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Registration No. 333-153306
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UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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WASHINGTON,
D.C. 20549
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POST-EFFECTIVE
AMENDMENT NO. 2 TO FORM S-1
WHICH SUPERSEDES POST-EFFECTIVE AMENDMENT NO.
1
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REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF
1933
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LADYBUG
RESOURCE GROUP, INC.
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(Exact
name of registrant as specified in its charter)
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NEVADA
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(State
or other jurisdiction of incorporation or organization
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7370
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(Primary
Standard Industrial Classification Code Number
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26-1973389
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(I.R.S.
Employer Identification Number)
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11630
Slater Avenue Northeast, Suite 1A, Kirkland, WA 98034
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(Address,
including zip code, and telephone number, including area code, of
registrant’s principal executive offices)
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11630
Slater Avenue Northeast, Suite 1A, Kirkland, WA 98034
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(Name,
address, including zip code, and telephone number, including area code, of
agent of service)
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Copies
to:
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David
M. Loev
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John
S. Gillies
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The
Loev Law Firm, PC
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The
Loev Law Firm, PC
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6300
West Loop South, Suite 280
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&
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6300
West Loop South, Suite 280
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Bellaire,
Texas 77401
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Bellaire,
Texas 77401
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Phone:
(713) 524-4110
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Phone:
(713) 524-4110
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Fax:
(713) 524-4122
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Fax:
(713) 456-7908
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From
time to time after the effective date of this Registration
Statement
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(Approximate
date of commencement of proposed sale to the
public)
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If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box:
x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
o
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
definitions of “large accelerated filer," "accelerated filer,” and "smaller
reporting company" in Rule 12b-2 of the Exchange Act (Check One):
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Large
accelerated filer
o
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Accelerated
filer
o
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Non-accelerated
filer
o
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Smaller
reporting company
x
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(Do
not check if a smaller reporting
company)
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The
Registrant hereby amends its Registration Statement, on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The
information contained in this Prospectus is not complete and may be changed.
These securities may not be sold until the Registration Statement filed with the
Securities and Exchange Commission is declared effective. This Prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
PROSPECTUS
LADYBUG
RESOURCE GROUP, INC.
RESALE OF
560,000
SHARES OF
COMMON STOCK
This is a
resale Prospectus for the resale of up to
560,000
shares of our
common stock by the selling stockholders listed in this Prospectus on page 33.
We will not receive any proceeds from the sale of the shares.
The
Company's Common Stock has been quoted on the Over-the-Counter Bulletin Board
under the symbol "LBRG" since approximately December 23, 2008; however, none of
our shares have traded to date. Accordingly, an investment in our
Company is an illiquid investment.
Selling
stockholders will sell at prevailing market prices or privately negotiated
prices.
A current
Prospectus must be in effect at the time of the sale of the shares of common
stock discussed above. The selling stockholders will be responsible for any
commissions or discounts due to brokers or dealers. We will pay all of the other
offering expenses.
Each
selling stockholder or dealer selling the common stock is required to deliver a
current Prospectus upon the sale. In addition, for the purposes of the
Securities Act of 1933, as amended, selling stockholders may be deemed
underwriters.
Investing
in our common stock involves very high risks. See "Risk Factors" beginning on
page 8.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of the Prospectus. Any representation to the contrary is a criminal
offense.
The date
of this Prospectus is ___, 2010.
TABLE
OF CONTENTS
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Page(s)
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SUMMARY
FINANCIAL DATA
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7
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RISK
FACTORS
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8
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USE
OF PROCEEDS
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17
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SELLING
STOCKHOLDERS
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17
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DIVIDEND
POLICY
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18
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MARKET
FOR SECURITIES
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18
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NOTE
REGARDING FORWARD-LOOKING STATEMENTS
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20
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MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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20
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DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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29
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PRINCIPAL
SHAREHOLDERS
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33
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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33
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CONTROLS
AND PROCEDURES
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34
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DESCRIPTION
OF CAPITAL STOCK
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35
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PLAN
OF DISTRIBUTION
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36
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LEGAL
MATTERS
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40
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EXPERTS
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40
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WHERE
YOU CAN FIND MORE INFORMATION
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41
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Part
I
INFORMATION
REQUIRED IN PROSPECTUS
PROSPECTUS
SUMMARY
About
Ladybug Resource Group, Inc.
Ladybug
Resource Group, Inc. was incorporated in the State of Nevada on November 27,
2007 by Molly S. Ramage, our former President and Director. Our business purpose
is to assist in the design of websites and website components that use specific
marketing messages or themes to reach target audiences. Our initial marketing
focus is the websites of the funeral industry in the Seattle, Washington
area.
Ladybug
Resource Group, Inc. has limited financial resources and has not established a
source of equity or debt financing.
Our
executive offices are located at 11630 Slater Avenue Northeast, Suite 1A,
Kirkland, WA 98034, and our telephone number is 425-306-5028. Our Website is
www.ladybugresource.com, which contains information that we do not wish to
incorporate by reference into this Prospectus.
We may
refer to ourselves in this document as “Ladybug,” “we”, “us,” “our,” the
“Company,” or the “Registrant.”
The
Offering
The
560,000 shares being offered for resale under this Prospectus by the selling
stockholders identified herein represent
4.9
% of the
outstanding shares of our common stock. The Company has 11,320,000 shares
of common stock outstanding as of the date of this Prospectus.
Common
stock offered:
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560,000
shares
by the selling stockholders
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Common
stock outstanding before the Offering:
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11,320,000
shares
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Common
stock outstanding after the Offering:
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11,320,000
shares
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Use
of proceeds
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We
will not receive any proceeds from the resale of shares offered by the
selling stockholders hereby, all of which proceeds will be paid to the
selling stockholders.
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Risk
factors
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The
purchase of our common stock involves a high degree of risk. See
“Risk Factors.”
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No
Market
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While
our common stock has been approved for trading on the OTC
Bulletin Board under the symbol “LBRG;” no securities have traded as of
the date of this Prospectus.
No assurance is
provided that a market will be created for our securities in the
future.
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Need
for Additional Financing:
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We
have generated limited revenues to date and anticipate the need for
additional capital in the future. If we are unable to raise the
additional funding, the value of our securities, if any, would likely
become worthless, and we may be forced to abandon our business
plan. We anticipate incurring net losses for the foreseeable
future.
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Address:
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11630
Slater Avenue Northeast, Suite 1A
Kirkland,
WA 98034
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Telephone
Number:
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(425)
306-5028
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Selling
stockholders will sell at prevailing market prices or privately negotiated
prices.
SUMMARY
FINANCIAL DATA
The
following summary financial data should be read in conjunction with the
financial statements and the notes thereto included elsewhere in this
Prospectus.
Summary
Balance Sheet
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Balance
Sheet Data:
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September
30,2009
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Current
assets
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$
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989
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Total
assets
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$
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3,950
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Current
liabilities
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$
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82,382
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Stockholders’
equity
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$
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82,382
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Summary
Statement of Operations
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For
the Three Months Ended September 30, 2009
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Revenue
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$
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3,059
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Expenses:
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Compensation
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4,500
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Professional
fees
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14,352
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Office
and subcontractor costs
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4,658
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Total
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23,510
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Net
Loss
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$
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(20,451
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)
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RISK FACTORS
You
should be aware that there are various risks to an investment in our common
stock. You should carefully consider these risk factors, together with all of
the other information included in this Prospectus, before you decide to invest
in shares of our common stock.
If any of
the following risks develop into actual events, then our business, financial
condition, results of operations and/or prospects could be materially adversely
affected. If that happens, the market price of our common stock, if any, could
decline, and investors may lose all or part of their investment.
Ladybug’s
founder and former President resigned in October 2009 because of health issues.
It is unclear whether our current officers and Directors can implement
successfully the business plan that she created.
Ladybug’s
current business strategy was developed and dependent upon the knowledge,
reputation and business contacts of Molly S. Ramage, its founder and former
President, who resigned in October 2009 because of health issues. She will be
available to us on a limited consulting basis moving forward. We can provide no
assurances that Ms. Ramage’s successors will be able to implement her business
plan successfully. If they are unable to successfully implement her
business plan, we may be forced to scale back our business plan and/or seek
additional funding, which may have a materially adverse effect on the value of
our common stock.
Ladybug
has a very limited operating history and anticipates generating losses for the
foreseeable future.
Ladybug
was formed in November 2007. Therefore, we have insufficient operating history
upon which an evaluation of our future performance and prospects can be made.
Ladybug’s future prospects must be considered in light of the risks, expenses,
delays, problems and difficulties frequently encountered in the establishment of
a new business. An investor in our common stock must consider the risks and
difficulties frequently encountered by early stage companies operating in new
and competitive markets such as ours. These risks include:
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competition
from entities that are much more established and have greater financial
and technical resources than do we;
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the
need to develop corporate
infrastructure;
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the
ability to access and obtain capital when required;
and
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the
dependence upon key personnel.
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Ladybug
cannot be certain that its business strategy will be successful or that it will
ever have profitable business activities or generate sustainable revenues.
Furthermore, Ladybug believes that it is probable that it will incur operating
losses and negative cash flow for the foreseeable future.
Ladybug has limited financial
resources, and its independent registered auditors’ report includes an
explanatory paragraph stating that there is substantial doubt about its ability
to continue as a going concern
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Ladybug has very limited financial
resources and had negative working capital of $81,393 and an accumulated deficit
of $134,572 at September 30, 2009. Our independent registered auditors included
an explanatory paragraph in their opinion on Ladybug’s financial statements as
of September 30, 2009 that states that this lack of resources causes substantial
doubt about our ability to continue as a going concern. No assurances can be
given that we will generate sufficient revenue or obtain necessary financing to
continue as a going concern.
Ladybug
is and will continue to be significantly dependent on the services of its
President, Mitchell Trace, and its Secretary, Patricia Barton, the loss of whose
services would likely cause its business operations to cease.
Ladybug’s
current business strategy is completely dependent upon the knowledge, reputation
and business contacts of Mitchell Trace, its President, and Patricia Barton, its
Secretary. If we were to lose the services of either one or both for any reason,
it is unlikely that we would be able to continue conducting our business plan
even if financing is obtained.
Our
President, Mitchell Trace and our Secretary Patricia Barton, are principally
responsible for the execution of our business. They are under no contractual
obligation to remain employed by us. If they should choose to leave us for any
reason before we have hired qualified additional personnel, our operations are
likely to fail. Even if we are able to find additional personnel, it is
uncertain whether we could find someone who could develop our business along the
lines with our business plan.
We
depend on a very limited number of customers.
During
the three months ended September 30, 2009, all revenue was derived from two
entities related to our Secretary and Director, Patricia Barton. During the
fiscal year ended June 30, 2009, the Company derived 34% of its revenues from
two companies, VOF (23.95%) and Seattle Cremations (10.45%). The work done
for VOF related to politically oriented websites and is not expected to result
in recurring engagements. We do not have long-term agreements with any customer
and cannot predict the likelihood of getting additional engagements from
them.
We
operate in a highly competitive industry with low barriers to entry, and we may
be unable to compete successfully against existing or new
competitors.
The Web
applications markets are highly competitive and have low barriers of entry,
which could hinder our ability to successfully market our products and services.
We may not have the resources, expertise or other competitive factors to compete
successfully in the future. Because there are few substantial barriers to entry,
we expect that we will face additional competition from existing competitors and
new market entrants in the future. Some of these competitors are part-time
contractors willing to provide services at low rates to enter the industry or
earn extra money. On the other hand, many of our current and potential
competitors have greater name recognition and more established relationships in
the industry and greater resources. As a result, these competitors may be able
to:
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Develop
and expand their network infrastructures and service offerings more
rapidly;
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Adapt
to new or emerging technologies and changes in customer requirements more
quickly; and
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Devote
greater resources to the marketing and sale of their services and adopt
more aggressive pricing policies than we
can.
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Current
and potential competitors in the market include Web hosting service providers,
applications hosting providers, Internet service providers, telecommunications
companies, large information technology firms and computer hardware
suppliers.
Our
success depends on our ability to maintain our professional reputation and name.
If we are unable to do so, our business would be significantly and negatively
impacted.
We depend
on our overall reputation and name recognition to secure new engagements. We
expect to obtain and are likely to continue obtaining many of our new
engagements from existing clients or from referrals by those clients. A client
who is dissatisfied with our work can adversely affect our ability to secure new
engagements. If any factor hurts our reputation, including poor performance, we
may experience difficulties in competing successfully for new engagements.
Failure to maintain our professional reputation and brand name could seriously
harm our business, financial condition and results of operations.
We
currently are likely to complete a limited number of engagements in a year. Our
revenues and operating results will fluctuate significantly from quarter to
quarter, which may cause our stock price, if one exists, to
decline.
Our current limited sources
of resources permit us to perform a limited number of engagements in any one
financial reporting period. Performance of a small number of engagements in any
one financial reporting quarter compared with the number of engagements
performed in other surrounding periods will have a significant percentage impact
on that quarter compared to the other quarters. As a result of these and other
factors, we believe that period-to-period comparisons of our operating results
will not be meaningful in the short term and that you should not rely upon our
performance in a particular period as an indication of our performance in any
future period.
We
are subject to the periodic reporting requirements of the Securities Exchange
Act of 1934, as amended, and will incur audit fees and legal fees in connection
with the preparation of such reports. These additional costs could reduce or
eliminate our ability to earn a profit.
We are
required to file periodic reports with the Securities and Exchange Commission
(the “SEC”) pursuant to the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder. In order to comply with these
requirements, our independent registered public accounting firm has to review
our financial statements on a quarterly basis and audit our financial statements
on an annual basis. Moreover, our legal counsel has to review and assist in the
preparation of such reports. The costs charged by these professionals for such
services cannot be accurately predicted because factors such as the number and
type of transactions that we engage in and the complexity of our reports cannot
be determined at this time and will have a major affect on the amount of time to
be spent by our auditors and attorneys. However, the incurrence of such costs
will obviously be an expense to our operations and thus have a negative effect
on our ability to meet our overhead requirements and earn a profit. We may be
exposed to potential risks resulting from new requirements under
Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide
reliable financial reports or prevent fraud, our business and operating results
could be harmed, investors could lose confidence in our reported financial
information, and the trading price of our common stock, if a market ever
develops, could drop significantly.
Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required,
beginning with our fiscal year ending June 30, 2010, to include in our annual
report our assessment of the effectiveness of our internal control over
financial reporting as of the end of the fiscal year ended June 30, 2010.
Furthermore, in the following fiscal year, our independent registered public
accounting firm will be required to report separately on whether it believes
that we have maintained, in all material respects, effective internal control
over financial reporting. We have not yet completed our assessment of the
effectiveness of our internal control over financial reporting. We expect to
incur additional expenses and diversion of management’s time as a result of
performing the system and process evaluation, testing and remediation required
in order to comply with the management certification and auditor attestation
requirements.
We
currently have only three employees. We may be unable to afford the cost of
increasing our staff or engaging outside consultants or professionals to
overcome our lack of employees. During the course of our testing, we may
identify other deficiencies that we may not be able to remediate in time to meet
the deadline imposed by the Sarbanes-Oxley Act for compliance with the
requirements of Section 404. In addition, if we fail to achieve and maintain
adequate internal controls, as such standards are modified, supplemented or
amended from time to time, we may not be able to ensure that we can conclude on
an ongoing basis that we have effective internal controls over financial
reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover,
effective internal controls, particularly those related to revenue recognition,
are necessary for us to produce reliable financial reports and are important to
help prevent financial fraud. If we cannot provide reliable financial reports or
prevent fraud, our business and operating results could be harmed, investors
could lose confidence in our reported financial information, and the trading
price of our common stock, if a market ever develops, could drop
significantly.
Mitchell
Trace, our Chief Executive Officer and Chief Financial Officer, has no
meaningful accounting or financial reporting education or experience and,
accordingly, our ability to meet Exchange Act reporting requirements on a timely
basis will be dependent to a significant degree upon others.
Mitchell
Trace, our Chief Executive Officer and Chief Accounting Officer, has no
meaningful financial reporting education or experience. He is heavily dependent
on advisors and consultants. As such, there is risk about our ability to comply
with all financial reporting requirements accurately and on a timely
basis.
Our
internal controls may be inadequate, which could cause our financial reporting
to be unreliable and lead to misinformation being disseminated to the
public.
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. As defined in the Securities Exchange Act of
1934, as amended, Rule 13a-15(f), internal control over financial reporting is a
process designed by, or under the supervision of, the principal executive and
principal financial officer and effected by the board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that: (i) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with
authorizations of management and/or directors of the Company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company's assets that could have a
material effect on the financial statements. Our internal controls may be
inadequate or ineffective, which could cause our financial reporting to be
unreliable and lead to misinformation being disseminated to the public.
Investors relying upon this misinformation may make an uninformed investment
decision.
Having
only two Directors limits our ability to establish effective independent
corporate governance procedures and increases the control of our
President/Director.
We have
only two Directors, one of whom is also our Chief Executive Officer.
Accordingly, we cannot establish Board committees comprised of independent
members to oversee functions like compensation or audit issues.
Until we
have a larger Board of Directors that would include some independent members, if
ever, there will be limited oversight of our President’s decisions and
activities and little ability for minority shareholders to challenge or reverse
those activities and decisions, even if they are not in the best interests of
minority shareholders.
