lga10ksab_92242007.htm



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

FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

For the fiscal year ended    June 30, 2007

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

For the transition period from _________ to _________


Commission file number  0-18113

LGA HOLDINGS, INC.
 (Exact name of small business issuer in its charter)


Utah
  
87-0405405
(State or other jurisdiction of
  
(I.R.S. Employer
incorporation or organization)
  
Identification No.)


3380 North El Paso Street, Suite G, Colorado Springs, Colorado     80907
(Address of principal executive offices)               (Zip Code)


Issuer's telephone number   (719) 630-3800

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock
(Title of class)



Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes [X]    No []

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB or any amendment to this Form 10-KSB. [ ]

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

State issuer's revenues for its most recent fiscal year. $408,707

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. August 31, 2007: $2,532,698

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. September 19, 2007:  9,072,960
 

DOCUMENTS INCORPORATED BY REFERENCE

None

Transitional Small Business Disclosure Format (Check one): Yes [ ]    No [X]


Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements based on management's current expectations and estimates; actual results may differ materially due to certain risks and uncertainties. For example, the ability of Let's Go Aero, Inc. to achieve expected results may be affected by external factors such as competitive price pressures, conditions in the economy and industry growth, and internal factors, such as future financing of the acquired operations and the ability to control expenses.



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PART I

Item 1.       Description of Business.

LGA Holdings, Inc., ("LGA" or the "Company")) is the sole owner of its operating subsidiary, Let's Go Aero, Inc. ("Aero"). LGA acquired Aero effective June 30, 2004 through a stock for stock exchange under which the former shareholders of Aero were issued new LGA shares of common stock in exchange for all of Aero's outstanding shares and $1,518,440 of debt. The former Aero shareholders and debt holders ended up with 85% of the outstanding common stock of LGA. Prior to the acquisition, LGA had no business or operations after having sold what business it did have October 22, 2003, several months before the acquisition of Aero. Therefore, at the time of the acquisition of Aero, LGA was what is known as a publicly held shell company. LGA changed its name to LGA, Inc. from Tenet Information Services, Inc. by a vote of shareholders on May 27, 2005, but the name was not available according to the Utah Secretary of State. By consent of shareholders owning in excess of a majority of shares, the name was changed to LGA Holdings, Inc. in October, 2005.  LGA was formed on February 24, 1984.

Upon the acquisition of Aero, two of LGA's three Directors resigned and two Directors of Aero were appointed to fill those positions. The third LGA director was and is a director of both companies. In addition, all of the officers of LGA resigned and members of Aero's management team were appointed to those positions. See Item 9, below. For accounting purposes, however, the transaction was deemed to have been an acquisition of LGA by Aero. Further information on the details of the transaction can be had by reviewing LGA's Form 8-K filed July 21, 2004 and Form 8-K/A filed October 20, 2004 available at the EDGAR website of the Securities and Exchange Commission (www.sec.gov) or from LGA upon request. Copies may also be read and copied at the SEC's Public Reference Room, Headquarters Office, 100 F Street, N.E., Room 1580, Washington, DC 20549. Call (800) SEC-0330 for further information.

Let's Go Aero, Inc.

Aero, LGA's wholly owned subsidiary, is LGA's only operating business. Aero is in the business of designing and selling gear management solutions for automotive, recreation and commercial uses.   Aero's family of products uses patented designs, and includes the GearWagon(R) line of Sport Performance Trailers(R), the GearSpace(TM) line of hitch-mount cargo carriers, the Silent Hitch Pin line, the LittleGiant Trailer line and the GullWing line of RV technology. Aero was formed in 1998.

Aero was founded as a product design, development and engineering company. It specializes in providing novel solutions for vehicular cargo carrying enhancements. Aero has patents issued and pending that protect its intellectual property. These patents and claims relate to how cargo can be attached and carried on a vehicle's hitch receiver, frame, or body surface. Some examples are:

o
 Silent Hitch Pin(TM) rigidly couples the connection between the trailer hitch receiver and any inserted ball mount or accessory;
   
o
TwinTube(TM) provides a universal mounting structure for carrying gear and equipment with a receiver style hitch;
   
o
 The fully-enclosed, encapsulated, and easy-opening designs of Aero's product enclosures for cargo safety, security, and accessibility; and
   
o
 Extensive designs for the use of C-Channel for making "Hardpoint(TM)" attachments to Aero's carriers, trailers, and all vehicular surfaces.

