		$	(204,373	)
Net (loss) for the quarter ended August 31, 2018			—				—				—				(8,182	)			(8,182	)
Balance – August 31, 2018			250,556				251				3,063,134				(3,275,940	)			(212,555	)
Net (loss) for the quarter ended November 30, 2018			—				—				—				(7,407	)			(7,407	)
Balance – November 30, 2018			250,556			$	251			$	3,063,134			$	(3,283,347	)		$	(219,962	)
Balance – May 31, 2019			250,556			$	251			$	3,063,134			$	(3,295,647	)		$	(232,262	)
Net (loss) for the quarter ended August 31, 2019			—				—				—				(8,453	)			(8,453	)
Balance – August 31, 2019			250,556				251			$	3,063,134				(3,304,100	)		$	(240,715	)
Net (loss) for the quarter ended November 30, 2019			—				—				—				(6,391	)			(6,391	)
Balance – November 30, 2019			250,556			$	251			$	3,063,134			$	(3,310,491	)		$	(247,106	)

 

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

 

 

LZG International, Inc.

Condensed Statements of Cash Flows

(Unaudited)

 

		SIX MONTHS ENDED NOV 30, 2019				SIX MONTHS ENDED NOV 30, 2018
Cash Flows from Operating Activities
Net Loss		$	(14,844	)		$	(15,589	)
Adjustment to reconcile net (loss) to cash provided (used) by operating activities:
Changes in assets and liabilities:
Accounts payable – related party			3,000				3,300
Accounts payable			1,225				475
Accrued interest			2,364				2,119
Accrued interest – related party			4,930				4,640
Net Cash Provided (Used) by Operating Activities			(3,325	)			(5,055	)
Cash Flows From Investing Activities			—				—
Cash Flows from Financing Activities:
Proceeds from advances and notes payable – related party			3,100				5,600
Net Cash Provided by Financing Activities			3,100				5,600
Increase (Decrease) in Cash			(225	)			545
Cash and Cash Equivalents, Beginning of Period			434				539
Cash and Cash Equivalents, End of Period		$	209			$	1,084
Supplemental Cash Flow Information:
Cash Paid For:
Interest		$	—			$	—
Income Taxes		$	—			$	—

 

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

 

 

LZG International, Inc.

Notes to the Condensed Financial Statements

November 30, 2019

(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, 2019 Annual Report on Form 10-K. Operating results for the six months ended November 30, 2019 are not necessarily indicative of the results to be expected for year ending May 31, 2020.

 

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, 2019, 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 have been extended to June 30, 2022. The loans are not collateralized, and bear interest at 8% per annum. Interest expense was $940 for the six months ended November 30, 2019 and $470 for the three months ended November 30, 2019, resulting in accrued interest of $18,397 and $17,457 at November 30, 2019 and May 31, 2019 respectively.

 

During the six months ended November 30, 2019, a stockholder, paid for administrative and professional services totaling $3,000, resulting in amounts payable to the stockholder of $9,100 and $6,100 as of November 30, 2019 and May 31, 2019 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. Interest expense was $3,990 for the six months ended November 30, 2019 and $2,014 for the three months ended November 30, 2019, resulting in accrued interest of $11,516 and $7,526 at November 30, 2019 and May 31, 2019, respectively.

 

NOTE 4 – LOAN PAYABLE

 

The Company borrowed $59,100 from a third party. The loan is due on demand, is not collateralized, and bears interest at 8% per annum. Interest expense was $2,364 for the six months ended November 30, 2019 and $1,182 for the three months ended November 30, 2019, resulting in accrued interest of $22,577 and $20,213 at November 30, 2019 and May 31, 2019, respectively.

 

 

LZG International, Inc.

Notes to the Condensed Financial Statements

November 30, 2019

(Unaudited)

 

 

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.

 

 

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. We may consider a business which needs to raise additional funds through a public offering, including one that 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.

 

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 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, 2019, we had cash of $209 and total liabilities of $247,315 compared to cash of $434 and total liabilities of $232,696 at May 31, 2019. We have not established an ongoing source of revenue sufficient to cover our operating costs. During the six month period ended November 30, 2019 (“2020 six month period”) we relied upon a stockholder for administrative and professional services totaling $3,100.

 

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 during the 2020 six month period or the fiscal years ended May 31, 2019 or May 31, 2018. General and administrative expenses represented consulting, administrative, professional services and out-of-pocket costs. General and administrative expenses were $7,550 for the 2020 six month period compared to $8,830 for the six month period ended November 30, 2018 (“2019 six month period”). General and administrative expenses were $2,725 for the 2020 second quarter compared to $3,990 for the three month period ended November 30, 2018 (“2019 second quarter”). General and administrative expenses decreased in both periods primarily due to reduced audit fees.

 

Total other expense increased to $7,294 for the 2020 six month period compared to $6,759 for the 2019 six month period and increased to $3,666 for the 2020 second quarter compared to $3,417 for the 2019 second quarter as a result of accrued interest on loans.

 

Our net loss decreased to $14,844 for the 2020 six month period compared to $15,589 for the 2019 six month period and decreased to $6,391 for the 2020 second quarter compared to $7,407 for the 2019 second quarter. Management expects net losses to continue until we acquire or merge with a business opportunity.

 

Commitments and Obligations

 

We have relied upon loans and advances to fund our operational expenses. During the fiscal 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, 2014; however, Mr. Popp agreed to extend the due date of this note and interest to June 30, 2022. The total interest due at November 30, 2019 was $18,397 compared to $17,457 at May 31, 2019.

 

 

We have borrowed funds from a third party for operating expenses. At November 30, 2019 we owed this third party $59,100 with accrued interest of $22,577 and $20,213 as of November 30, 2019 and May 31, 2019, respectively. These loans are payable upon demand, are not collateralized and bear interest at 8% per annum.

 

During the 2020 six month period First Equity Holdings Corp, a stockholder, paid for administrative and professional services totaling $3,000, resulting in amounts payable to the stockholder of $9,100 and $6,100 as of November 30, 2019 and May 31, 2019, respectively.

 

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.

 

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, 2019 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.

 

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.

  

 

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 10, 2020	By:	/s/ Greg L. Popp
		Greg L. Popp
		President and Director
		Principal Executive and Financial Officer