Risks
Related to Our Common Stock
Shareholders
may be diluted significantly through our efforts to obtain financing and satisfy
obligations through the issuance of additional shares of our common
stock.
We have
no committed source of financing. Wherever possible, our Board of Directors will
attempt to use non-cash consideration to satisfy obligations. In many instances,
we believe that the non-cash consideration will consist of restricted shares of
our common stock. Our Board of Directors has authority, without action or vote
of the shareholders, to issue all or part of the authorized but unissued common
shares. We have authorized 300,000,000 shares of common stock, and as of January
27, 2010, 288,680,000 shares remain unissued. In addition, if a trading market
develops for our common stock, we may attempt to raise capital by selling shares
of our common stock, possibly at a discount to market. These actions will result
in dilution of the ownership interests of existing shareholders, may further
dilute common stock book value, and that dilution may be material. Such
issuances may also serve to enhance existing management’s ability to maintain
control of Ladybug
because
the shares may be issued to parties or entities committed to supporting existing
management.
Nevada
law and our Articles of Incorporation authorize us to issue shares of stock,
which shares may cause substantial dilution to our existing
shareholders.
We have
authorized capital stock consisting of 300,000,000 shares of common stock,
$0.001 par value per share and 20,000,000 shares of preferred stock, $0.001 par
value per share (“Preferred Stock”). As of the date of this Prospectus, we have
11,320,000 shares of common stock issued and outstanding and no shares of
Preferred Stock issued and outstanding. As a result, our Board of Directors
has the ability to issue a large number of additional shares of common stock
without shareholder approval, which if issued could cause substantial dilution
to our then shareholders. Additionally, shares of Preferred Stock may be issued
by our Board of Directors without shareholder approval with voting powers, and
such preferences and relative, participating, optional or other special rights
and powers as determined by our Board of Directors, which may be greater than
the shares of common stock currently outstanding. As a result, shares of
Preferred Stock may be issued by our Board of Directors which cause the holders
to have super majority voting power over our shares, provide the holders of the
Preferred Stock the right to convert the shares of Preferred Stock they hold
into shares of our common stock, which may cause substantial dilution to our
then common stock shareholders and/or have other rights and preferences greater
than those of our common stock shareholders. Investors should keep in mind that
the Board of Directors has the authority to issue additional shares of common
stock and Preferred Stock, which could cause substantial dilution to our
existing shareholders. Additionally, the dilutive effect of any Preferred
Stock, which we may issue may be exacerbated given the fact that such Preferred
Stock may have super majority voting rights and/or other rights or preferences
which could provide the preferred shareholders with voting control over us
subsequent to this offering and/or give those holders the power to prevent or
cause a change in control. As a result, the issuance of shares of
common stock and/or Preferred Stock may cause the value of our securities to
decrease and/or become worthless.
Our Articles of Incorporation
provide for indemnification of officers and Directors at our expense and limit
their liability. These provisions may result in a major cost to us and hurt the
interests of our shareholders because corporate resources may be expended for
the benefit of officers and/or Directors.
Our
Articles of Incorporation and applicable Nevada law provide for the
indemnification of our Directors, officers, employees, and agents, under certain
circumstances, against attorney's fees and other expenses incurred by them in
any litigation to which they become a party arising from their association with
or activities on our behalf. We will also bear the expenses of such litigation
for any of our Directors, officers, employees, or agents, upon such person's
written promise to repay us even if it is ultimately determined that any such
person shall not have been entitled to indemnification. This indemnification
policy could result in substantial expenditures by us that we may be unable to
recoup.
We have
been advised that, in the opinion of the SEC, indemnification for liabilities
arising under federal securities laws is against public policy as expressed in
the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the
event that a claim for indemnification for liabilities arising under federal
securities laws, other than the payment by us of expenses incurred or paid by a
Director, officer or controlling person in the successful defense of any action,
suit or proceeding, is asserted by a Director, officer or controlling person in
connection with the securities being registered, we will (unless in the opinion
of our counsel, the matter has been settled by controlling precedent) submit to
a court of appropriate jurisdiction, the question whether indemnification by us
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue. The legal process relating to this
matter if it were to occur is likely to be very costly and may result in us
receiving negative publicity, either
of which factors is
likely to materially reduce the market and price for our shares, if such a
market ever develops.
Currently,
there is no established public market for our securities, and there can be no
assurances that any established public market will ever develop or that our
common stock will be quoted for trading, and even if quoted, it is likely to be
subject to significant price fluctuations.
There has
not been any established trading market for our common stock. The Financial
Industry Regulatory Authority ("FINRA") has assigned us a trading symbol
(“LBRG”) which enables a market maker to quote the shares of our common stock on
the OTCBB maintained by FINRA. There can be no assurances as to
whether:
|
1.
|
any
market for our shares will ever
develop;
|
|
2.
|
the
prices at which our common stock will trade;
or
|
|
3.
|
the
extent to which investor interest in us will lead to the development of an
active, liquid trading market. Active trading markets generally
result in lower price volatility and more efficient execution of buy and
sell orders for investors.
|
In
addition, in the event a market develops, our common stock is unlikely to be
followed by any market analysts, and there may be few institutions acting as
market makers for our common stock. Either of these factors could adversely
affect the liquidity and trading price of our common stock. Until an orderly
market develops in our common stock, if ever, the price at which it trades is
likely to fluctuate significantly. Prices for our common stock will be
determined in the marketplace and may be influenced by many factors, including
the depth and liquidity of the market for shares of our common stock,
developments affecting our business, including the impact of the factors
referred to elsewhere in these Risk Factors, investor perception of us
and
general economic and market conditions. No assurances can be given that an
orderly or liquid market will ever develop for the shares of our common
stock.
Because
of the anticipated low price of the securities being registered, many brokerage
firms may not be willing to effect transactions in these securities. Purchasers
of our securities should be aware that any market that develops in our stock
will be subject to the penny stock restrictions.
Any
market that develops in shares of our common stock will be subject to the penny
stock regulations and restrictions pertaining to low priced stocks that will
create a lack of liquidity and make trading difficult or
impossible.
The
trading of our securities, if any, will likely be on the OTCBB as maintained by
FINRA. As a result, an investor may find it difficult to dispose of, or to
obtain accurate quotations as to the price of our securities.
Rule
3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a
"penny stock," for purposes relevant to us, as any equity security that has a
minimum bid price of less than $4.00 per share or with an exercise price of less
than $4.00 per share, subject to a limited number of exceptions which are not
available to us. It is likely that our shares will be considered to be penny
stocks for the immediately foreseeable future. This classification severely and
adversely affects any market liquidity for our common stock.
For any
transaction involving a penny stock, unless exempt, the penny stock rules
require that a broker or dealer approve a person's account for transactions in
penny stocks and the broker or dealer receive from the investor a written
agreement to the transaction setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must obtain financial
information and investment experience and objectives of the person and make a
reasonable determination that the transactions in penny stocks are suitable for
that person and that that person has sufficient knowledge and experience in
financial matters to be capable of evaluating the risks of transactions in penny
stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the SEC relating to the penny stock market,
which, in highlight form, sets forth:
|
·
|
the
basis on which the broker or dealer made the suitability determination,
and
|
|
·
|
that
the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
|
Disclosure
also has to be made about the risks of investing in penny stock in both public
offerings and in secondary trading and commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
Because
of these regulations, broker-dealers may not wish to engage in the
above-referenced necessary paperwork and disclosures and/or may encounter
difficulties in their attempt to sell shares of our common stock, which may
affect the ability of selling shareholders or other holders to sell their shares
in any secondary market. Our common stock’s penny stock status may also have the
effect of reducing the level of trading activity in any secondary market. These
additional sales practice and disclosure requirements could impede the sale of
our securities, if and when our securities become publicly traded. In addition,
the liquidity for our securities may decrease, with a corresponding decrease in
the price of our securities. Our shares, in all probability, if they trade at
all, will be subject to such penny stock rules for the foreseeable future, and
our shareholders will, in all likelihood, find it difficult to sell their
securities.
The
market for penny stocks has experienced numerous frauds and abuses that could
adversely impact investors in our stock.
Company
management believes that the market for penny stocks has suffered from patterns
of fraud and abuse. Such patterns include:
|
·
|
Control
of the market for the security by one or a few broker-dealers that are
often related to the promoter or
issuer;
|
|
·
|
Manipulation
of prices through prearranged matching of purchases and sales and false
and misleading press releases;
|
|
·
|
"Boiler
room" practices involving high pressure sales tactics and unrealistic
price projections by sales persons;
|
|
·
|
Excessive
and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
|
|
·
|
Wholesale
dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the inevitable
collapse of those prices with consequent investor
losses.
|
State
securities laws may limit secondary trading, which may restrict the states in
which and conditions under which you can sell shares.
Secondary
trading in our common stock may not be possible in any state until the common
stock is qualified for sale under the applicable securities laws of the state or
there is confirmation that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. If we fail
to register or qualify, or to obtain or verify an exemption for the secondary
trading of, the common stock in any particular state, the common stock could not
be offered or sold to, or purchased by, a resident of that state. In the event
that a significant number of states refuse to permit secondary trading in our
common stock, the liquidity for the common stock could be significantly
impacted.
The
ability of our majority shareholder to control our business may limit or
eliminate minority shareholders’ ability to influence corporate
affairs.
Our
largest shareholder, Patricia Barton, also our Secretary and Director,
beneficially owns 66.3% of our outstanding common stock. Because of this level
of beneficial stock ownership, she is and will be in a position to continue to
elect our Board of Directors, decide all matters requiring stockholder approval
and determine our policies. Her interests may differ from the interests of other
shareholders with respect to the issuance of shares, business transactions with
or sales to other companies, selection of officers and Directors and other
business decisions. The minority shareholders would have no way of overriding
decisions made by such principal shareholder. This level of control may also
have an adverse impact on the market value of our shares because she may
institute or undertake transactions, policies or programs that result in losses,
may not take any steps to increase our visibility in the financial community
and
/
or may sell
sufficient numbers of shares to significantly decrease our price per
share.
Future
sales of common stock by our existing shareholders could adversely affect our
stock price.
As of
January 27, 2010, Ladybug has 11,320,000 issued and outstanding shares of common
stock. Sales of substantial amounts of common stock in the public market, or the
perception that such sales will occur, could have a materially negative effect
on the market price of our common stock if a market ever develops. This problem
would be exacerbated if we issue common stock in exchange for services or in
connection with fund raising transactions.
We
do not expect to pay cash dividends in the foreseeable future
We have
never paid cash dividends on our common stock. We do not expect to pay cash
dividends on our common stock at any time in the foreseeable future. The future
payment of dividends directly depends upon our future earnings, capital
requirements, financial requirements and other factors that our Board of
Directors will consider. Since we do not anticipate paying cash dividends on our
common stock, return on your investment, if any, will depend solely on an
increase, if any, in the market value of our common stock.
Because
we are not subject to compliance with rules requiring the adoption of certain
corporate governance measures, our stockholders have limited protections against
interested director transactions, conflicts of interest and similar
matters.
The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the
SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a
result of Sarbanes-Oxley, require the implementation of various measures
relating to corporate governance. These measures are designed to enhance the
integrity of corporate management and the securities markets and apply to
securities that are listed on those exchanges or the Nasdaq Stock Market.
Because we are not presently required to comply with many of the corporate
governance provisions and because we chose to avoid incurring the substantial
additional costs associated with such compliance any sooner than legally
required, we have not yet adopted these measures.
Because
our Directors are not independent directors, we do not currently have
independent audit or compensation committees. As a result, our Directors have
the ability to, among other things, determine their own level of compensation.
Until we comply with such corporate governance measures, regardless of whether
such compliance is required, the absence of such standards of corporate
governance may leave our stockholders without protections against interested
director transactions, conflicts of interest, if any, and similar matters and
any potential investors may be reluctant to provide us with funds necessary to
expand our operations.
We intend
to comply with all corporate governance measures relating to director
independence as and when required. However, we may find it very difficult or be
unable to attract and retain qualified officers, Directors and members of board
committees required to provide for our effective management as a result of the
Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has
resulted in a series of rules and regulations by the SEC that increase
responsibilities and liabilities of directors and executive officers. The
perceived increased personal risk associated with these recent changes may make
it more costly or deter qualified individuals from accepting these
roles.
We
are required to remain current in our filings with the SEC and our securities
will not be eligible for quotation if we are not current in our filings with the
SEC.
As our
shares are currently quoted on the OTCBB, we are required to remain current
in our filings with the SEC in order for shares of our common stock to remain
eligible for quotation on the OTCBB. In the event that we become delinquent in
our required quarterly and annual filings with the SEC, quotation of our common
stock will be terminated following a 30 day grace period if we do not make our
required filing during that time. If our shares are not eligible for quotation
on the OTCBB, investors in our common stock may find it difficult to sell their
shares.
Additionally,
pursuant to OTCBB rules relating to the timely filing of periodic reports with
the SEC, any OTCBB issuer which fails to file a periodic report (Form 10-Q's or
10-K's) by the due date of such report (not withstanding any extension granted
to the issuer by the filing of a Form 12b-25), three (3) times during any
twenty-four (24) month period is automatically de-listed from the OTCBB. Such
removed issuer would not be re-eligible to be listed on the OTCBB for a period
of one-year, during which time any subsequent late filing would reset the
one-year period of de-listing. Furthermore, any issuer delisted from the OTCBB
more than one (1) time in any twenty-four (24) month period for failure to file
a periodic report would be ineligible to be re-listed for a period of one-year
year, during which time any subsequent late filing would reset the one-year
period of de-listing. As such, if we are late in our filings three times
in any twenty-four (24) month period and are de-listed from the OTCBB, or if our
securities are de-listed from the OTCBB two times in any twenty-four (24) month
period for failure to file a periodic report, our securities may become
worthless and we may be forced to curtail or abandon our business
plan.
You
may have limited access to information regarding our business because our
obligations to file periodic reports with the SEC could be automatically
suspended under certain circumstances.
As of the
effectiveness date of our Registration Statement, September 19, 2008, we are
required to file periodic reports with the SEC which are immediately available
to the public for inspection and copying. Except during the year that our
Registration Statement became effective, these reporting obligations may (in our
discretion) be automatically suspended under Section 15(d) of the Securities
Exchange Act of 1934 if we have less than 300 shareholders. If this occurs after
the year in which our Registration Statement became effective, we will no longer
be obligated to file periodic reports with the SEC and your access to our
business information would then be even more restricted. Although we currently
deliver periodic reports to security holders, we will not be required to furnish
proxy statements to security holders and our Directors, officers and principal
beneficial owners will not be required to report their beneficial ownership of
securities to the SEC pursuant to Section 16 of the Securities Exchange Act of
1934, as amended, until we have both 500 or more security holders and greater
than $10 million in assets. This means that your access to information regarding
our business will be limited.
For
all of the foregoing reasons and others set forth herein, an investment in our
securities involves a high degree of risk.
USE
OF PROCEEDS
We will
not receive any of the proceeds from the sale of shares of the common stock
offered by the selling stockholders, none of which are acting in concert with us
or as a conduit of us. We are registering
560,000 of our 11,320,000
currently outstanding shares of common stock for resale to provide the
holders thereof with freely tradable securities, but the registration of such
shares does not necessarily mean that any of such shares will be offered or sold
by the holders thereof.
SELLING
STOCKHOLDERS
At
January 27, 2010, we had approximately 39 shareholders of record.
The
Registrant has issued securities pursuant to exemptions from registration under
the Securities Act on the terms and circumstances described in the following
paragraphs:
At
inception, we issued 6,300,000 shares of our common stock to Molly S. Ramage
(800,000 shares), Stephen H. Ramage (2,000,000 shares) and Benjamin Ramage
(3,500,000 shares) in consideration for their efforts to incorporate us and
establish our initial business plan. A portion of which shares were subsequently
sold to Patricia Barton, our current Secretary and Director, as described
below. We also issued 4,000,000 shares to Patricia Barton, our
Secretary and Director for $4,000. Shortly after inception, we issued 90,000
shares to Keith Barton in consideration for services rendered in connection with
the formation of the Company and other related services. In March 2008 we
issued 540,000 shares to David Loev, our outside counsel, for professional
services performed. We claim an exemption from registration afforded by
Section 4(2) of the Securities Act of 1933 for the above issuances, since
the foregoing issuances did not involve a public offering, the recipients took
the shares for investment and not resale and we took appropriate measures to
restrict transfer.
In March
through May 2008, we raised $3,900 through the sale of 390,000 shares of our
common stock to 36 investors for $0.01 per share. This transaction was exempt
from registration under the Securities Act of 1933 pursuant to
Rule
504
of Regulation D of the Securities Act of 1933.
In the
foregoing issuances, neither the Registrant nor any person acting on its behalf
offered or sold the securities by means of any form of general solicitation or
general advertising, no underwriters or agents were involved, and we paid no
underwriting discounts or commissions.
|
|
|
|
|
Selling
Security Holders
|
Shares
Owned Before Offering
|
Shares
Being Offered
|
Number
and Percentage of Shares To Be Owned After Offering Completed
(1)
|
Relationship
to Ladybug or Affiliates
|
|
|
|
|
|
Laney,
Ashley
|
5,000
|
4,900
|
100
|
Minor
child of Lori Laney
|
|
|
|
|
|
Laney,
Elisabeth
|
5,000
|
4,900
|
100
|
Minor
child of Lori Laney
|
|
|
|
|
|
Laney,
Lori
|
1,109,000
|
9,900
|
1,108,900
|
Shareholder
(not including those shares held by Ashley and Elisabeth Laney, as
described above)
|
|
|
|
|
|
Loev,
David
|
540,000
|
539,000
|
1,000
|
Counsel
to Ladybug.
|
|
|
|
|
|
Total
|
560,000
|
560,000
|
1,300
|
|
(1)
Assumes that none of the selling stockholders sells shares of common stock not
being offered in this Prospectus or purchases additional shares of common stock,
and assumes that all shares offered are sold.