Aero also has numerous product extensions and accessories that complement and expand these core technologies.


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Aero's intellectual property has broad application in the automotive industry, and several automotive Original Equipment Manufacturers are in various stages of integrating aspects of Aero's technology into their product lines. In May, 2002, Aero licensed three pieces of its intellectual property to Sport Rack International/Valley Industries, Inc., an affiliate of Thule, AB, the largest supplier to automotive manufacturers worldwide of products similar to Aero's products. Aero's product licenses with Sport Rack International/Valley Industries, Inc. resulted in the payment to Aero of $300,000 in 2004 and an ongoing royalty of 10% of the revenues (after $300,000) Sport Rack generates with the technology until May, 2007.  The $300,000 is reflected in the financial statements at $60,000 in 2006 and $55,000 in 2007.  At June 30, 2007, no further deferred licensing revenue remains to be amortized under this contract and the contract has expired.  The company is presently negotiating with Sport Rack for a new contract to replace the expired one.  The company anticipates that a new agreement generating royalties from Sport Rack will be reached in 2008 because Sport Rack has continued to sell Silent Hitch Pins since the contract expired, without paying royalties, and hence is infringing on our patents.  However, we can give no assurance that any such new license agreement will be signed or any further royalty revenues realized.  See note 4 to Financial Statements.

Aero has developed and will continue to develop intellectual property for the Automotive, RV and commercial industries. It is Aero's intent to license its technology to the industry leaders that can most effectively bring the licensed technology to market. Aero plans to license the production and sales of its products for an up-front fee and an ongoing royalty based on unit sales.

     Products

Aero currently has several product lines that it has been selling for several years and other product lines that are emergent. These product lines are described as follows:
 
o
GearWagon 125 Sport Performance Trailers(R). Aero's GearWagon(R) line of Sport Performance Trailers(R) are designed for carrying all types of personal, recreational, and commercial gear in an aerodynamic, weather-resistant, secure and attractive transport.
   
o
GearSpace(TM) Carriers. The GearSpace(TM) hitch based carrier line consists of two fully enclosed cargo carrier models, GearSpace 34(TM) and GearSpace 20(TM), with three structural options to choose from for varying function while on the vehicle's hitch receiver. These designs offer versatility, security and safety.
   
o
 SILENT HITCH PIN(TM). This anti-vibration device takes all movement out of the connection between the vehicle towing system and what's being towed or carried. In short, it freezes the attachment securely in place. It works with most consumer vehicle towing systems.
   
o
 TwinTube(TM) System. The TwinTube(TM) ("TT(TM)") System is a patented design that was included in the technology licensed to Sport Rack International/Valley Industries, Inc. as discussed above.  TwinTube(TM) is a universal mounting structure for carrying gear and equipment with a hitch receiver. TwinTube(TM) is also available as a UBI(TM) system (U-Build-It).
   
o
GearDeck(TM) System. Incorporating Aero's novel TwinTube(TM) technology, GearDeck(TM) is a modular carrier that functions as an open platform carrier or a fully-enclosed carrier through the use of a modular hardtop lid enclosure that is easily attached and removed. The open platform can carry bicycles, among many other large items; the full enclosure system carries all kinds of general cargo as well as items such as power generators.
   
o
 GearCrate(TM)/LittleGiant Trailer System(TM). New design for both a stand alone recyclable shipping crate, a stand alone utility trailer and the novel function of a shipping crate that can be easily converted into a trailer at destination for the device being shipped; for example, ATV's, motorcycles, generators, welders, etc. The design debuted at the April, 2005, Canton Fair in Guangzhou, China.
   
o
GullWing(TM) camper. Derivative of Little Giant Trailer(TM). New design for personal motor sport and RV applications. The GullWing(TM) design allows a cargo trailer to convert into a new category of camping trailer. GullWing(TM) intellectual property also has application for pickup toppers and pickup campers. On October 7, 2006 the U.S. Patent and  Trade Office notified LGA of its acceptance of LGA's GullWing claims, and the patent was issued on February 20, 2007.   LGA is in discussions with several RV Original Equipment Manufacturers regarding the GullWing/Foldout intellectual property.
   
o
TENTRIS(TM) tent and portable structure. New design for tent and portable enclosure applications.
   
