First
Quarter 2008 Compared with First Quarter 2007
During
the first Quarter of Fiscal 2008, the Company had revenues of $126,975,
which
represented an increase of $9,960 or 8% over the comparable quarter's
revenue of
$117,015. During the first quarter of Fiscal 2008, the Company had
substantial changes in the product mix compared to 2007’s first
quarter. In particular, the company’s Little Giant Trailer, a product
not in existence during fiscal 2007, was the company’s largest selling product
by dollar volume in the most recent quarter.
Cost
of
revenue increased $37,513 or 69% from $61,837 in 2007 to $99,350 in
2008. This substantial increase in product costs was due primarily to
high costs of the Company’s initial inventory of Little Giant trailers, the
first such trailers ever produced by our manufacturer in China. After
the trailers arrived at our warehouse, we discovered certain shortfalls
in
product quality. The full cost of correcting these shortfalls for the
entire stock of trailers is included in Cost of Revenue for the 2008
1
st
quarter. We anticipate some recovery of these quality improvement
costs from our Chinese vendor. No assurance can be given of the
timing or magnitude of such recoveries.
Gross
margin on product sales decreased substantially in the first quarter
of 2008
versus the first quarter of 2007, both absolutely and in percentage
terms, due
to the reasons discussed above.
SG&A
expenses decreased slightly year-to-year, despite increased business
activity
and employee head count, due to the absence in the 2008 quarter of
the
substantial embezzlement-associated expenses incurred in the 2007
quarter.
Net
loss
for the current quarter was ($104,408) or ($0.01) per share as compared
to
($81,683) or ($0.01) per share for the Quarter ended Sept. 30,
2006.
Liquidity
and Capital Resources
The
Company's cash position increased from $18,889 at September 30, 2006
to $37,068
at September 30, 2007. During the first quarter of Fiscal 2008, the
Company used
$235,208 of cash to fund its operating activities. Negative operating
cash flow was substantially greater than the operating loss primarily
due to
large inventory purchase expenditures.
LGA
Capital Requirements
The
Company reported shareholder equity of $197,520 as of September 30,
2007, as
compared with $181,755 as of September 30, 2006.
The
Company will need additional capital in order to achieve and sustain
profitable
operations. LGA has a history of obtaining growth capital from three
sources, 1)
equity sales, 2) product margin, 3) licensing revenue. LGA prefers
to obtain
operating capital from operating margin and licensing revenue.
The
Company is working on several product licensing opportunities that,
if
completed, have the potential to generate significant operating capital
for our
business. However, no assurance can be given as to whether these discussions
will result in a completed transaction, nor can the Company give any
assurances
as to the timing or financial magnitude of these transactions.
The
Company is experiencing a growing level of product interest from consumers,
dealers, distributors and OEM's. The Company displayed product at the
October, 2007 SEMA show and the Company's products received a favorable
response.
The
Company has inventory available for immediate shipment of all primary
products,
and nearly all planned accessories.
The
Company anticipates substantial improvement in operating margins due
to higher
selling prices and reduced per-unit inventory acquisition costs. Even
so, our operating plans for the balance of the current fiscal year
may require
additional capital. The Company can provide shareholders with no
assurance the required additional capital will be forthcoming on terms
acceptable to shareholders.
While
a
portion of the current liabilities, approximately $184,056, is owed
to present
officers and/or directors, there can be no assurance that these
officers/directors will not seek payment in the near term.
Inflation
has not had a significant impact on the Company's operations.