To the
best of management’s knowledge, none of the Selling Stockholders are
broker/dealers or affiliates of broker/dealers.
Selling
stockholders will sell at prevailing market prices or privately
negotiated prices.
DIVIDEND
POLICY
We have
never paid cash or any other form of dividend on our common stock, and we do not
anticipate paying cash dividends in the foreseeable future. Moreover, any
future credit facilities might contain restrictions on our ability to declare
and pay dividends on our common stock. We plan to retain all earnings, if any,
for the foreseeable future for use in the operation of our business and to fund
the pursuit of future growth. Future dividends, if any, will depend on, among
other things, our results of operations, capital requirements and on such other
factors as our Board of Directors, in its discretion, may consider
relevant.
MARKET
FOR SECURITIES
The
Company's common stock has been quoted on the Over-the-Counter Bulletin Board
under the symbol "
LBRG
" since
approximately December 23, 2008; however, none of our shares have traded to
date. As of January 27, 2010, the Company had 11,320,000 shares of common stock
outstanding held by approximately 41 shareholders of record.
There are
currently no outstanding options or warrants to purchase stock of the Company or
any securities convertible into our common equity.
Rule
144
Sales
by Non-Affiliates
In
general, under Rule 144, a holder of restricted common shares who is not and has
not been one of our affiliates at any time during the three months preceding the
proposed sale can resell the shares as follows, which discussion assumes that we
are not and never were a “shell company” as defined in the Securities
Act:
|
·
|
If
we have been a reporting company under the Exchange Act for at least 90
days immediately before the sale, then:
|
|
|
|
|
·
|
Beginning
six months after the shares were acquired from us or any of our
affiliates, the holder can resell the shares, subject to the condition
that current public information about us must be available (as described
below) until one year from the date the shareholder acquired the shares,
but without any other restrictions; and
|
|
|
|
|
·
|
Beginning
one year after the shares were acquired from us or any of our affiliates,
the holder can resell the shares without any
restrictions.
|
|
|
|
|
·
|
If
we have not been a public reporting company under the Exchange Act for at
least 90 days immediately before the sale, then the holder may not resell
the shares until at least one year has elapsed since the shares were
acquired from us or any of our affiliates, and may resell the shares
without restrictions after that
time.
|
Sales
by Affiliates
In
general, under Rule 144, a holder of restricted common shares who is one of our
affiliates at the time of the sale or any time during the three months preceding
the sale can resell shares, subject to the restrictions described
below.
|
·
|
If
we have been a public reporting company under the Exchange Act for at
least 90 days immediately before the sale, then at least six months must
have elapsed since the shares were acquired from us or one of our
affiliates, and we must remain current in our filings for an additional
period of six months; in all other cases, at least one year must have
elapsed since the shares were acquired from us or one of our
affiliates.
|
|
|
|
|
·
|
The
number of shares sold by such person within any three-month period cannot
exceed the greater of:
|
|
|
1%
of the total number of our common shares then outstanding;
or
|
|
|
|
|
|
The
average weekly trading volume of our common shares during the four
calendar weeks preceding the date on which notice on Form 144 with respect
to the sale is filed with the SEC (or, if Form 144 is not required to be
filed, the four calendar weeks preceding the date the selling broker
receives the sell order).
|
|
·
|
Conditions
relating to the manner of sale, notice requirements (filing of Form 144
with the SEC) and the availability of public information about us must
also be satisfied.
|
Current
Public Information
In
general, for sales by affiliates and non-affiliates, the satisfaction of the
current public information requirement depends on whether we are a public
reporting company under the Exchange Act:
|
·
|
If
we have been a public reporting company for at least 90 days immediately
before the sale, then the current public information requirement is
satisfied if we have filed all periodic reports (other than Form 8-K)
required to be filed under the Exchange Act during the 12 months
immediately before the sale (or such shorter period as we have been
required to file those reports).
|
|
·
|
If
we have not been a public reporting company for at least 90 days
immediately before the sale, then the requirement is satisfied if
specified types of basic information about us (including our business,
management and our financial condition and results of operations) are
publicly available.
|
However,
no assurance can be given as to (1) the likelihood of a market for our common
shares developing, (2) the liquidity of any such market, (3) the ability of the
shareholders to sell the shares, or (4) the prices that shareholders may obtain
for any of the shares. No prediction can be made as to the effect, if any, that
future sales of shares or the availability of shares for future sale will have
on the market price prevailing from time to time. Sales of substantial amounts
of our common shares, or the perception that such sales could occur, may
adversely affect prevailing market prices of the common shares.
Ladybug
has
agreed to register
560,000
shares of the
11,320,000 shares currently outstanding for sale by security holders, although
not obligated to do so by virtue of any registration rights agreement or other
agreement.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
Certain
matters discussed herein are forward-looking statements. Such
forward-looking statements contained in this Prospectus which is a part of our
Registration Statement involve risks and uncertainties, including statements as
to:
|
·
|
our
future operating results;
|
|
·
|
our
business prospects;
|
|
·
|
any
contractual arrangements and relationships with third
parties;
|
|
·
|
the
dependence of our future success on the general
economy;
|
|
·
|
any
possible financings; and
|
|
·
|
the
adequacy of our cash resources and working
capital.
|
These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as we “believe,” “anticipate,” “expect,”
“estimate” or words of similar meaning. Similarly, statements that describe our
future plans, objectives or goals are also forward-looking statements. Such
forward-looking statements are subject to certain risks and uncertainties which
are described in close proximity to such statements and which could cause actual
results to differ materially from those anticipated as of the date of this
Prospectus. Shareholders, potential investors and other readers are urged
to consider these factors in evaluating the forward-looking statements and are
cautioned not to place undue reliance on such forward-looking statements.
The forward-looking statements included herein are only made as of
the date of this Prospectus, and we undertake no obligation to publicly update
such forward-looking statements to reflect subsequent events or
circumstances.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009
COMPARED
TO THE THREE MONTHS ENDED SEPTEMBER 30, 2008
Operations
for the three months ended September 30, 2009 and 2008 consisted of the
following (changes between the periods on a cash and percentage basis are also
provided below):
|
|
2009
|
|
|
2008
|
|
|
Change
($)
|
|
|
Change
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,059
|
|
|
$
|
24,357
|
|
|
$
|
(21,298
|
)
|
|
|
(87
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
4,500
|
|
|
|
4,500
|
|
|
|
-
|
|
|
|
-
|
|
Professional
fees
|
|
|
14,352
|
|
|
|
1,500
|
|
|
|
12,852
|
|
|
|
857
|
|
Office
and subcontractor costs
|
|
|
4,658
|
|
|
|
33,384
|
|
|
|
(28,726
|
)
|
|
|
(86
|
)
|
Total
Expenses
|
|
|
23,510
|
|
|
|
39,384
|
|
|
|
(15,874
|
)
|
|
|
(40
|
)
|
Net
Loss
|
|
$
|
(20,451
|
)
|
|
$
|
(15,027
|
)
|
|
$
|
(5,424
|
)
|
|
|
36
|
|
Substantially
all the revenue in both periods was referred by or related to a Director or
major shareholder. Our revenue during the three months ended September 30, 2009
was adversely impacted by health issues affecting our former President, Molly
Ramage, which reduced the number of hours that she was able to work each week.
Ms. Ramage resigned in October 2009 because of health issues; however, she is
available to consult with us on a limited basis moving forward. The
Company’s revenues were also impacted by the overall economic recession and the
fact that fewer customers are willing to spend funds on advertising expenses,
such as the creation of websites.
Molly S.
Ramage, our former President, performed work for us and permitted us to use
facilities and equipment owned by her without charge to us during the three
months ended September 30, 2009 and 2008. The estimated cost of this service,
$4,500, was recorded as an expense and as a contribution to paid-in-capital in
each period.
Professional
fees increased for the three months ended September 30, 2009, compared to the
three months ended September 30, 2008, mainly due to the increased legal and
accounting costs associated with the Company being a public reporting company,
which it was not during the prior period.
Office
and subcontractor costs decreased for the three months ended September 30, 2009,
compared to the three months ended September 30, 2008, mainly as a result of the
decrease in revenues for the same period. The Company previously
subcontracted out the majority of its work to third parties, and due to the
decrease in services performed for the three months ended September 30, 2009,
compared to the prior period, there were less subcontractor costs as a result of
the decrease in revenues.
Our net
loss increased for the three months ended September 30, 2009, compared to the
three months ended September 30, 2008, mainly due to the 87% decrease in revenue
and the 857% increase in professional fees, which was not sufficiently offset by
the 86% decrease in office and subcontractor costs.
Other -
As a corporate
policy, we will not incur any cash obligations that we cannot satisfy with known
resources, of which there are currently none except as described in “Liquidity”
below.
RESULTS
OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2009
COMPARED
TO THE YEAR ENDED JUNE 30, 2008
We had
total revenue of $52,186 for the year ended June 30, 2009, compared to total
revenues of $22,850 for the period from November 27, 2007 (inception) through
June 30, 2008, which represented an increase in revenue of $29,336 or 128% from
the prior period. Revenues increased due to approximately doubling
the number of clients we had during the prior period, including a one-time
client involved in politically oriented web sites. That client, VOF, constituted
approximately 24% of our annual revenue for the fiscal year ended June 30,
2009.
We had
total expenses of $148,274 for the year ended June 30, 2009, compared to total
expenses of $40,833 for the period from November 27, 2007 (inception) through
June 30, 2008, an increase in total expenses of $107,441 or 263% from the prior
period. The reason for the increase in expenses was due to a $63,043
or 383% increase in professional fees, to $79,483 for the year ended June 30,
2009, compared to $16,440 for the period from November 27, 2007 (inception)
through June 30, 2008, due to expenses associated with becoming a
publicly-traded company and a $50,649 increase in office and subcontractor fees
to $50,792 for the year ended June 30, 2009, compared to $143 for the period
from November 27, 2007 (inception) through June 30, 2008, due to health related
issues of our President, offset by a $6,300 decrease in organizational expenses
to no expenses for the year ended June 30, 2009, compared to $6,300 in total
organizational expenses for the period from November 27, 2007 (inception)
through June 30, 2008.
We had a
net loss of $96,088 for the year ended June 30, 2009, compared to a net loss of
$18,033 for the period from November 27, 2007 (inception) through June 30, 2008,
an increase in net loss of $78,055 or 433%, which increase in net loss was
primarily due to the increase in professional fees and office and subcontractor
costs.
LIQUIDITY
AND CAPITAL RESOURCES
Ladybug
had $3,950 in total assets as of September 30, 2009, which included $989 of
current assets consisting of cash and $2,961 of long-term assets consisting of
computer equipment, net of accumulated depreciation.
Ladybug
had total liabilities of $82,382 as of September 30, 2009, consisting
principally of accrued professional fees.
Ladybug
had negative working capital of $81,393 and an accumulated deficit of $134,572
as of September 30, 2009.
Ladybug
had net cash used in operating activities of $7,224 for the three months ended
September 30, 2009, consisting of net loss of $20,451, offset by $4,500 of
contributed services, $425 of depreciation and $8,302 of change in net operating
activities.
Ladybug
does not have any credit facilities or other commitments for debt or equity
financing. No assurances can be given that advances when needed will be
available. We do not believe that we need funding to cover current operations
because we do not have a capital intensive business plan and can also use
independent contractors to assist in many projects. We will use funding, if
obtained, to cover the salary of our President and to pay for marketing
materials and proposal efforts. We currently have no formal salary arrangements
with our President. While no annual salary or length of employment has been
determined to date, we anticipate providing an annual salary not to exceed
$100,000 commencing after the successful completion of several engagements. The
salary will be paid out of revenues, if any, or accrued if sufficient cash is
not available to make payments.
The accrual will begin
after we generate annual revenue of at least $100,000 per year.
We may
seek private capital at some time in the future. Such funding, which we
anticipate would not exceed $100,000, will, if obtained, be used to pay salaries
and for the production of marketing materials. However, we will conduct
operations and seek client engagements even if no funding is obtained. The
private capital will be sought from former business associates of our President
or private investors referred to us by those associates. If a market for our
shares ever develops, of which there can be no assurances and which is unlikely
in the foreseeable future, we will use shares to compensate
employees/consultants wherever possible. To date, we have not sought any funding
source and have not authorized any person or entity to seek out funding on our
behalf.
We are
subject to the periodic reporting requirements of the Securities Exchange Act of
1934, as amended and as such will incur ongoing expenses associated with
professional fees for accounting, legal and a host of other expenses for annual
reports and proxy statements. We estimate that these costs may range up to
$50,000 per year for the next few years and will be higher if our business
volume and activity increases but lower during the first year of being public
because our overall business volume will be lower, and we will not yet be
subject to the requirements of Section 404 of the Sarbanes-Oxley Act of
2002. These obligations will reduce our ability and resources to fund other
aspects of our business. We hope to be able to use our status as a public
company to increase our ability to use noncash means of settling obligations and
compensating independent contractors who provide services for us, although there
can be no assurances that we will be successful in any of those efforts. We will
reduce the compensation levels paid to management if there is insufficient cash
generated from operations to satisfy these costs.
To meet
commitments that become due more than 12 months in the future, we will have to
obtain engagements in sufficient number and at sufficient levels of
profitability, of which there can be no assurance. There does not currently
appear to be any other viable source of long-term financing except that
management may consider various sources of debt and/or equity financing if the
same financing can be obtained on terms deemed reasonable to
management.
Recently
Issued Accounting Pronouncements
In June
2003, the Securities and Exchange Commission (“SEC”) adopted final rules under
Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC
Release No. 33-8934 on June 26, 2008. Commencing with the Company’s Annual
Report for the fiscal year ended June 30, 2010, the Company is required to
include a report of management on the Company’s internal control over financial
reporting. The internal control report must include a statement of management’s
responsibility for establishing and maintaining adequate internal control over
financial reporting for the Company; of management’s assessment of the
effectiveness of the Company’s internal control over financial reporting as of
year end; of the framework used by management to evaluate the effectiveness of
the Company’s internal control over financial reporting; and that the Company’s
independent accounting firm has issued an attestation report on management’s
assessment of the Company’s internal control over financial reporting, which
report is also required to be filed as part of the Annual Report on Form
10-K.
In
June 2009, the FASB issued SFAS No. 168,
The FASB Accounting Standards
Codification’ and the Hierarchy of Generally Accepted Accounting Principles, a
replacement of FASB Statement No. 162
(“SFAS 168”). SFAS 168
establishes the “FASB Accounting Standards Codification” (“Codification”), which
officially launched July 1, 2009, to become the source of authoritative
U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to
be applied by nongovernmental entities, superseding existing FASB, American
Institute of Certified Public Accountants, Emerging Issues Task Force, and
related accounting literature. Rules and interpretive releases of the Securities
and Exchange Commission (“SEC”) under authority of federal securities laws are
also sources of authoritative U.S. GAAP for SEC registrants. SFAS 168
reorganizes the previously issued GAAP pronouncements into accounting topics and
displays them using a consistent structure. The subsequent issuances of new
standards will be in the form of Accounting Standards Updates that will be
included in the Codification. SFAS 168 will be effective for the Company as of
the interim period ended October 31, 2009. As the Codification was not
intended to change or alter existing GAAP, it will not have an impact on the
Company’s consolidated financial statements. The only impact will be that any
future references to authoritative accounting literature will be in accordance
with SFAS 168 and the new numbering system prescribed by the
Codification.
In
May 2009, the FASB issued SFAS No. 165,
Subsequent Events
(“SFAS
165”). This standard is intended to establish general standards of accounting
and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. SFAS 165 requires
issuers to reflect in their financial statements and disclosures the effects of
subsequent events that provide additional evidence about conditions at the
balance sheet date. Disclosures should include the nature of the event and
either an estimate of its financial effect or a statement that an estimate
cannot be made. This standard also requires issuers to disclose the date through
which they have evaluated subsequent events and whether the date corresponds
with the release of their financial statements. The Company adopted SFAS 165 as
of the interim period ended July 31, 2009. As the requirements under SFAS
165 are consistent with its current practice, the implementation of this
standard did not have an impact on the Company’s consolidated financial
statements.
In March
2008, the FASB issued SFAS No. 161,
Disclosures about Derivative
Instruments and Hedging Activities
, and Amendment of FASB Statement No.
133. SFAS 161 amends SFAS 133,
Accounting for Derivative
Instruments and Hedging Activities
, to amend and expand the disclosure
requirements of SFAS 133 to provide greater transparency about (i) how and why
an entity uses derivative instruments, (ii) how derivative instruments and
related hedge items are accounted for under SFAS 133 and its related
interpretations, and (iii) how derivative instruments and related hedged items
affect an entity's financial position, results of operations and cash flows. To
meet those objectives, SFAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures about
fair value amounts of gains and losses on derivative instruments and disclosures
about credit-risk-related contingent features in derivative agreements. SFAS 161
is effective for fiscal years and interim periods beginning after November 15,
2008. Earlier adoption is encouraged. The Company is currently evaluating the
impact of SFAS 161 on its financial position, results of operations or cash
flows.