o
 GearDeck APU(TM). New derivative of Aero's GearDeck 17 system. APU is an all-in-one electrical generator storage, transportation and organization solution designed initially for recreational vehicles. The APU system may also have application with the broader portable generator market.
   
o
ONAN JUICEBOX. During 2006, Aero completed a product development effort with the Onan division of Cummins, Inc. resulting in Onan's JuiceBox product. The licensed design is based on LGA's Silent Hitch Pin, TwinTube, GearDeck and  LandingGear Intellectual Property. LGA began receiving product royalties in July, 2006.  During fiscal 2007, a formal licensing agreement with Onan was signed that specifies per-unit royalty payments and the precise extent of licensing rights for Onan for the life of LGA’s patents.  Since the signing of this agreement, revenues resulting from it have been immaterial.
   
o
 HARDPOINT(TM) Technology. Aero has patents issued and patents pending for the integration of C-Channel onto vehicle surfaces, including pickup truck beds, vehicle roofs and trailers. The Hardpoint(TM) system is another potential source of royalty revenue for Aero.  See “Patent Protection,” below.


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  Business History

The impetus for Aero was a 1990 concept by its principal founder for a lightweight aerodynamic trailer to carry recreational gear. This concept led to the creation of a prototype product that was tested in 1997. In the fall of 1997, work began on what came to be the GearWagon(R) line of Sport Performance Trailers(R) (SPT). Aero was incorporated in April 1998, the first GearWagon(R) SPT hit the road in July, 1998, and Aero debuted two GearWagon(R) SPT's at the Interbike Trade Show in October, 1998.

During the development of the GearWagon(R) product, several additional product opportunities became apparent. The GearWagon(R) Hardpoint(TM) system was designed using Unistrut(TM) and/or B-Line(TM) engineering C-Channel. The Hardpoint(TM) system appeared to have great promise for use in the motor vehicle and recreation vehicle industries, and Aero filed patent claims for the integration of C-Channel on vehicular surfaces in 1998. The original patent claims for Hardpoint(TM) technology were issued in 2001. Aero has also filed many continuation claims for this technology.

After the Interbike Show in the Fall of 1998, Aero began receiving orders for GearWagon(R) trailers. Medallion Plastics in Elkhart, IN, became Aero's manufacturer of GearWagon(R) trailers in January, 1999.

In early 1999, Aero joined the Specialty Equipment Market Association (SEMA). SEMA is the largest trade organization for the automotive after-market industry. Basically, SEMA is the entire automotive industry worldwide, less new vehicle sales. Aero displayed its products at SEMA's industry convention in November, 1999, as a debut to the automotive industry.

During the development of the GearWagon(R) line, the Company developed a concept for a hitch based cargo carrier line that resulted in Aero's GearSpace(TM) product line. The GearSpace(TM) 34 capsule also debuted at the 1999 SEMA convention.

Aero went on to design the Silent Hitch Pin(TM). Aero's patent application for the Silent Hitch Pin(TM), which was filed in mid-2000, was granted in May, 2003.

After the SEMA 2001 convention, Aero entered into a relationship with J.S. Chamberlain and Associates. Chamberlain and Associates has been an automotive supplier developer since the early 1960's. Through a series of meetings arranged by Chamberlain, Aero and Sport Rack International/Valley Industries, Inc. agreed to a product license for Aero's Silent Hitch Pin(TM) and Twin-Tube(TM) Technology in May, 2002.

At the SEMA 2002 convention Aero won the Best New SUV Accessory Idea from General Motors Corporation for its TwinTube(TM) carrier system.  At the SEMA 2003 convention Aero won the Best New Idea award from General  Motors Corporation for its GearBed surface attachment system.  See “Patent Protection,” below.

With the Tenet combination, Aero began redesigning and retooling its GearDeck, TwinTube, GearSpace and GearWagon products in order to meet market pricing, durability, assembly and shipping expectations. Retooled GearDeck production began in early 2005, TwinTube production began in May, 2006, GearSpace production began in June, 2006, and the company began production and shipping of the retooled GearWagon 125 product in May, 2007.  Also in May, 2007, LGA began shipping its new GearCage™ hitch mounted cargo carrier.  In July, 2007 (subsequent to year-end), LGA began shipments of its new LGT-7 utility trailer.  LGA will be displaying these products, and others, at the 2007 SEMA show.