In May
2008, the FASB issued FSP APB 14-1,
Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlements)
. This FSP requires a portion of this type of convertible
debt to be recorded as equity and to record interest expense on the debt portion
at a rate that would have been charged on nonconvertible debt with the same
terms. This FSP takes effect in the first quarter of fiscal years beginning
after December 15, 2008 and will be applied retrospectively for all periods
presented. It will be effective for the Company on July 1, 2009. This FSP would
apply to the Company's convertible debentures. The Company is currently
evaluating how it may affect the financial statements. The Company
does not currently have any convertible debt instruments.
In June
2008, the FASB issued Staff Position ("FSP") EITF 03-6-1,
Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities.
Securities participating in dividends with common stock according to a formula
are participating securities. This FSP determined unvested shares of restricted
stock and stock units with nonforfeitable rights to dividends are participating
securities. Participating securities require the "two-class" method to be used
to calculate basic earnings per share. This method lowers basic earnings per
common share. This FSP takes effect in the first quarter of fiscal years
beginning after December 15, 2008 and will be applied retrospectively for all
periods presented. It will be effective for the Company on July 1, 2009. The
Company does not expect FSP EITF 03-6-1 to have a material effect on its
financial statements.
Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying consolidated financial statements.
Critical
Accounting Policies
The
preparation of financial statements and related notes requires us to make
judgments, estimates, and assumptions that affect the reported amounts of
assets, liabilities, revenue and expenses, and related disclosure of contingent
assets and liabilities.
An
accounting policy is considered to be critical if it requires an accounting
estimate to be made based on assumptions about matters that are highly uncertain
at the time the estimate is made, and if different estimates that reasonably
could have been used, or changes in the accounting estimates that are reasonably
likely to occur periodically, could materially impact the financial
statements.
Financial
Reporting Release No. 60 requires all companies to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements. There are no critical policies or decisions that rely on judgments
that are based on assumptions about matters that are highly uncertain at the
time the estimate is made. Note 2
to the financial
statements, included in our Registration Statement that was declared effective
on September 19, 2008, includes a summary of the significant accounting policies
and methods used in the preparation of our financial
statements.
Seasonality
We do not
yet have a basis to determine whether our business will be
seasonal.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of
Regulation S-K, obligations under any guarantee contracts or contingent
obligations. We also have no other commitments, other than the costs of being a
public company that will increase our operating costs or cash requirements in
the future.
BUSINESS
Ladybug
Resource Group, Inc. was incorporated in the State of Nevada on November 27,
2007 by Molly S. Ramage, our former President and Director. Ms. Ramage resigned
from us in October 2009 because of health reasons; however, she will be
available to consult with us on a limited basis moving forward. Our business
purpose is to assist in the design of websites and website components that use
specific marketing messages or themes to reach target audiences. Our initial
marketing focus is the websites of the funeral industry in the Seattle,
Washington area.
Ladybug
has limited financial resources and has not established a source of equity or
debt financing.
Operations
Ladybug
designs the message or marketing theme included on Internet Websites. We will
accept engagements for the development of entire Websites in which case we will
work with other contractors to code complex portions of the project and design
portions that are not theme or marketing related.
We refer
to our approach as “Smart Design” which is about carefully planning the work
that needs to be done before starting the project. We make sure a customer’s
website is a good fit for its business and customers. We design our websites
based on what it means for the customer. We work to:
·
Increase
brand recognition;
·
Integrate
the website with a customer’s marketing goals and strategies; and
·
Enhance
a customer’s credibility through offerings that are timely and
relevant.
A
successful website depends on much more than just aesthetics. Delivery of a
successful product to customer requires careful analysis of what customers want
and need for their business
We have
developed an approach to accomplish our development efforts.
The first
stage is the Planning and Discovery Stage. During this stage we get to know
the customer and its business to determine:
·
The
customer’s marketing objectives;
·
The
customer’s expected Website audience and the expectations of that
audience;
·
The
message to be conveyed to the target audience; and
· The
competitive landscape in the customer’s industry and the industry’s best
practices on the Internet.
Once we
have a thorough understanding of a customer’s place in the market and its
business needs, we make recommendations of how we can best help achieve those
goals. We help a customer to make decisions about the course of the project and
how it will impact their overall marketing scheme.
The
information that we develop during this process will provide us in the Concept
Stage. During this stage we develop concepts for customer review - keeping in
mind usability, best design practices, and ease-of-use.
Designing
the look and feel of a Website is just one part of this stage; other tasks
include:
|
·
|
Determining
the architecture of the Website by developing a detailed site
map.
|
|
·
|
If
the website includes technical developments, such as a shopping cart, we
make sure that the design meets all usability
standards.
|
When the
look of the Website has been developed and all of the web pages that will need
to be constructed have been identified, we start to build the Website in our
Implementation Stage. During this phase we do the following:
|
·
|
Construct
the navigational architecture with what we believe to be usability best
practices;
|
|
·
|
Propagate
all pages with graphics and
content;
|
|
·
|
Code
any technical requirements into the site - such as eCommerce functions and
interactivity; and
|
|
·
|
Create
extra features like Flash animations, dynamic menus, and multimedia
components.
|
Also,
during this phase, we review all areas of the site to ensure that we have met
our internal standards of making the site extremely simple to use.
We then
enter the Deployment Stage. Prior to the Website going-live on the Internet,
we:
|
·
|
Test
the site to make sure it provides the best user experience
possible;
|
|
·
|
Obtain
customer approval that we have met project requirements for usability and
technical standards, and design
excellence;
|
|
·
|
Develop
a launch plan to promote the customer’s Website, including marketing, ads
and email blasts; and
|
|
·
|
Submit
a customer’s Website to the appropriate search
engines.
|
We will
also resell Website hosting space for the Websites of customers. In this case,
the Website is hosted on the server of a Website hosting company, but we manage
all changes to the Website.
Marketing
Ladybug
obtains customer leads from the business and personal contacts of investors in
the Company, Molly S. Ramage, our former President and Director, and by word of
mouth. We work with each customer to understand the nature of the business and
the theme that the customer wants to convey. We then work with subcontractors to
develop the image and written portion of the theme. In most cases, we code the
HyperText Markup Language portions of the package to be placed on the customer’s
Website. In certain cases, we will engage the assistance of independent
subcontractors to assist us with complex coding requirements.
Ladybug
developed its first product to be marketed to companies in the funeral business.
This product, when installed on a funeral home’s Website, makes it easy to place
obituaries on the Website. No sales to funeral businesses other than an original
participating funeral business have been made at this point. Ladybug
has gone on to develop other cost-saving features for funeral home web sites and
has decided to delay marketing to funeral homes until an entire suite of
features has been developed and thoroughly tested. The code to support these
additional features is being developed primarily by outsourcing the work to a
third party independent contractor who continues to incrementally add features
and improve functionality. One significant feature added during the month of
January 2010 was a way to flag and eliminate inappropriate comments being posted
to an obituary as a prank. Due to the departure of our previous
president, development of Ladybug's funeral obituary web interface has proceeded
at a slower pace. We cannot predict if and when the product
will become economically viable as competing products are entering the market
from vendors that are financially stronger than the
Company. There is no contract between Ladybug and the
independent contractor.
During
the fiscal year ended June 30, 2009, the Company derived 34% of its revenues
from two (2) companies, VOF (23.95%) and Seattle Cremations (10.45%). The
remaining revenue was derived from twelve (12) separate clients. VOF
is a company involved in political web sites. That activity has
ceased and it is unlikely that additional revenue will be generated from VOF in
the foreseeable future. We do not have any agreements or contracts with any of
the companies described above.
Ladybug
bills for engagements after the work has been completed and accepted by the
customer.
Competition
The Web
applications markets are highly competitive and have low barriers of entry,
which could hinder our ability to successfully market our products and services.
We may not have the resources, expertise or other competitive factors to compete
successfully in the future. Because there are few substantial barriers to entry,
we expect that we will face additional competition from existing competitors and
new market entrants in the future. Some of these competitors are part-time
contractors willing to provide services at low rates to enter the industry or
earn extra money. On the other hand, many of our current and potential
competitors have greater name recognition and more established relationships in
the industry and greater resources. As a result, these competitors may be able
to:
|
·
|
Develop
and expand their network infrastructures and service offerings more
rapidly;
|
|
·
|
Adapt
to new or emerging technologies and changes in customer requirements more
quickly; and
|
|
·
|
Devote
greater resources to the marketing and sale of their services and adopt
more aggressive pricing policies than we
can.
|
Current
and potential competitors in the market include Web hosting service providers,
applications hosting providers, Internet service providers, telecommunications
companies, large information technology firms and computer hardware
suppliers.
Our
ability to compete is based on our ability to meet customers through our other
contacts and to convince those prospective customers that we provide quality
personalized services at very competitive prices. We cannot provide assurances
that our strategy will succeed.
Intellectual
Property
We have
no patents or trademarks.
Employees
As of
January 27, 2010, we had no employees.
Recent
Events:
On or
around August 18, 2009, the Board of Directors of and the Majority Shareholders
(defined below) of the Company, approved via a consent to action without meeting
(a) an amendment to the Company’s Bylaws (described in greater detail below);
and (b) the filing of Amended and Restated Articles of Incorporation for the
Company (the “Restated Articles”). The Company’s “Majority
Shareholders” who provided their consent to the action without a meeting
included Molly S. Ramage, the former President and former Chairman of the
Company, Stephen H. Ramage, a former Vice President and a former Director of the
Company, Benjamin Ramage, the former Vice President and a former Director of the
Company, and Patricia Barton, our current Secretary and Director, who in
aggregate voted 10,300,000 shares of the Company’s outstanding common stock,
representing approximately 91% of the Company’s outstanding common stock, which
they held as of the date of the minutes, August 18, 2009, to approve the written
consent to action without meeting.
The
Company’s Bylaws (the “Bylaws”) were amended to provide that in the event that
action is taken by written consent to action by the shareholders of the Company,
the prompt notice required to be given to the shareholders of the Company who
did not sign the written consent could be given, in the event the Company is a
reporting company which files periodic and current reports with the Securities
and Exchange Commission, by the filing of a Report on Form 8-K describing the
items approved by the shareholders in the consent to action.
The
Restated Articles affected an increase in the number of the Company’s authorized
shares of common stock to 300,000,000 shares of common stock, $0.001 par value
per share, and authorized 20,000,000 shares of preferred stock, $0.001 par value
per share (“Preferred Shares”). Previously the Company had 75,000,000
shares of common stock, $0.001 par value per share and no shares of preferred
stock authorized.
The
Preferred Shares shall be issued from time to time in one or more series, with
such distinctive serial designations as shall be stated and expressed in the
resolution or resolutions providing for the issue of such shares from time to
time adopted by the Board of Directors; and in such resolution or resolutions
providing for the issue of shares of each particular series, the Board of
Directors is expressly authorized to fix the annual rate or rates of dividends
for the particular series; the dividend payment dates for the particular series
and the date from which dividends on all shares of such series issued prior to
the record date for the first dividend payment date shall be cumulative; the
redemption price or prices for the particular series; the voting powers for the
particular series, the rights, if any, of holders of the shares of the
particular series to convert the same into shares of any other series or class
or other securities of the corporation, with any provisions for the subsequent
adjustment of such conversion rights; and to classify or reclassify any unissued
preferred shares by fixing or altering from time to time any of the foregoing
rights, privileges and qualifications. All the Preferred Shares
of any one series shall be identical with each other in all respects, except
that shares of any one series issued at different times may differ as to the
dates from which dividends thereon shall be cumulative.
The
Restated Articles further clarified the Articles of Incorporation to provide
that no shareholders are entitled to cumulative voting and that the Directors of
the Company have the power to amend the Bylaws of the Company, provided that the
shareholders have the power at any meeting called and held for such purpose, to
amend or repeal any such amendments to the Bylaws affected by the Board of
Directors.
The
effective filing date of the Restated Articles with the Secretary of State of
Nevada was August 31, 2009.
On
October 21, 2009, the Board of Directors of the Company increased the number of
Directors of the Company from three (3) to five (5) and appointed Mitchell T.
Trace and Patricia J. Barton as Directors of the Company to fill the vacancies
created by such increase. Subsequent to that appointment, Molly S.
Ramage, resigned as our President, Chief Executive Officer, Chief Accounting
Officer, and Chairman; Stephen H. Ramage resigned as our Vice President,
Secretary, Treasurer, and Director; and Benjamin Ramage, resigned as our Vice
President, Chief Financial Officer, and Director (the “Resignations”) and
Mitchell T. Trace was appointed as the President, Chief Executive Officer, Chief
Financial Officer and Treasurer of the Company and Patricia J. Barton was
appointed as the Secretary of the Company.
Ms.
Barton is currently the Company’s largest shareholder holding
7,500,000 shares of our common stock, following the purchase of the Shares,
as provided below, or 66.25% of our outstanding shares of common
stock.
On
October 21, 2009, Molly Ramage, Benjamin Ramage and Stephen Ramage sold 400,000,
1,500,000 and 1,600,000 shares, respectively, of our restricted common stock
(collectively the “Shares”) to Patricia J. Barton, pursuant to individual Stock
Purchase Agreements entered into between the parties. In connection
with the Stock Purchase Agreements, Mrs. Barton paid $0.001 per share to each of
the sellers in consideration for the Shares, or $3,500 in
aggregate.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
management consists of:
NAME
|
AGE
|
POSITION
|
|
|
|
Mitchell
T. Trace
|
34
|
President,
Chief Executive Officer, Chief Financial Officer, Treasurer and
Director
|
|
|
|
Patricia
J. Barton
|
66
|
Secretary
and Director
|
|
|
|
Mitchell
T. Trace
Mitchell
T. Trace has served are our President, Chief Executive Officer, Chief Financial
Officer, Treasurer and Director since October 21, 2009. Mitchell T. Trace has
served as a commodities buyer for Keller Supply in Seattle, Washington since
March 2007. From April 2006 to September 2006, he served as the Materials
Manager for Pryer Machine and Tools Aeronautics in Tulsa,
Oklahoma. From July 2004 to April 2006, he served as the Logistics
Manager for F.W. Murphy in Tulsa, Oklahoma. From September 2001
to May 2004, he served as the Accounting and Purchasing Supervisor for Maverick
Transportation in North Little Rock, Arkansas. From March 1994 to
September 2001, he served as the Assistant Sales Manager for Sam’s Club in North
Little Rock, Arkansas. He holds a Bachelors of Science degree in
Organizational Business Management from John Brown University, which he received
in 1999.
Patricia
J. Barton
Patricia
has served as our Secretary and Director since October 31,
2009. Patricia has been a managing member of Barton Family Funeral
Service LLC, a privately held funeral service in Seattle, Washington, since its
founding in June 2004. She holds a BS in accounting from Woodbury
University, which she received in 1963. Previously, she managed the
dental practice of S.C. Barton DDS, her husband, from August 1970 to June 1997.
Throughout her career, she has established and managed several small businesses
including a wholesale distribution company.
The term
of office of each Director expires at our annual meeting of stockholders or
until their successors are duly elected and qualified. No officer or Director
has any prior history with a blank check company.
Possible
Potential Conflicts
The OTCBB
on which our shares of common stock are quoted does not have any director
independence requirements.
No member
of management is or will be required by us to work on a full-time basis,
although our President currently devotes approximately five (5) hours per week
working for us. Accordingly, certain conflicts of interest may arise between us
and our officer in that he may have other business interests in the future to
which he devotes his attention, and he may be expected to continue to do so
although management time must also be devoted to our business. As a
result, conflicts of interest may arise that can be resolved only through his
exercise of such judgment as is consistent with her understanding of his
fiduciary duties to us.
Currently
we have only two officers and two Directors, Mitchell T. Trace and Patricia J.
Barton, and will seek to add additional officer(s) and/or Director(s) as and
when the proper personnel are located and terms of employment are mutually
negotiated and agreed, and we have sufficient capital resources and cash flow to
make such offers.
Board
of Directors
All
Directors hold office until the completion of their term of office, which is not
longer than one year, or until their successors have been elected. All
officers are appointed annually by the Board of Directors and, subject to
existing employment agreements (of which there are currently none) and serve at
the discretion of the board. Currently, our Directors receive no compensation
for their role as Directors but may receive compensation for their role as
officers.
If we
have an even number of Directors, tie votes on issues will be resolved in favor
of the chairman’s vote, if any.
The Board
of Directors has adopted a Code of Ethics.
Committees
of the Board of Directors
Concurrent
with having sufficient members and resources, the Ladybug Board of Directors
will establish an audit committee and a compensation committee. We believe
that we will need a minimum of five Directors to have effective committee
system
s
. The audit
committee will review the results and scope of the audit and other services
provided by the independent auditors and review and evaluate the system of
internal controls. The compensation committee will manage any stock option
plan we may establish and review and recommend compensation arrangements for the
officers. No final determination has yet been made as to the
memberships of these committees or when we will have sufficient members to
establish committees. See “Executive Compensation”
hereinafter.
All
Directors will be reimbursed by us for any expenses incurred in attending
Directors' meetings provided that we have the resources to pay these fees.
We will consider applying for officers and Directors liability insurance
at such time when we have the resources to do so.
Indebtedness
of Directors and Executive Officers
None of
our directors or executive officers or their respective associates or affiliates
is indebted to us.
Involvement
In Certain Legal Proceedings
There
have been no events under any bankruptcy act, no criminal proceedings and no
judgments, injunctions, orders or decrees material to the evaluation of the
ability and integrity of any Director or executive officer, of Registrant during
the past five years, other than as provided above.
Independence
of Directors
We are
not required to have independent members of our Board of Directors, and do not
anticipate having independent Directors until such time as we are required to do
so.
Summary
Compensation Table
The
following table shows, for the years ended June 30, 2009 and 2008, compensation
awarded to or paid to, or earned by, our officers.
Name
and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Option
Awards
|
|
Total
|
|
Molly
S. Ramage(1)
|
|
2009
|
|
$
|
-
|
|
-
|
|
-
|
|
$
|
-
|
|
Former
CEO/CFO
|
|
2008
|
|
$
|
-
|
|
-
|
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
H. Ramage
|
|
2009
|
|
$
|
-
|
|
-
|
|
-
|
|
$
|
-
|
|
Former
VP/Secretary/Treasurer
|
|
2008
|
|
$
|
-
|
|
-
|
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin
Ramage(2)
|
|
2009
|
|
$
|
-
|
|
-
|
|
-
|
|
$
|
-
|
|
Former
VP/Chief Financial Officer
|
|
2008
|
|
$
|
-
|
|
-
|
|
-
|
|
$
|
-
|
|
(1) Molly
S. Ramage performed work and permitted us to use facilities and equipment owned
by her without charge during the year ended June 30, 2009 and the period from
inception until June 30, 2008. The estimated cost of this service, $18,000 for
both the fiscal year ended June 30, 2009 and for the period from November 27,
2007 (inception) through June 30, 2008. These amounts were recorded as an
expense and as a contribution to paid-in-capital in 2009 and
2008. Ms. Ramage resigned in October 2009 and was replaced by
Mitchell T. Trace, as described above.
(2) The
Company paid Benjamin Ramage, who is the son of the Company’s President,
independent contractor fees of $10,000 for the fiscal year ended June 30, 2009,
which fees were not paid for services as an officer or Director of the Company
and have not therefore been included in the table above. Mr. Ramage
resigned in October 2009 and was replaced by Mitchell T. Trace, as described
above.
There
have been no changes in the Company’s compensation policies since June 30, 2009,
the end of the Company’s last fiscal year.
Outstanding
Equity Awards at Fiscal Year End
There
were no outstanding equity awards at June 30, 2009.
COMPENSATION
DISCUSSION AND ANALYSIS
Director
Compensation
Our Board
of Directors does not currently receive any consideration for their services as
Directors of the Company. The Board of Directors reserves the right
in the future to award the members of the Board of Directors cash or stock based
consideration for their services to the Company, which awards, if granted shall
be in the sole determination of the Board of Directors.
Executive
Compensation Philosophy
Our Board
of Directors determines the compensation given to our executive officers in
their sole determination. As our executive officers currently draw no
compensation from us, we do not currently have any executive compensation
program in place. Although we have not to date, our Board of Directors also
reserves the right to pay our executives a salary, and/or to issue them shares
of common stock in consideration for services rendered and/or to award incentive
bonuses which are linked to our performance, as well as to the individual
executive officer’s performance. This package may also include long-term stock
based compensation to certain executives which is intended to align the
performance of our executives with our long-term business strategies.
Additionally, while our Board of Directors has not granted any performance base
stock options to date, the Board of Directors reserves the right to grant such
options in the future, if the Board in its sole determination believes such
grants would be in the best interests of the Company.
Incentive
Bonus
The Board
of Directors may grant incentive bonuses to our executive officers in its sole
discretion, if the Board of Directors believes such bonuses are in the Company’s
best interest, after analyzing our current business objectives and growth, if
any, and the amount of revenue we are able to generate each month, which revenue
is a direct result of the actions and ability of such executives.
Long-term,
Stock Based Compensation
In order
to attract, retain and motivate executive talent necessary to support the
Company’s long-term business strategy we may award certain executives with
long-term, stock-based compensation in the future, in the sole discretion of our
Board of Directors, which we do not currently have any immediate plans to
award.
PRINCIPAL
SHAREHOLDERS
As of January 27, 2010, we
had 11,320,000 shares of common stock outstanding which are held by
approximately 41 shareholders of record. The chart below sets forth the
ownership, or claimed ownership, of certain individuals and entities. This chart
discloses those persons known by the Board of Directors to have, or claim to
have, beneficial ownership of more than 5% of the outstanding shares of our
common stock as of January 27, 2010; of all Directors and executive officers of
Ladybug; and of our Directors and officers as a group.
Unless otherwise indicated,
Ladybug believes that all persons named in the table have sole voting and
investment power with respect to all shares of the common stock beneficially
owned by them. A person is deemed to be the beneficial owner of securities
which may be acquired by such person within 60 days from the date indicated
above upon the exercise of options, warrants or convertible securities.
Each beneficial owner’s percentage ownership is determined by assuming
that options, warrants or convertible securities that are held by such person
(but not those held by any other person) and which are exercisable within 60
days of the date indicated above, have been exercised.
Name
and Address
|
|
Amount
and Nature of Beneficial Ownership
|
|
Percentage
of Class
|
Mitchell
T. Trace, CEO, President and Director
|
|
0
|
|
0%
|
11630
Slater Avenue Northeast, Suite 1A, Kirkland, WA 98034
|
|
|
|
|
|
|
|
|
|
Patricia
Barton, Secretary and Director
11630
Slater Avenue Northeast, Suite 1A, Kirkland, WA 98034
|
|
7,500,000
|
|
66.3%
|
|
|
|
|
|
Keith
Barton
1611
Gatecreek Dr.
Pearland,
TX 77581
|
|
1,057,000
|
|
9.3%
|
|
|
|
|
|
Julie
Hammond
1110
East 53
rd
St. #3
Chicago,
IL 60615
|
|
1,099,000
|
|
9.7%
|
|
|
|
|
|
Lori
Laney (1)
1485
E. Feather Nest Dr.
Eagle,
ID 83616
|
|
1,119,900
|
|
9.9%
|
|
|
|
|
|
All
Officers and Directors as a group (2 individuals)
|
|
7,500,000
|
|
66.3%
|
(1)
Includes 5,000 shares held by each of Ms. Laney’s minor children.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We
currently operate out of office space located at 11630 Slater Avenue Northeast,
Suite 1A, Kirkland, WA 98034 provided to us by our Secretary, Patricia Barton,
at no cost, which serves as our address. Mrs. Barton incurs no incremental costs
as a result of our using the space. Therefore, she does not charge us for its
use. There is no written lease agreement.
Molly S.
Ramage, our former President, performed work and permitted us to use facilities
and equipment owned by her without charge during the year ended June 30, 2009
and the period from inception until June 30, 2008. The estimated cost of this
service, $18,000 for both the fiscal year ended June 30, 2009 and for the period
from November 27, 2007 (inception) through June 30, 2008. These amounts were
recorded as an expense and as a contribution to paid-in-capital in 2009 and
2008.
During
the fiscal year ended June 30, 2009, the Company derived 34% of its revenues
from two (2) companies, VOF (23.95%) and Seattle Cremations (10.45%). VOF
was introduced by the husband of an affiliate and Seattle Cremations was
introduced by the same affiliate, Patricia Barton. VOF is a company
involved in political web sites. That activity has ceased and it is
unlikely that additional revenue will be generated from VOF in the foreseeable
future. We do not have any agreements or contracts with any of the companies
described above.
During
the period from November 27, 2007 (inception) through June 30, 2008, the Company
derived all of its revenues from five (5) companies, BFFS (31.51%), Sterling
Trade Group (5.25%), Kibble (28.23%), Cohort Investments (8.75%) and Golden Age
Collectables (26.26%). Golden Age Collectables is a related party of a Company
officer and the other four companies were introduced by and indirectly related
to a minority shareholder of the Company. We do not have any
agreements or contracts with any of the five companies described
above.
The
Company paid Benjamin Ramage, who is the son of the Company’s former President,
independent contractor fees of $10,000 for the fiscal year ended June 30,
2009.
CONTROLS
AND PROCEDURES
(a) An
evaluation was carried out under the supervision and with the participation of
the Company's management, including the Chief Executive Officer ("CEO") and
Chief Financial Officer ("CFO") (in this case the same person), of the
effectiveness of the Company's disclosure controls and procedures as of
September 30, 2009. Based on that evaluation, the CEO/CFO has concluded that the
Company's disclosure controls and procedures are effective to provide reasonable
assurance that: (i) information required to be disclosed by the Company in
reports that it files or submits under the Securities Exchange Act of 1934 is
accumulated and communicated to the Company's management, including the CEO/CFO,
as appropriate to allow timely decisions regarding required disclosure by the
Company; and (ii) information required to be disclosed by the Company in reports
that it files or submits under the Securities Exchange Act of 1934, as amended,
is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.
(b) Changes
in internal control over financial reporting. There were no changes in our
internal control over financial reporting during our most recent fiscal quarter
that materially affected, or were reasonably likely to materially affect, our
internal control over financial reporting.
DESCRIPTION
OF CAPITAL STOCK
We have
authorized capital stock consisting of 300,000,000 shares of common stock,
$0.001 par value per share (“Common Stock”), and 20,000,000 shares of preferred
stock, $0.001 par value per share (“Preferred
Shares”).
Common
Stock
The
holders of outstanding shares of Common Stock are entitled to receive dividends
out of assets or funds legally available for the payment of dividends of such
times and in such amounts as the board from time to time may
determine. Holders of Common Stock are entitled to one vote for each
share held on all matters submitted to a vote of shareholders. There
is no cumulative voting of the election of Directors then standing for
election. The Common Stock is not entitled to pre-emptive rights and
is not subject to conversion or redemption. Upon liquidation,
dissolution or winding up of our company, the assets legally available for
distribution to stockholders are distributable ratably among the holders of the
Common Stock after payment of liquidation preferences, if any, on any
outstanding payment of other claims of creditors. Each outstanding
share of Common Stock is duly and validly issued, fully paid and
non-assessable.
Preferred
Stock
The
Preferred Shares shall be issued from time to time in one or more series, with
such distinctive serial designations as shall be stated and expressed in the
resolution or resolutions providing for the issue of such shares from time to
time adopted by the Board of Directors; and in such resolution or resolutions
providing for the issue of shares of each particular series, the Board of
Directors is expressly authorized to fix the annual rate or rates of dividends
for the particular series; the dividend payment dates for the particular series
and the date from which dividends on all shares of such series issued prior to
the record date for the first dividend payment date shall be cumulative; the
redemption price or prices for the particular series; the voting powers for the
particular series, the rights, if any, of holders of the shares of the
particular series to convert the same into shares of any other series or class
or other securities of the corporation, with any provisions for the subsequent
adjustment of such conversion rights; and to classify or reclassify any unissued
preferred shares by fixing or altering from time to time any of the foregoing
rights, privileges and qualifications. All the Preferred Shares
of any one series shall be identical with each other in all respects, except
that shares of any one series issued at different times may differ as to the
dates from which dividends thereon shall be cumulative.
Shareholder
Matters
As an
issuer of "penny stock" the protection provided by the federal securities laws
relating to forward looking statements does not apply to us if our shares are
considered to be penny stocks. Although the federal securities law provide a
safe harbor for forward-looking statements made by a public company that files
reports under the federal securities laws, this safe harbor is not available to
issuers of penny stocks. As a result, we will not have the benefit of this safe
harbor protection in the event of any claim that the material provided by us,
including this Prospectus, contained a material misstatement of fact or was
misleading in any material respect because of our failure to include any
statements necessary to make the statements not misleading.
As a
Nevada corporation, we are subject to the
Nevada Revised Statutes ("NRS" or "Nevada
law"). Certain provisions of
Nevada
law create rights that might be deemed material to our shareholders. Other
provisions might delay or make more difficult acquisitions of our stock or
changes in our control or might also have the effect of preventing changes in
our management or might make it more difficult to accomplish transactions that
some of our shareholders may believe to be in their best interests.
Directors' Duties
. Section
78.138 of the Nevada law allows our Directors and officers, in exercising their
powers to further our interests, to consider the interests of our employees,
suppliers, creditors and customers. They can also consider the economy of the
state and the nation, the interests of the community and of society and our
long-term and short-term interests and shareholders, including the possibility
that these interests may be best served by our continued independence. Our
Directors may resist a change or potential change in control if they, by a
majority vote of a quorum, determine that the change or potential change is
opposed to or not in our best interest. Our Board of Directors may consider
these interests or have reasonable grounds to believe that, within a reasonable
time, any debt which might be created as a result of the change in control would
cause our assets to be less than our liabilities, render us insolvent, or cause
us to file for bankruptcy protection.
Amendments to Bylaws -
Our Articles of
Incorporation provide that the power to adopt, alter, amend, or repeal our
bylaws is vested exclusively with the Board of Directors. In exercising this
discretion, our Board of Directors could conceivably alter our bylaws in ways
that would affect the rights of our shareholders and the ability of any
shareholder or group to effect a change in our control; however, the board would
not have the right to do so in a way that would violate law or the applicable
terms of our Articles of Incorporation.
Transfer
Agent
The
Transfer Agent for our common stock is Action Stock Transfer Company, 7069 S.
Highland Drive, Suite 300, Salt Lake City, Utah 84121. Its telephone number is
801-274-1088.
PLAN
OF DISTRIBUTION
The
selling stockholders may offer the shares at various times in one or more of the
following transactions:
|
·
|
on
any market that might develop;
|
|
·
|
in
transactions other than market
transactions;
|
|
·
|
by
pledge to secure debts or other
obligations;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account(1); or
|
|
·
|
in
a combination of any of the above.
|
Selling stockholders may also sell
their shares pursuant to Rule 144, if available.
(1) If
any of the selling shareholders enter into an agreement after the effectiveness
of our Registration Statement to sell all or a portion of their shares in
Ladybug to a broker-dealer as principal and the broker-dealer is acting as
underwriter, Ladybug will file a post-effective amendment to its Registration
Statement identifying the broker-dealer, providing the required information on
the Plan of Distribution, revising disclosures in its Registration Statement as
required and filing the agreement as an exhibit to its Registration Statement.
Additionally to the extent that any successor(s) to the named selling
stockholder wish to sell under this Prospectus, we must file a Prospectus
supplement identifying such successors as selling stockholders.
Accordingly, a Prospectus supplement will be filed under these
circumstances.
Selling
stockholders will sell at prevailing market prices or privately negotiated
prices. In order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or licensed brokers
or dealers.
The
selling stockholders may use broker-dealers to sell shares. If this happens,
broker-dealers will either receive discounts or commissions from the selling
stockholders, or they will receive commissions from purchasers of shares for
whom they have acted as agents. To date, no discussions have been held or
agreements reached with any broker/dealers.
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this Prospectus. Rule 144 provides that any
affiliate or other person who sells restricted securities of an issuer for his
own account, or any person who sells restricted or any other securities for the
account of an affiliate of the issuer of such securities, shall be deemed not to
be engaged in a distribution of such securities and, therefore, not to be an
underwriter thereof within the meaning of Section 2(a)(11) of the Securities Act
if all of the conditions of Rule 144 are met. Conditions for sales under Rule
144, assuming that the Company is not and has never been a “shell company”
include:
a.
|
adequate
current public information with respect to the issuer must be
available;
|
b.
|
restricted
securities must meet a six month holding period if purchased from a
reporting company or purchased (as is the case herein) from a
non-reporting entity, measured from the date of acquisition of the
securities from the issuer or from an affiliate of the
issuer.
|
c.
|
sales
of restricted or other securities sold for the account of an affiliate
during any three month period, cannot exceed the greater of 1% of the
securities of the class outstanding as shown by the most recent statement
of the issuer; (There is no 1% limitation applied to non-affiliate
sales).
|
d.
|
the
securities must be sold in ordinary "brokers' transactions" within the
meaning of section 4(4) of the Securities Act or in transactions directly
with a market maker, without solicitation by the selling security holders,
and without the payment of any extraordinary commissions or
fees.
|
e.
|
if
the amount of securities to be sold pursuant to Rule 144 during any three
month period by an affiliate exceeds 5,000 shares/units or has an
aggregate sale price in excess of $50,000 the selling security holder (if
an affiliate) must file a notice in Form 144 with the
Commission.
|
The
current information requirement listed in (a) above, the volume limitations
listed in (c) above, the requirement for sale pursuant to broker's transactions
listed in (d) above, and the Form 144 notice filing requirement listed in (e)
above cease to apply to any restricted securities sold for the account of a
non-affiliate if at least six months has elapsed from the date the securities
were acquired from the issuer or from an affiliate if purchased from a reporting
Issuer or 12 months (as is the case herein) if purchased from a non-reporting
Company.
The
selling stockholders shall have the sole and absolute discretion not to accept
any purchase offer or make any sale of shares if they deem the purchase price to
be unsatisfactory at any particular time.
The
selling stockholders or their respective pledgees, donees, transferees or other
successors in interest, may also sell the shares directly to market makers
acting as principals and/or broker-dealers acting as agents for themselves or
their customers. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. The
selling stockholders cannot assure that all or any of the shares offered in this
Prospectus will be sold by the selling stockholders.