The Future

LGA’s basic product line is now substantially complete.  A full line of accessories to the basic products will be introduced during fiscal 2008.  These accessories are anticipated to expand the market for LGA’s basic products (e.g., soft-sided full enclosures for GearCage and LGT-7).  Two new product initiatives may also occur in fiscal 2008, resources permitting.  The company has patent protection on both a new hitch mounted bicycle carrier technology called “Pixie,” and a new tent design technology called “Tentris.”  We will be looking for ways to bring these products to market.  The balance of our efforts in 2008 will focus on streamlining and cost-cutting in our production and expansion of our marketing efforts.  Aero's Hardpoint(TM) technology may also become a significant royalty generator for Aero in the future.

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Aero's future focus is on market, partner and product development. There is a very large consumer market for Aero's products, and Aero’s approach to this market is to enter it through partnership arrangements with large existing participants.

Aero is in discussions with various automotive and recreation vehicle Original Equipment Manufacturers for custom versions of its products and technology that compliment and extend the capabilities of the Original Equipment Manufacturers' vehicles.

Objectives and Sales

     Objectives

o
 To establish manufacturing, sales and marketing partners for Aero's  products domestically and internationally
   
o
  To continue product development and invention work where a clear payoff is predictable
   
o
 To establish positive operating cash flow and earnings

Customer Direct Sales

Close to 80% of Aero's sales revenue currently comes from direct-to-customer sales that are the result of the customer finding Aero's web site. Aero has exhibited products at several trade shows over the last five years. Primarily, Aero has attended the SEMA automotive trade show that is held annually in early November in Las Vegas. Aero has also displayed its products at the Denver International Auto Show and the Denver Sportsman’s Show.

Aero has promoted its products primarily through a "Public Relations" approach. As a result of these efforts, Aero has spent little on direct advertising, yet has been featured in many national magazines, newspapers, and TV and radio shows. Because Aero's product designs are novel, publishers of magazines frequently feature its products in the magazines "New Product Review" sections along with Aero's address and web site. This approach has been important to Aero's products getting discovered, while keeping its promotional expenses low.

Aero's customers also provide great leads for product sales. In addition to current owners giving Aero positive reviews to prospective new owners, Aero's products all feature its web site address on its product logo. Aero regularly gets inquiries from individuals who have seen Aero products in the field.

It is Aero's intent to establish a sales relationship with market partners or an Original Equipment Manufacturer to promote, manage and distribute its product lines for gear transport through the partners' established market channels.

     Market for Products

For many years, people have been increasing their recreation time and recreation interests. This trend has spurred a dramatic increase in the purchase of sport utility vehicles (SUV's), mini-vans, and pick-up trucks. The purchase of these style vehicles reflects, in part, the consumers' perceived need for increased cargo capacity.

The installed base of receiver style hitches presents a large latent market for Aero's products. Further, Aero believes that the automotive Original Equipment Manufacturers would like to migrate the accessories currently being carried on the roofs of SUVs to the receiver hitch in order to reduce the roll-over risk of SUVs and provide consumers with more convenient cargo carrying solutions.

     Competition

The sport equipment carrier market is a competitive environment with more than ten participants that are larger than Aero and have the following advantages relative to Aero:


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     Name recognition

Several competitors, like Yakima Products and Thule have established names with the public. Aero is still relatively unknown. It can take years to establish a Brand name, and Aero is at the beginning of exposing its products and brand to the public.  Aero’s success against these competitors can not be assured.

     Product Lines

Several competitors have broad product lines compared to Aero. Aero does not participate in the roof top cargo carrier market and does not plan to participate in this market, except, potentially, in a limited way with a roof top version of its GearCage line.

In terms of product strength, Aero believes it has several distinct advantages over the competition:

o
Large cargo capacities and lightweight designs easily surpass the cargo transport capabilities of roof top products and other receiver based products currently on the market.
   
o
The opening systems enable Aero products to enclose space more efficiently.
   
o
Aero enclosed carrier products offer increased security over open carriers.
   
o
Aero products are safer than rooftop carriers, their primary competitors.
   
o
Patent filings protect Aero products' ergonomics and efficiencies.
   
o
Aero products' aerodynamic efficiencies reduce impact on fuel economy.
   
o
Multiple product offerings provide consumers with various options and price consideration.

     Opening Systems

Aero's GearWagon(R) and GearSpace(TM) capsules represent a new category of container. These containers have shells that are concave so that the lids open by dropping and "nesting" under the base. This allows easy content access for customers. When closed, the shells are "self-reinforcing" and very tough.