The
selling stockholders, alternatively, may sell all or any part of the shares
offered in this Prospectus through an underwriter. No selling stockholder has
entered into any agreement with a prospective underwriter and there is no
assurance that any such agreement will be entered into.
Affiliates
and/or promoters of Ladybug who are offering their shares for resale and any
broker-dealers who act in connection with the sale of the shares hereunder will
be deemed to be "underwriters" of this offering within the meaning of the
Securities Act, and any commission they receive and proceeds of any sale of the
shares may be deemed to be underwriting discounts and commissions under the
Securities Act.
Selling
shareholders and any purchasers of our securities should be aware that any
market that develops in our common stock will be subject to “penny stock”
restrictions.
We will
pay all expenses incident to the registration, offering and sale of the shares
other than commissions or discounts of underwriters, broker-dealers or agents.
We have also agreed to indemnify the selling stockholders against certain
liabilities, including liabilities under the Securities Act.
This
offering will terminate on the earlier of the:
|
a)
|
date
on which the shares are eligible for resale without restrictions pursuant
to Rule 144 under the Securities Act;
or
|
|
b)
|
the
date on which all shares offered by this Prospectus have been sold by the
selling stockholders.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our Directors, officers and controlling persons, we have been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable.
Selling
shareholders and any purchasers of our securities should be aware that any
market that develops in our stock will be subject to the penny stock
restrictions.
The
trading of our securities, if any, will be in the over-the-counter markets which
are commonly referred to as the OTCBB as maintained by FINRA. As a result,
an investor may find it difficult to dispose of, or to obtain accurate
quotations as to the price of, our securities.
OTCBB
Considerations
The OTCBB
is separate and distinct from the NASDAQ stock market. NASDAQ has no business
relationship with issuers of securities quoted on the OTCBB. The SEC’s order
handling rules, which apply to NASDAQ-listed securities, do not apply to
securities quoted on the OTCBB.
Although
we anticipate that quotation on the OTCBB will increase liquidity for our stock,
investors may have difficulty in getting orders filled because trading activity
on the OTCBB in general is not conducted as efficiently and effectively as with
NASDAQ-listed securities. As a result, investors’ orders may be filled at a
price much different than expected when an order is placed.
Investors
must contact a broker-dealer to trade OTCBB securities. Investors do not have
direct access to the bulletin board service. For OTCBB securities, there only
has to be one market maker.
Certain
OTCBB transactions are conducted via telephone conversations between brokers. In
times of heavy market volume, the limitations of this process may result in a
significant increase in the time it takes to execute investor orders. Therefore,
when investors place market orders - an order to buy or sell a specific number
of shares at the current market price - it is possible for the price of a stock
to go up or down significantly during the lapse of time between placing a market
order and getting execution.
Because
OTCBB stocks are usually not followed by analysts, there may be lower trading
volume than for NASDAQ-listed securities.
Section
15(g) of the Exchange Act
Our
shares will be covered by Section 15(g) of the Exchange Act, and Rules 15g-1
through 15g-6 promulgated thereunder. They impose additional sales practice
requirements on broker-dealers who sell our securities to persons other than
established customers and accredited investors (generally institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their
spouses).
Rule
15g-1 exempts a number of specific transactions from the scope of the penny
stock rules (but is not applicable to us).
Rule
15g-2 declares unlawful broker-dealer transactions in penny stocks unless the
broker-dealer has first provided to the customer a standardized disclosure
document.
Rule
15g-3 provides that it is unlawful for a broker-dealer to engage in a penny
stock transaction unless the broker-dealer first discloses and subsequently
confirms to the customer current quotation prices or similar market information
concerning the penny stock in question.
Rule
15g-4 prohibits broker-dealers from completing penny stock transactions for a
customer unless the broker-dealer first discloses to the customer the amount of
compensation or other remuneration received as a result of the penny stock
transaction.
Rule
15g-5 requires that a broker-dealer executing a penny stock transaction, other
than one exempt under Rule 15g-1, disclose to its customer, at the time of or
prior to the transaction, information about the sales persons
compensation.
Rule
15g-6 requires broker-dealers selling penny stocks to provide their customers
with monthly account statements.
Rule
3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a
"penny stock," for purposes relevant to us, as any equity security that has a
minimum bid price of less than $4.00 per share or with an exercise price of less
than $4.00 per share, subject to a limited number of exceptions. It is likely
that our shares will be considered to be penny stocks for the immediately
foreseeable future. For any transaction involving a penny stock, unless exempt,
the penny stock rules require that a broker or dealer approve a person's account
for transactions in penny stocks and the broker or dealer receive from the
investor a written agreement to the transaction setting forth the identity and
quantity of the penny stock to be purchased.
In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must obtain financial information and investment experience and
objectives of the person and make a reasonable determination that the
transactions in penny stocks are suitable for that person and that that person
has sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the SEC relating to the penny stock market,
which, in highlight form, sets forth:
|
·
|
the
basis on which the broker or dealer made the suitability determination,
and
|
|
·
|
that
the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
|
Disclosure
also has to be made about the risks of investing in penny stock in both public
offerings and in secondary trading and commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. The above-referenced
requirements may create a lack of liquidity, making trading difficult or
impossible, and accordingly, shareholders may find it difficult to dispose of
our shares.
State
Securities – Blue Sky Laws
Transfer
of our common stock may be restricted under the securities or securities
regulations laws promulgated by various states and foreign jurisdictions,
commonly referred to as "Blue Sky" laws. Absent compliance with such individual
state laws, our common stock may not be traded in such jurisdictions. Because
the securities registered hereunder have not been registered for resale under
the blue sky laws of any state, the holders of such shares and persons who
desire to purchase them in any trading market that might develop in the future,
should be aware that there may be significant state blue-sky law restrictions
upon the ability of investors to sell the securities and of purchasers to
purchase the securities. Accordingly, investors may not be able to liquidate
their investments and should be prepared to hold the common stock for an
indefinite period of time.
Selling
Securityholders may contact us directly to ascertain procedures necessary for
compliance with Blue Sky Laws in the applicable states relating to Sellers
and/or Purchasers of Ladybug shares of common stock.
We intend
to apply for listing in Mergent, Inc., a leading provider of business and
financial information on publicly listed companies, which, once published, will
provide Ladybug with “manual” exemptions in approximately 33 states as indicated
in CCH Blue Sky Law Desk Reference at Section 6301 entitled “Standard Manuals
Exemptions.”
We
currently do not intend to and may not be able to qualify securities for resale
in other states which require shares to be qualified before they can be resold
by our shareholders.
Limitations
Imposed by Regulation M
Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the shares may not simultaneously engage in market making
activities with respect to our common stock for a period of two business days
prior to the commencement of such distribution. In addition and without limiting
the foregoing, each selling stockholder will be subject to applicable provisions
of the Exchange Act and the associated rules and regulations thereunder,
including, without limitation, Regulation M, which provisions may limit the
timing of purchases and sales of shares of our common stock by the selling
stockholders. We will make copies of this Prospectus available to the selling
stockholders and have informed them of the need for delivery of copies of this
Prospectus to purchasers at or prior to the time of any sale of the shares
offered hereby. We assume no obligation to so deliver copies of this Prospectus
or any related Prospectus supplement.
LEGAL
MATTERS
Certain
legal matters with respect to the issuance of shares of common stock offered
hereby will be passed upon by The Loev Law Firm, PC, Bellaire, Texas.
David M. Loev, the President of The Loev Law Firm, PC, beneficially owns
540,000 shares of the Company’s common stock (the “Loev Securities”) and is a
Selling Stockholder in this offering. Other than the Loev Securities,
neither Mr. Loev nor The Loev Law Firm, PC holds any other interest in the
Company.
EXPERTS
The
financial statements of Ladybug Resource Group, Inc. as of September 30, 2009
and June 30, 2009, included in this Prospectus have been reviewed by and audited
by our independent registered public accounting firm, respectively, and have
been so included in reliance upon the report of Li & Company, PC given on
the authority of such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We have
filed with the Securities and Exchange Commission a Registration Statement on
Form S-1, including exhibits, schedules and amendments, under the Securities Act
with respect to the shares of common stock to be sold in this offering. This
Prospectus does not contain all the information included in the Registration
Statement. For further information about us and the shares of our common stock
to be sold in this offering, please refer to our Registration
Statement.
Ladybug
is subject to the periodic reporting requirements of the Securities Exchange Act
of 1934, amended. Accordingly, we file annual, quarterly and special reports and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference room at 100 F Street, N. E., Washington, D.C. 20549.
You should call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings will also be available to the public at the
SEC's web site at "http:/www.sec.gov."
You may
request, and we will voluntarily provide, a copy of our filings, including our
annual report which will contain audited financial statements, at no cost to
you, by writing or telephoning us at the following address:
Ladybug
Resource Group, Inc.
11630
Slater Avenue Northeast, Suite 1A
Kirkland,
WA 98034
LADYBUG
RESOURCE GROUP, INC.
INDEX
TO FINANCIAL STATEMENTS
Contents
|
Page(s)
|
|
|
Unaudited Financial
Statements
|
|
|
|
Balance
Sheets at September 30, 2009 and June 30, 2009
|
F-2
|
|
|
Statement
of Operations for the three months ended September 30, 2009 and
2008
|
F-3
|
|
|
Statement
of Cash Flows for the three months ended September 30, 2009 and
2008
|
F-4
|
|
|
Notes
to Financial Statements
|
F-5
|
|
|
Audited Financial
Statements
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-10
|
|
|
Balance
Sheets at June 30, 2009 and 2008
|
F-11
|
|
|
Statement
of Operations for the Fiscal Year ended June 30, 2009 and for
the
|
F-12
|
Period
from November 27, 2007 (inception) through June 30, 2008
|
|
|
|
Statement
of Stockholders’ Equity (Deficit) from November 27, 2007
|
F-13
|
(inception)
through June 30, 2009
|
|
|
|
Statement
of Cash Flows for Fiscal Year ended June 30, 2009 and for
the
|
F-14
|
Period
from November 27, 2007 (inception) through June 30, 2008
|
|
|
|
Notes
to the Financial Statements
|
F-15
|
LADYBUG
RESOURCE GROUP, INC.
Balance
Sheets
|
|
September
30, 2009 (Unaudited)
|
|
|
June
30, 2009
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
Cash
|
|
$
|
989
|
|
|
$
|
8,213
|
|
Accounts
receivable
|
|
|
-
|
|
|
|
850
|
|
Total
Current Assets
|
|
|
989
|
|
|
|
9,063
|
|
|
|
|
|
|
|
|
|
|
COMPUTER
EQUIPMENT – net of accumulated depreciation of $2,150 and $1,725,
respectively
|
|
|
2,961
|
|
|
|
3,386
|
|
TOTAL
ASSETS
|
|
$
|
3,950
|
|
|
$
|
12,449
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued professional fees
|
|
$
|
82,382
|
|
|
$
|
74,930
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Deficit:
|
|
|
|
|
|
|
|
|
Preferred
stock: $0.001 par value; 20,000,000 shares authorized; no shares issued
and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common
stock: $0.001 par value; 300,000,000 shares authorized; 11,320,000 shares
issued and outstanding
|
|
|
11,320
|
|
|
|
11,320
|
|
Additional
paid-in capital
|
|
|
44,820
|
|
|
|
40,320
|
|
Accumulated
deficit
|
|
|
(134,572
|
)
|
|
|
(114,121
|
)
|
Total
Stockholders’ Deficit
|
|
|
(78,432
|
)
|
|
|
(62,481
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
3,950
|
|
|
$
|
12,449
|
|
See
accompanying notes to the financial statements.
LADYBUG
RESOURCE GROUP, INC.
Statements
of Operations
(Unaudited)
|
|
Three
Months Ended September 30, 2009
|
|
|
Three
Months Ended September 30, 2008
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,059
|
|
|
$
|
24,357
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
4,500
|
|
|
|
4,500
|
|
Professional
fees
|
|
|
14,352
|
|
|
|
1,500
|
|
Office
and subcontractor costs
|
|
|
4,658
|
|
|
|
33,384
|
|
Total
|
|
|
23,510
|
|
|
|
39,384
|
|
Net
Loss
|
|
$
|
(20,451
|
)
|
|
$
|
(15,027
|
)
|
|
|
|
|
|
|
|
|
|
Net
loss per common share – basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding - basic and
diluted
|
|
|
11,320,000
|
|
|
|
11,320,000
|
|
See
accompanying notes to the financial statements.
LADYBUG
RESOURCE GROUP, INC.
Statements
of Cash Flows
(Unaudited)
|
|
Three
Months Ended September 30,
2009
|
|
|
Three
Months Ended September 30,
2008
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(20,451
|
)
|
|
$
|
(15,027
|
)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
425
|
|
|
|
500
|
|
Contribution
of services
|
|
|
4,500
|
|
|
|
4,500
|
|
Change
in net operating assets
|
|
|
8,302
|
|
|
|
(1,894
|
)
|
Net
Cash Used in Operating Activities
|
|
|
(7,224
|
)
|
|
|
(11,921
|
)
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase
of equipment
|
|
|
-
|
|
|
|
(4,092
|
)
|
Net
Cash Used in Investing Activities
|
|
|
-
|
|
|
|
(4,092
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
CHANGE IN CASH
|
|
|
(7,224
|
)
|
|
|
(16,013
|
)
|
|
|
|
|
|
|
|
|
|
CASH
AT BEGINNING OF PERIOD
|
|
|
8,213
|
|
|
|
25,181
|
|
|
|
|
|
|
|
|
|
|
CASH
AT END OF PERIOD
|
|
$
|
989
|
|
|
$
|
9,168
|
|
See
accompanying notes to the financial statements.
LADYBUG
RESOURCE GROUP, INC.
September
30, 2009 and 2008
Notes
to Interim Financial Statements
(Unaudited)
NOTE 1 -
ORGANIZATION
Ladybug
Resource Group, Inc. (the “Company”) was incorporated in the State of Nevada on
November 27, 2007. Its business purpose is to assist in the design of websites
and website components that use specific marketing messages or themes to reach
target audiences. Its initial marketing focus is the websites of the funeral
industry in the Seattle, Washington area.
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
accompanying interim financial statements for the three months ended September
30, 2009 and 2008 are unaudited and have been prepared in accordance with
accounting principles generally accepted in the United States of America (“U.S.
GAAP”) for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by U.S. GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The results of operations realized during an interim period are not
necessarily indicative of results to be expected for a full year. These
financial statements should be read in conjunction with the information filed on
Form 10-K which was filed with the SEC on September 28, 2009.
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 and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fiscal year
end
The
Company elected June 30 as its fiscal year ending date.
Cash
Equivalents
The
Company considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents.
Computer
equipment
Computer
equipment is stated at cost less accumulated depreciation. Depreciation is
provided on the straight-line basis over an estimated useful life of three (3)
years.
Fair
value of financial instruments
The
Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph
820-10-35-37”) to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in accounting
principles generally accepted in the United States of America (U.S. GAAP), and
expands disclosures about fair value measurements. To increase
consistency and comparability in fair value measurements and related
disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into
three (3) broad levels. The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for identical assets or
liabilities and the lowest priority to unobservable inputs. The three
(3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are
described below:
Level
1
|
|
Quoted
market prices available in active markets for identical assets or
liabilities as of the reporting date.
|
|
|
|
Level
2
|
|
Pricing
inputs other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date.
|
|
|
|
Level
3
|
|
Pricing
inputs that are generally observable inputs and not corroborated by market
data.
|
The
carrying amounts of the Company’s financial assets and liabilities, such as
cash, accounts payable and accrued expenses, approximate their fair values
because of the short maturity of these instruments.
The
Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at
September 30, 2009 or 2008, nor gains or losses are reported in the statement of
operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date for
the interim period ended September 30, 2009 or 2008.
Revenue
Recognition
The
Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue
when it is realized or realizable and earned. The Company considers
revenue realized or realizable and earned when all of the following criteria are
met: (i) persuasive evidence of an arrangement exists, (ii) the product has been
shipped or the services have been rendered to the customer, (iii) the sales
price is fixed or determinable, and (iv) collectability is reasonably
assured.
Income
Taxes
The
Company accounts for income taxes under Section 740-10-30 of the FASB Accounting
Standards Codification. Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to
the extent management concludes it is more likely than not that the assets will
not be realized. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in the statements of operations in the period that includes the
enactment date.
The
Company adopted section 740-10-25 of the FASB Accounting Standards Codification
(“Section 740-10-25”). Section 740-10-25 addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should
be recorded in the financial statements. Under Section 740-10-25, the
Company may recognize the tax benefit from an uncertain tax position only if it
is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements
from such a position should be measured based on the largest benefit that has a
greater than fifty percent (50%) likelihood of being realized upon ultimate
settlement. Section 740-10-25 also provides guidance on
de-recognition, classification, interest and penalties on income taxes,
accounting in interim periods and requires increased disclosures. The
Company had no material adjustments to its liabilities for unrecognized income
tax benefits according to the provisions of Section 740-10-25.
Net
Loss per Common Share
Net loss
per common share is computed pursuant to section 260-10-45 of the FASB
Accounting Standards Codification. Basic net loss per share is
computed by dividing net loss by the weighted average number of shares of common
stock outstanding during the period. Diluted net loss per share is
computed by dividing net loss by the weighted average number of shares of common
stock and potentially outstanding shares of common stock during each
period. There were no potentially dilutive shares outstanding as of
September 30, 2009 or 2008.
Recently
Issued Accounting Standards
In June
2003, the Securities and Exchange Commission (“SEC”) adopted final rules under
Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC
Release No. 33-9072 on October 13, 2009. Commencing with its annual
report for the fiscal year ending June 30, 2010, the Company will be required to
include a report of management on its internal control over financial reporting.
The internal control report must include a statement of management’s
responsibility for establishing and maintaining adequate internal control over
its financial reporting; of management’s assessment of the effectiveness of its
internal control over financial reporting as of year end; and of the framework
used by management to evaluate the effectiveness of the Company’s internal
control over financial reporting.
Furthermore,
it is required to file the auditor’s attestation report separately on the
Company’s internal control over financial reporting on whether it believes that
the Company has maintained, in all material respects, effective internal control
over financial reporting.
In
June 2009, the FASB approved the “FASB Accounting Standards Codification”
(the “Codification”) as the single source of authoritative nongovernmental U.S.
GAAP to be launched on July 1, 2009. The Codification does not
change current U.S. GAAP, but is intended to simplify user access to all
authoritative U.S. GAAP by providing all the authoritative literature related to
a particular topic in one place. All existing accounting standard
documents will be superseded and all other accounting literature not included in
the Codification will be considered non-authoritative. The Codification is
effective for interim and annual periods ending after September 15,
2009. The adoption did not have a material impact on the Company’s
financial position, results of operations or cash flows.
In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-04
“Accounting for
Redeemable Equity Instruments - Amendment to Section 480-10-S99”
which
represents an update to section 480-10-S99, distinguishing liabilities from
equity, per EITF Topic D-98,
Classification and Measurement of
Redeemable Securities
. The Company does not expect the
adoption of this update to have a material impact on its consolidated financial
position, results of operations or cash flows.
In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-05
“Fair Value
Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair
Value”
, which provides amendments to subtopic 820-10, Fair Value
Measurements and Disclosures – Overall, for the fair value measurement of
liabilities. This “Update” provides clarification that in
circumstances in which a quoted price in an active market for the identical
liability is not available, a reporting entity is required to measure fair value
using one or more of the following techniques: 1. A valuation technique that
uses: a. The quoted price of the identical liability when traded as an asset and
b. Quoted prices for similar liabilities or similar liabilities when traded as
assets; and/or 2. Another valuation technique that is consistent with the
principles of topic 820; two examples would be an income approach, such as a
present value technique, or a market approach, such as a technique that is based
on the amount at the measurement date that the reporting entity would pay to
transfer the identical liability or would receive to enter into the identical
liability. The amendments in this Update also clarify that when estimating the
fair value of a liability, a reporting entity is not required to include a
separate input or adjustment to other inputs relating to the existence of a
restriction that prevents the transfer of the liability. The amendments in this
Update also clarify that both a quoted price in an active market for the
identical liability when traded as an asset in an active market when no
adjustments to the quoted price of the asset are required are Level 1 fair value
measurements. The Company does not expect the adoption of this update
to have a material impact on its consolidated financial position, results of
operations or cash flows.
In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-08
“Earnings Per Share –
Amendments to Section 260-10-S99”,
which represents technical corrections
to topic 260-10-S99, Earnings per share, based on EITF Topic D-53,
Computation of Earnings Per Share
for a Period that includes a Redemption or an Induced Conversion of a Portion of
a Class of Preferred Stock
and EITF Topic D-42,
The Effect of the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred
Stock
. The Company does not expect the adoption of this update to have a
material impact on its consolidated financial position, results of operations or
cash flows.
In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-09
“Accounting for
Investments-Equity Method and Joint Ventures and Accounting for Equity-Based
Payments to Non-Employees”
. This Update represents a
correction to Section 323-10-S99-4,
Accounting by an Investor for
Stock-Based Compensation Granted to Employees of an Equity Method
Investee
. Additionally, it adds observer comment
Accounting Recognition for Certain
Transactions Involving Equity Instruments Granted to Other Than Employees
to the Codification. The Company does not expect the adoption to have a material
impact on its consolidated financial position, results of operations or cash
flows.
In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-12
“Fair Value
Measurements and Disclosures Topic 820 – Investment in Certain Entities That
Calculate Net Assets Value Per Share (or Its Equivalent)”
, which provides
amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall,
for the fair value measurement of investments in certain entities that calculate
net asset value per share (or its equivalent). The amendments in this Update
permit, as a practical expedient, a reporting entity to measure the fair value
of an investment that is within the scope of the amendments in this Update on
the basis of the net asset value per share of the investment (or its equivalent)
if the net asset value of the investment (or its equivalent) is calculated in a
manner consistent with the measurement principles of Topic 946 as of the
reporting entity’s measurement date, including measurement of all or
substantially all of the underlying investments of the investee in accordance
with Topic 820. The amendments in this Update also require disclosures by major
category of investment about the attributes of investments within the scope of
the amendments in this Update, such as the nature of any restrictions on the
investor’s ability to redeem its investments at the measurement date, any
unfunded commitments (for example, a contractual commitment by the investor to
invest a specified amount of additional capital at a future date to fund
investments that will be made by the investee), and the investment strategies of
the investees. The major category of investment is required to be determined on
the basis of the nature and risks of the investment in a manner consistent with
the guidance for major security types in U.S. GAAP on investments in debt and
equity securities in paragraph 320-10-50-1B. The disclosures are required for
all investments within the scope of the amendments in this Update regardless of
whether the fair value of the investment is measured using the practical
expedient. The Company does not expect the adoption to have a material impact on
its consolidated financial position, results of operations or cash
flows.
Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.
NOTE 3 -
GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As reflected in the accompanying
financial statements, the Company had an accumulated deficit of $134,572 at
September 30, 2009, a net loss from operations of $20,451 and net cash used in
operations of $7,224 for the interim period ended September 30, 2009,
respectively.
While the
Company is attempting to generate sufficient revenues, the Company’s cash
position may not be enough to support the Company’s daily
operations. The Company intends to seek business aggressively through
the business contacts of its management and investors. While the Company
believes in the viability of its strategy to increase revenues and in its
ability to raise funds if necessary, there can be no assurances to that effect.
The ability of the Company to continue as a going concern is dependent upon the
Company’s ability to generate increased levels of revenues.
The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
NOTE 4 -
RELATED PARTY TRANSACTIONS
The
Company’s former President, who resigned in October 2009 because of health
issues, performed work and permitted the Company to use facilities and equipment
owned by her without charge. The estimated cost of this service ($4,500 for each
of the three months ended September 30, 2009 and 2008) was recorded as an
expense and as a contribution to paid-in-capital.
NOTE 5 -
SUBSEQUENT EVENTS
The
Company has evaluated all events that occurred after the balance sheet date of
September 30, 2009 through November 11, 2009, the date these financial
statements were issued. The Management of the Company determined that
there were no reportable events that occurred during that subsequent period to
be disclosed or recorded.
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
Ladybug
Resource Group, Inc.
Kirkland,
Washington
We have
audited the accompanying balance sheets of Ladybug Resource Group, Inc. (the
“Company”) as of June 30, 2009 and 2008, and the related statements of
operations, stockholders' equity (deficit), and cash flows for the fiscal year
ended June 30, 2009 and for the period from November 27, 2007 (inception)
through June 30, 2008. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of June 30, 2009 and
2008 and the results of its operations and its cash flows for the fiscal year
ended June 30, 2009 and for the period from November 27, 2007 (inception)
through June 30, 2008 in conformity with accounting principles generally
accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has negative working capital, net losses from
operations, negative cash flows from operations with very limited financial
resources and no sources of committed debt or equity financing, which raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are also described in Note 3. The financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classifications of liabilities that may result from the outcome of this
uncertainty.
|
/s/ Li & Company, PC
|
|
Li
& Company, PC
|
|
|
Skillman,
New Jersey
|
|
September
17, 2009
|
|
LADYBUG
RESOURCE GROUP, INC.
Balance
Sheets
|
|
June
30, 2009
|
|
|
June
30, 2008
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
Cash
|
|
$
|
8,213
|
|
|
$
|
25,181
|
|
Accounts
receivable
|
|
|
850
|
|
|
|
-
|
|
Total
Current Assets
|
|
|
9,063
|
|
|
|
25,181
|
|
|
|
|
|
|
|
|
|
|
COMPUTER
EQUIPMENT – net of accumulated depreciation of $1,725 and $69,
respectively
|
|
|
3,386
|
|
|
|
2,426
|
|
TOTAL
ASSETS
|
|
$
|
12,449
|
|
|
$
|
27,607
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued professional fees
|
|
$
|
74,930
|
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity (Deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock: $0.001 par value; 20,000,000 shares authorized; no shares issued
and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common
stock: $0.001 par value; 300,000,000 shares authorized; 11,320,000 shares
issued and outstanding
|
|
|
11,320
|
|
|
|
11,320
|
|
Additional
paid-in capital
|
|
|
40,320
|
|
|
|
22,320
|
|
Accumulated
deficit
|
|
|
(114,121
|
)
|
|
|
(18,033
|
)
|
Total
Stockholders’ Equity (Deficit)
|
|
|
(62,481
|
)
|
|
|
15,607
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
$
|
12,449
|
|
|
$
|
27,607
|
|
See
accompanying notes to the financial statements.
LADYBUG
RESOURCE GROUP, INC.
Statement
of Operations
|
|
For
the Fiscal Year Ended June 30, 2009
|
|
|
For
the Period from November 27,2007 (inception) through June 30,
2008
|
|
Revenue
|
|
$
|
52,186
|
|
|
$
|
22,850
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
18,000
|
|
|
|
18,000
|
|
Professional
fees
|
|
|
79,483
|
|
|
|
16,440
|
|
Office
and subcontractor costs
|
|
|
50,792
|
|
|
|
143
|
|
Organization
|
|
|
-
|
|
|
|
6,300
|
|
Total
|
|
|
148,274
|
|
|
|
40,833
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(96,088
|
)
|
|
$
|
(18,033
|
)
|
|
|
|
|
|
|
|
|
|
Net
Net loss per common share – basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
W Weighted
average number of common shares outstanding - basic and
diluted
|
|
|
11,320,000
|
|
|
|
10,762,500
|
|
See
accompanying notes to the financial statements.
LADYBUG
RESOURCE GROUP, INC.
STATEMENT
OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the
Period from November 27, 2007 (inception) through June 30, 2009
|
|
Common
Shares
|
|
|
Common
Stock
|
|
|
Additional
Paid-in Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares to founders
|
|
|
6,300,000
|
|
|
$
|
6,300
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
of shares
|
|
|
4,480,000
|
|
|
|
4,480
|
|
|
|
4,320
|
|
|
|
|
|
|
|
5,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services
|
|
|
540,000
|
|
|
|
540
|
|
|
|
|
|
|
|
|
|
|
|
540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution
of services
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
|
|
|
|
|
18,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,033
|
)
|
|
|
(18,033
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2008
|
|
|
11,320,000
|
|
|
|
11,320
|
|
|
|
22,320
|
|
|
|
(18,033
|
)
|
|
|
15,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution
of services
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
|
|
|
|
|
18,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(96,088
|
)
|
|
|
(96,088
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2009
|
|
|
11,320,000
|
|
|
$
|
11,320
|
|
|
$
|
40,320
|
|
|
$
|
(114,121
|
)
|
|
$
|
(62,481
|
)
|
See
accompanying notes to the financial
statements.
|
LADYBUG
RESOURCE GROUP, INC.
Statement
of Cash Flows
|
|
For
the Fiscal Year Ended June 30, 2009
|
|
|
Period
from November 27, 2007 (Inception) through June 30, 2008
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(96,088
|
)
|
|
$
|
(18,033
|
)
|
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,656
|
|
|
|
69
|
|
Contribution
of services
|
|
|
18,000
|
|
|
|
18,000
|
|
Common
stock issued for services
|
|
|
-
|
|
|
|
6,840
|
|
Change
in operating assets:
|
|
|
|
|
|
|
|
|
Increase
in accounts receivable
|
|
|
(850
|
)
|
|
|
-
|
|
Increase
in accrued expenses
|
|
|
62,930
|
|
|
|
12,000
|
|
Net
Cash Provided by (Used in) Operating Activities
|
|
|
(14,352
|
)
|
|
|
18,876
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase
of equipment
|
|
|
(2,616
|
)
|
|
|
(2,495
|
)
|
Net
Cash Used in Investing Activities
|
|
|
(2,616
|
)
|
|
|
(2,495
|
)
|
CASH
FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
Sale
of common stock
|
|
|
-
|
|
|
|
8,800
|
|
Net
Cash Provided by Financing Activities
|
|
|
-
|
|
|
|
8,800
|
|
|
|
|
|
|
|
|
|
|
CHANGE
IN CASH
|
|
|
(16,968
|
)
|
|
|
25,181
|
|
|
|
|
|
|
|
|
|
|
CASH
AT BEGINNING OF PERIOD
|
|
|
25,181
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH
AT END OF PERIOD
|
|
$
|
8,213
|
|
|
$
|
25,181
|
|
See
accompanying notes to the financial statements.
LADYBUG
RESOURCE GROUP, INC.
June
30, 2009 and 2009
Notes
to the Financial Statements
NOTE 1 -
ORGANIZATION
Ladybug
Resource Group, Inc. (the “Company”) was incorporated in the State of Nevada on
November 27, 2007. Its business purpose is to assist in the design of websites
and website components that use specific marketing messages or themes to reach
target audiences. Its initial marketing focus is the websites of the funeral
industry in the Seattle, Washington area.
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
Company’s financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (“U.S.
GAAP”).
Year-end
The
Company has elected a fiscal year ending on June 30.
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 and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash
Equivalents
The
Company considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents.
Fair
value of financial instruments
The
Company follows Statement of Financial Accounting Standards No. 107
“Disclosures about fair value of
Financial Instruments”
(“SFAS No. 107”) for disclosures about fair value
of its financial instruments and has adopted Financial Accounting Standards
Board (“FASB”) No. 157
“Fair
Value Measurements”
(“SFAS No. 157”) to measure the fair value of its
financial instruments. SFAS No. 157 establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, SFAS No. 157
establishes a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three (3) broad
levels. The fair value hierarchy gives the highest priority to quoted
prices (unadjusted) in active markets for identical assets or liabilities and
the lowest priority to unobservable inputs. The three (3) levels of
fair value hierarchy defined by SFAS No. 157 are described below:
Level
1
|
|
Quoted
market prices available in active markets for identical assets or
liabilities as of the reporting date.
|
|
|
|
Level
2
|
|
Pricing
inputs other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date.
|
|
|
|
Level
3
|
|
Pricing
inputs that are generally observable inputs and not corroborated by market
data.
|
As
defined by SFAS No. 107, the fair value of a financial instrument is the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale, which was
further clarified as
the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date. The
carrying amounts of the Company’s financial assets and liabilities, such as cash
and accrued expenses, approximate their fair values because of the short
maturity of these instruments.
The
Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at June
30, 2009, nor gains or losses are reported in the statement of operations that
are attributable to the change in unrealized gains or losses relating to those
assets and liabilities still held at the reporting date for the year ended June
30, 2009 or for the fiscal year then ended.
Computer
equipment
Computer
equipment is stated at cost less accumulated depreciation. Depreciation is
provided on the straight-line basis over an estimated useful life of three (3)
years.
Revenue
Recognition
The
Company follows the guidance of the United States Securities and Exchange
Commission’s Staff Accounting Bulletin 104 for revenue recognition. The Company
recognizes revenue when it is realized or realizable after the work has been
performed.
Stock-based
compensation and equity instruments issued to other than employees for acquiring
goods or services
The
Company accounted for its stock based compensation under the recognition and
measurement principles of the fair value recognition provisions of Statement of
Financial Accounting Standards No. 123 (revised 2004)
“Share-Based Payment”
(“SFAS
No. 123R”) using the modified prospective method for transactions in which
the Company obtains employee services in share–based payment transactions and
the Financial Accounting Standards Board Emerging Issues Task Force Issue
No. 96-18
“Accounting For Equity
Instruments That Are Issued To Other Than Employees For Acquiring, Or In
Conjunction With Selling Goods Or Services”
(“EITF No.
96-18”) for share-based payment transactions with parties other than employees provided in
SFAS No. 123R. All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable. The
measurement date used to determine the fair value of the equity instrument
issued is the earlier of the date on which the third-party performance is
complete or the date on which it is probable that performance will
occur.
Income
Taxes
The
Company follows Statement of Financial Accounting Standards No. 109
“Accounting for Income Taxes”
(“SFAS No. 109”), which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are based on the differences between
the financial statement and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to
the extent management concludes it is more likely than not that the assets will
not be realized. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the Consolidated Statements of Income and
Comprehensive Income in the period that includes the enactment
date.
The
Company adopted the provisions of Financial Accounting Standards Board (“FASB”)
Interpretation No. 48
“Accounting for Uncertainty in
Income Taxes – an interpretation of FASB Statement No.109”
(“FIN
48”). FIN 48 addresses the determination of whether tax benefits
claimed or expected to be claimed on a tax return should be recorded in the
financial statements. Under FIN 48, the Company may recognize the tax
benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position. The tax benefits
recognized in the financial statements from such a position should be measured
based on the largest benefit that has a greater than fifty (50) percent
likelihood of being realized upon ultimate settlement. FIN 48 also
provides guidance on de-recognition, classification, interest and penalties on
income taxes, accounting in interim periods and requires increased
disclosures. The Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the provisions of
FIN 48.