     Content Security

Aero's GearWagon(R) and GearSpace(TM) carriers are lockable and fully enclosed so the owner's gear is in a water and dust free environment. When traveling, having gear out of sight is one of the best theft-prevention steps to take. This means high-value, lightweight objects like cameras and computers can be stowed out of sight in Aero's carriers.

     Safety Factor

Safety comes in many forms for Aero customers. When compared to roof-based systems, Aero carriers do not raise a vehicle's center of gravity and therefore, when compared to a similar weight on the roof of a vehicle, make the vehicle less prone to rollover.

Aero's carriers are also loaded by standing on the ground. Roof carriers are commonly loaded by standing on a running board, a doorsill or a stepladder--all precarious positions from which to be lifting and moving gear. Most roof systems are limited to 100 pounds of gear weight. Most SUV hitch receivers are rated for 500 pounds of load carrying.

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     Patent Protection

Starting in 1998, Aero has been diligent at protecting its technology with "utility" patent protection, which is the highest form of invention protection. Utility patents are issued for truly novel technological achievements. The method by which Aero's product capsules open, the Hardpoints(TM) used on Aero's products, the way Aero's GearSpace(TM) carrier platforms telescope and pivot, and the features of the Silent Hitch Pin(TM) are all patented aspects of Aero's products. All Aero's patents have at least 11 years remaining in their respective terms.  Aero has eight issued patents and nine pending patents.

Aero has patents issued and patents pending protecting its GearBed intellectual property.  Nissan Motor Company has challenged certain GearBed claims with the US Patent and Trademark Office.  While Aero intends to pursue its claims vigorously, it cannot forecast the outcome of the GearBed patent review at this time.

     Aerodynamic Efficiencies and Fuel Economy

It appears from informal evidence that Aero's GearWagon(R) line of Sport Performance Trailers(R) is fuel efficient. It also appears from informal evidence that Aero's GearSpace(TM) carriers have no noticeable effect on fuel economy. When used on an SUV, these carriers sit in the vehicle's draft.

     Volume and Weight Advantages

Because of Aero's capsular designs, its products offer high "space-to-weight" ratios relative to other cargo carrying products currently on the market.  The GearWagon(R) 125 weighs in at 480 pounds empty, encloses approximately 125 cubic feet and has a carrying capacity of 1,000 pounds. A standard "box" trailer with similar storage capability typically weighs close to 1,000 pounds empty, meaning that a fully loaded GearWagon(R) 125 weighs only 480 pounds more than a comparable empty box trailer.  Aero's GearSpace(TM) line attaches to one of the strongest points on a vehicle, the hitch receiver.  Aero rates its GearSpace(TM) carriers for 300 pounds of cargo carrying, which gives the owner of a standard SUV more than twice the weight carrying ability of a typical roof top box.

Manufacturing and Development

     Manufacturing

Aero's focus is on product and technology development.  Aero has utilized numerous vendors that have produced over 100,000 Silent Hitch Pins(TM). Aero has begun GearSpace 34 production with a Colorado based rotational molder. Aero has reduced the retail price of its GearSpace 34 by more than 25% with this production technique change.  Aero has also successfully converted the production of GearWagon, with this vendor, from a thermoformed to a rotational molded design.

Aero recently began a contract manufacturing relationship with Red Horse Performance (RHP) of Shanghai, China. RHP is currently one of Aero's TwinTube(TM) and GearCage™ system vendors. Aero is evaluating RHP as a potential vendor for the Silent Hitch Pin product line and the LittleGiant product line. Aero and RHP anticipate providing LGA's designs to known industry brands under private label supply agreements.

Aero purchased its initial inventory of LGT-7 trailers from AutoTek China, and anticipates a continuing and growing supplier relationship with Autotek China.  LGA and Autotek China are discussing an expanded licensing agreement whereby Autotek China would have manufacturing and worldwide sales rights to LGA’s LGT technology contained in the Little Giant trailer and GearCage/GearCrate product lines.  Beginning April 5, 2005, Chinese citizens can now tow lightweight trailers (under 1,500 pound load) on China's roads.  Aero and AutoTek China displayed LGT's at the April, 2006, Canton Fair in Guangzhou, China. AutoTek China is displaying LGT at the Canton Fair starting October 15, 2007:http://www.cantonfair.org.cn/en/index.asp  AutoTek China, one of LGA's non-exclusive manufacturing partners, can be viewed at their website:http://www.autotekchina.com/


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Aero is actively engaged in specifying sources for all its assembly services, raw materials and parts in order to ensure that its products meet its quality and performance standards. All specified raw materials and parts or acceptable substitutions are available from many suppliers, and Aero does not rely on any one supplier the loss of which would cause any long term adverse consequences to Aero.