Net
Loss per Common Share
Net loss
per common share is computed pursuant to Statement of Financial Accounting
Standards No. 128,
Earnings
Per Share
. Basic and diluted net income per common share has been
calculated by dividing the net income for the period by the basic and diluted
weighted average number of common shares outstanding assuming that the Company
incorporated as of the beginning of the first period presented. Basic net loss
per common share is computed by dividing net loss by the weighted average number
of shares of common stock outstanding during the period. Diluted net loss per
common share is computed by dividing net loss by the weighted average number of
shares of common stock and potentially outstanding shares of common stock during
each period. There were no potentially dilutive shares outstanding as of June
30, 2009 or 2008.
Recently
Issued Accounting Standards
In
June 2003, the Securities and Exchange Commission (“SEC”) adopted final
rules under Section 404 of the Sarbanes-Oxley Act of 2002
(“Section 404”), as amended by SEC Release No. 33-8934 on
June 26, 2008. Commencing with its annual report for the fiscal year ending
June 30, 2010, the Company will be required to include a report of management on
its internal control over financial reporting. The internal control report must
include a statement of management’s responsibility for establishing and
maintaining adequate internal control over its financial reporting; of
management’s assessment of the effectiveness of its internal control over
financial reporting as of year end; and of the framework used by management to
evaluate the effectiveness of the Company’s internal control over financial
reporting.
Furthermore,
in the following fiscal year, it is required to file the auditor’s attestation
report separately on the Company’s internal control over financial reporting on
whether it believes that the Company has maintained, in all material respects,
effective internal control over financial reporting.
In
April 2009, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position (FSP) Financial Accounting Standard (FAS) 157-4 “Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly”.
Based on the guidance, if an entity determines that the level of activity for an
asset or liability has significantly decreased and that a transaction is not
orderly, further analysis of transactions or quoted prices is needed, and a
significant adjustment to the transaction or quoted prices may be necessary to
estimate fair value in accordance with Statement of Financial Accounting
Standards (SFAS) No. 157 “Fair Value Measurements”. This FSP is to be
applied prospectively and is effective for interim and annual periods ending
after June 30, 2009 with early adoption permitted for periods ending after
March 15, 2009. The company adopted this FSP for its year ending
June 30, 2009. There was no impact on the financial
statements.
In
April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board
(APB) 28-1 “Interim Disclosures about Fair Value of Financial Instruments”. The
FSP amends SFAS No. 107 “Disclosures about Fair Value of Financial
Instruments” to require an entity to provide disclosures about fair value of
financial instruments in interim financial information. This FSP is to be
applied prospectively and is effective for interim and annual periods ending
after June 30, 2009 with early adoption permitted for periods ending after
March 15, 2009. The company has included the required
disclosures.
In
June 2009, the FASB approved the “FASB Accounting Standards Codification”
(the “Codification”) as the single source of authoritative nongovernmental U.S.
GAAP to be launched on July 1, 2009. The Codification does not change
current U.S. GAAP, but is intended to simplify user access to all authoritative
U.S. GAAP by providing all the authoritative literature related to a particular
topic in one place. All existing accounting standard documents will be
superseded and all other accounting literature not included in the Codification
will be considered nonauthoritative. The Codification is effective for interim
and annual periods ending after September 15, 2009. The Codification is
effective for the Company in the interim period ending September 30, 2009
and the Company does not expect the adoption to have a material impact on its
consolidated financial position, results of operations or cash
flows.
Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.
NOTE 3 -
GOING CONCERN
The
Company was incorporated on November 27, 2007 and began generating revenues in
early 2008. It has very limited financial resources and no committed sources of
debt or equity financing. At June 30, 2009, the Company has a negative working
capital of $65,867, recurring losses of $96,088 and $18,033 for the fiscal year
ended June 30, 2009 and for the period from November 27, 2007 (inception)
through June 30, 2008, and a negative cash flow from operations at June 30, 2009
of $14,352.
The
Company intends to seek business aggressively through the business contacts of
its management. While the Company believes in the viability of its strategy to
increase revenues and in its ability to raise funds if necessary, there can be
no assurances to that effect. The ability of the Company to continue as a going
concern is dependent upon the Company’s ability to generate increased levels of
revenues. The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
NOTE 4 -
RELATED PARTY
The
Company’s President performed work and permitted the Company to use facilities
and equipment owned by her without charge. The estimated cost of this service,
$18,000 for both the fiscal year ended June 30, 2009 and for the period from
November 27, 2007 (inception) through June 30, 2008. These amounts were
recorded as an expense and as a contribution to paid-in-capital in 2009 and
2008.
The
Company paid a director, who is the son of the Company’s President, independent
contractor fees of $10,000 for the fiscal year ended June 30, 2009.
NOTE 5 -
CONCENTRATION OF RISKS
During
the fiscal year ended June 30, 2009, the Company derived 34% of its revenues
from two (2) companies, VOF (23.95%) and Seattle Cremations
(10.45%). During the period from November 27, 2007 (inception) through June
30, 2008, the Company derived all of its revenues from five (5) companies, BFFS
(31.51%), Sterling Trade Group (5.25%), Kibble (28.23%), Cohort Investments
(8.75%) and Golden Age Collectables (26.26%). Golden Age Collectables is a
related party of a Company officer and the other four companies were introduced
by and indirectly related to a minority shareholder of the Company.
NOTE 6
- INCOME TAXES
Deferred
tax assets
At June
30, 2009, the Company had net operating loss (“NOL”) carry–forwards for Federal
income tax purposes of $38,801 that may be offset against future taxable income
through 2029. No tax benefit has been reported with respect to these
net operating loss carry-forwards in the accompanying financial statements
because the Company believes that the realization of the Company’s net deferred
tax assets of approximately $38,801 was not considered more likely than not and
accordingly, the potential tax benefits of the net loss carry-forwards are fully
offset by a valuation allowance of $38,801.
Deferred
tax assets consist primarily of the tax effect of NOL
carry-forwards. The Company has provided a full valuation allowance
on the deferred tax assets because of the uncertainty regarding its
realizability. The valuation allowance increased approximately
$34,473 and $4,328 for the fiscal year ended June 30, 2009 and for the period
from November 27, 2007 (inception) through June 30, 2008,
respectively.
Components
of deferred tax assets at June 30, 2009 and 2008 are as follows:
|
|
June
30, 2009
|
|
|
June
30, 2008
|
|
Net
deferred tax assets – Non-current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
income tax benefit from NOL carry-forwards
|
|
|
38,801
|
|
|
|
4,328
|
|
Less
valuation allowance
|
|
|
(38,801
|
)
|
|
|
(4,328
|
)
|
|
|
|
|
|
|
|
|
|
Deferred
tax assets, net of valuation allowance
|
|
|
-
|
|
|
|
---
|
|
Income taxes in the
statements of operations
A
reconciliation of the federal statutory income tax rate and the effective income
tax rate as a percentage of income before income taxes is as
follows:
|
|
For
the Year Ended
June
30,
2009
|
|
|
For the Period from
November
27, 2007
(inception)
through
June
30,
2008
|
|
|
|
|
|
|
|
|
Federal
statutory income tax rate
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
Change
in valuation allowance on net operating loss
carry-forwards
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
Effective
income tax rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
NOTE 7 -
SUBSEQUENT EVENTS
The
Company has evaluated all events that occurred after the balance sheet date
through September 17, 2009, the date these financial statements were issued.
The Management of the Company determined that there were certain
reportable subsequent events to be disclosed as follows:
On or
around August 18, 2009, the Board of Directors of and the Majority Shareholders,
as defined, of the Company approved via a written consent to action without
meeting (a) an amendment to the Company’s Bylaws and (b) the filing of Amended
and Restated Articles of Incorporation for the Company. The Restated
Articles affected an increase in the number of the Company’s authorized shares
of common stock to 300,000,000 shares of common stock, $0.001 par value per
share, and authorized 20,000,000 shares of preferred stock, $0.001 par value per
share. Previously the Company only had 75,000,000 shares of common
stock, $0.001 par value per share and no shares of preferred stock authorized.
The share numbers on the balance sheet have been adjusted retroactively to
reflect these changes.
This
Prospectus is part of a Registration Statement we filed with the SEC. You should
rely only on the information or representations provided in this Prospectus. We
have authorized no one to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Prospectus is
accurate as of any date other than the date on the front of the
document.
No one
(including any salesman or broker) is authorized to provide oral or written
information about this offering that is not included in this
Prospectus.
The
information contained in this Prospectus is correct only as of the date set
forth on the cover page, regardless of the time of the delivery of this
Prospectus.
Until 90
days after the commencement of the offering, all dealers that effect
transactions in these securities, whether or not participating in this offering,
may be required to deliver a Prospectus. This is in addition to the dealers'
obligation to deliver a Prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
560,000
Shares
Ladybug
Resource Group, Inc.
Common
Stock
PROSPECTUS
______________ ,
2010
Part
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
13
OTHER
EXPENSES OF ISSUANCE AND DISTRIBUTION
The
Registrant is bearing all expenses in connection with this Registration
Statement other than sales commissions, underwriting discounts and underwriter's
expense allowances designated as such. Estimated expenses payable by the
Registrant in connection with the registration and distribution of the common
stock registered hereby are as follows:
|
|
|
|
SEC
Registration fee
|
|
$
|
2.29
|
|
NASD
Filing Fee
|
|
|
100.00
|
|
*Accounting
fees and expenses
|
|
|
10,000.00
|
|
*Legal
fees and expenses
|
|
|
30,000.00
|
|
*Transfer
Agent fees
|
|
|
2,500.00
|
|
*Blue
Sky fees and expenses
|
|
|
5,000.00
|
|
*Miscellaneous
expenses
|
|
|
7,500.00
|
|
|
|
|
|
|
Total
|
|
$
|
55,102.29
|
|
*Indicates
expenses that have been estimated for filing purposes.
ITEM 14
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
The
Company has a provision in its Articles of Incorporation at Article XI thereof
providing for indemnification of its officers and Directors as
follows.
“The
corporation shall indemnify all directors, officers, employees, and agents to
the fullest extent permitted by Nevada law as provided within NRS 78.751 or any
other law then in effect or as it may hereafter be amended.
The
corporation shall indemnify each present and future director, officer, employee,
or agent of the corporation who becomes a party or is threatened to be made a
party to any suit or proceeding, whether pending, completed, or merely
threatened, and whether said suit or proceeding is civil, criminal,
administrative, investigative, or otherwise, except an action by or in the right
of the corporation, by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses, including but not limited to attorneys= fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with the action, suit, or proceeding if he acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
The
expenses of directors and officers incurred in defending a civil or criminal
action, suit, or proceeding must be paid by the corporation as they are incurred
and in advance of the final disposition of the action, suit, or proceeding if
and only if the director or officer undertakes to repay said expenses to the
corporation if it is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the corporation.
The
indemnification and advancement of expenses may not be made to or on behalf of
any director or officer if a final adjudication establishes that the director’s
of officer’s acts or omission involved intentional misconduct, fraud, or a
knowing violation of the law and was material to the cause of
action.”
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as
amended, may be permitted to directors officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a Director, officer or controlling person of the registrant in the
successful defense of any such action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM
15
RECENT
SALES OF UNREGISTERED SECURITIES
During
the three years preceding the filing of this Form S-1, Registrant has issued
securities without registration under the Securities Act on the terms and
circumstances described in the following paragraphs:
At
inception, we issued 6,300,000 shares of our common stock to our former officers
and Directors, Molly S. Ramage (800,000 shares), Stephen H. Ramage (2,000,000
shares) and Benjamin Ramage (3,500,000 shares) in consideration for their
efforts to incorporate us and establish our business plan. Certain of those
shares were later sold to Patricia Barton, our Secretary in October 2009, as
described above. In or around inception, we issued 90,000 shares to
Keith Barton in consideration for services rendered in connection with the
formation of the Company and other related services. We also issued 4,000,000
shares to Patricia Barton, our current Secretary, for $4,000. We claim an
exemption from registration afforded by Section 4(2) of the Securities Act of
1933 for the above issuances, since the foregoing issuances did not involve a
public offering, the recipients took the shares for investment and not resale
and we took appropriate measures to restrict transfer.
In April
and May 2008, we raised of $3,900 through the sale of 390,000 shares of our
common stock to 36 investors for $0.01 per share. This transaction was exempt
from registration under the Securities Act of 1933 pursuant to Rule 504 of
Regulation D of the Securities Act of 1933.
In August
2008, the Company issued an aggregate of 540,000 shares of its common stock to
David M. Loev of The Loev Law Firm, PC, in consideration for legal services
rendered. We claim an exemption from registration afforded by Section 4(2)
of the Securities Act of 1933 for the above issuance, since the foregoing
issuance did not involve a public offering, the recipient took the shares for
investment and not resale and we took appropriate measures to restrict
transfer.
In the
forgoing issuances, neither the Registrant nor any person acting on its behalf
offered or sold the securities by means of any form of general solicitation or
general advertising, no underwriters or agents were involved, and we paid no
underwriting discounts or commissions.
ITEM
16
EXHIBITS
|
|
3.1(2)
|
Amended
and Restated Articles of Incorporation
|
3.2(1)
|
By-Laws
|
3.3(2)
|
Summary
of Amendment to Bylaws
|
5.1*
|
Opinion
of The Loev Law Firm, P.C.
|
14.1(1)
|
Code
of Ethics
|
23.1*
|
Consent
of Li & Company, PC
|
23.2*
|
Consent
of The Loev Law Firm, P.C. (included in Exhibit
5.1)
|
* Filed
herewith.
(1)
|
Filed
as exhibits to the Company’s Form S-1 Registration Statement, filed with
the Commission on September 3, 2008, and incorporated herein by
reference.
|
(2)
|
Filed
as exhibits to the Company’s Form 8-K, filed with the Commission on
September 3, 2009, and incorporated herein by
reference.
|
The
exhibits are not part of the Prospectus and will not be distributed with the
Prospectus.
ITEM
17
UNDERTAKINGS
The
undersigned registrant hereby undertakes:
1. To
file, during any period in which offers or sales are being made, a post
effective amendment to this Registration Statement:
|
|
(a)
|
To
include any Prospectus required by Section 10(a)(3) of the Securities
Act;
|
|
|
(b)
|
To
reflect in the Prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of Prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume
and rise represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
|
|
|
(c)
|
To
include any material information with respect to the plan of distribution
not previously disclosed in this Registration Statement or any material
changes to such information in the Registration
Statement.
|
2. For
determining liability under the Securities Act, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide
offering.
3. To
file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
4. For
determining liability of the undersigned registrant under the Securities Act to
any purchaser in the initial distribution of the securities, the undersigned
registrant undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement, regardless of
the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
i.
|
Any
preliminary Prospectus or Prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule
424;
|
|
|
ii.
|
Any
free writing Prospectus relating to the offering prepared by or on behalf
of the undersigned registrant or used or referred to by the undersigned
registrant;
|
|
|
iii.
|
The
portion of any other free writing Prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and
|
|
|
iv.
|
Any
other communication that is an offer in the offering made by the
undersigned registrant to the
purchaser.
|
5. Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer of controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
6. For
determining any liability under the Securities Act, treat the information
omitted from the form of Prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of Prospectus filed by the
Registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act as
part of this registration statement as of the time the Commission declared it
effective.
7. For
determining any liability under the Securities Act, treat each post-effective
amendment that contains a form of Prospectus as a new registration statement for
the securities offered in the registration statement, and that offering of the
securities at that time as the initial bona fide offering of those
securities.
8. That,
for the purpose of determining liability under the Securities Act to any
purchaser:
a).
If the registrant is relying on Rule 430B:
1.
|
Each
Prospectus filed by the undersigned registrant pursuant to Rule 424(b)(3)
shall be deemed to be part of the registration statement as of the date
the filed Prospectus was deemed part of and included in the registration
statement; and
|
|
|
2.
|
Each
Prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x)
for the purpose of providing the information required by section 10(a) of
the Securities Act shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of
Prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
Prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which that Prospectus
relates, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or Prospectus that is part of
the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or Prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or Prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective date;
or
|
b).
If the registrant is subject to Rule 430C:
|
Each
Prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements
relying on Rule 430B or other than Prospectuses filed in reliance on Rule
430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or Prospectus
that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or Prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or Prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first
use.
|
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and authorized this Registration Statement
to be signed on its behalf by the undersigned in the City of Kirkland, State of
Washington on the 3rd day of February 2010.
|
Ladybug
Resource Group, Inc.
|
|
|
|
/s/
Mitchell T. Trace
|
|
By:
Mitchell T. Trace, Chief Executive Officer and Chief Financial Officer
(Principal Accounting Officer and Principal Financial
Officer)
|
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and on the date
indicated.
|
|
|
Signature(s)
|
Title(s)
|
Date
|
/s/
Mitchell T. Trace
|
President,
Chief Executive Officer (Principal
|
February
3, 2010
|
By:
Mitchell T. Trace
|
Executive
Officer), Chief Financial Officer (Principal Financial Officer and
Principal Accounting Officer) and Director
|
|
|
|
|
/s/
Patricia Barton
|
Secretary
and Director
|
February
3, 2010
|
By:
Patricia Barton
|
|
|
|
|
|
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