     Shipping

The shipping cost of Aero's products is reasonable considering some of the products' sizes. Aero has shipped over 1,000 units from Elkhart, Indiana, to destinations throughout the United States. Aero has had few freight claims for damaged goods and believes it has the packaging adequate to properly protect the product.

Both GearWagon(R) and GearSpace(TM) products have modest final assembly requirements for the customer or dealer to complete.

Aero utilizes the shipping services of Yellow, DATS, FedEx, National, LTL, and Old Dominion among others.

     Research and Development

Aero's expenditures for research and development have been $13,779 and $94,095 for the fiscal years ended June 30 2006 and 2007, respectively. See Management's Discussion and Analysis, below. Aero will continue product development and invention work where a clear payoff is anticipated.  Aero's staff is considering numerous ways to branch and grow its current products depending on market opportunity and demand. Aero's staff continues to work on new product designs and improvements to protect and expand Aero's existing intellectual property.

     Regulation

Aero has adopted all applicable standards from United States National Highway Transportation Safety Administration regulations and maintains adherence to Society of Automotive Engineers guidelines and specifications. In addition, both federal and state authorities regulate the manufacturers and sellers of recreational and family cargo transports. Aero is a licensed vehicle manufacturer in the State of Colorado and has obtained the state permits, licenses, and bonds required to operate.

Aero's products have been independently tested for impact and temperature extremes. Aero's Silent Hitch Pin(TM) and GearSpace(TM) Spine and Frame structural systems have been independently tested for load carrying strength.

Aero has had Corporate and Product Liability insurance for the last five years and has not had a product liability claim. Further, as Aero successfully licenses its designs, generally the licensee will be responsible for carrying manufacturer and product liability insurance.

Aero has registered with or obtained memberships, licenses, permits, or certificates from the following organizations and agencies:

Society of Automotive Engineers (SAE); National Highway Transportation Safety Administration (NHTSA); Dealer Section of the Department of Motor Vehicles, State of Colorado; and Specialty Equipment Market Association (SEMA).

Aero anticipates no material effects on its business from federal, state or local environmental regulation.

Employees

Aero currently has seven full-time employees including its officers, Marty Williams, Sara Williams, and Eric Nickerson. Aero's Vice President of Engineering and Board member, Matthew Drabczyk, who is also a major LGA shareholder, works on a project basis for Aero.  Aero anticipates adding sales, administrative, and production employees as needed.


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Reports Filed with the Securities and Exchange Commission.

LGA is registered with the SEC under the Securities Exchange Act of 1934. As a registrant, LGA files annual (Form 10-KSB that contains audited financial information) and quarterly reports (Form 10-QSB that contain unaudiuted financial information). LGA also files proxy statements for its meetings of shareholders and reports of material current events (Form 8-K). This information may be requested or read through sources described above in this Item 1 or from the Company free of charge.  The Company does not maintain copies of its Securities and Exchange Commission reports on its website, www.letsgoaero.com, because the reports are easily available at www.sec.gov.  Although the Company is required to send annual reports to security holders that contain audited financial information when it solicits proxies for annual meetings of security holders, LGA has not held an annual meeting since 2004.  LGA has no policy of voluntarily sending such reports to security holders.

Item 2. Description of Property.

Aero currently leases 7,500 square feet of combined office and warehouse space at its principal place of business in Colorado Springs, Colorado, that it uses for storage of some inventory and light product assembly. Aero entered into this lease in June, 2007, and expects its facilities will be sufficient for the one-year term of the lease.  We expect the lease to be renewable on nearly unchanged terms should we choose to do so upon its expiration.  The lease rent is $5,500 per month. The space is currently fully built out in good condition and Aero has no plans to renovate it.  Should Aero decide or be forced to move at expiration of the current lease, comparable properties both smaller and larger are available at competitive rates in the same general area as the current facilities. The current space is adequately covered by insurance.

Item 3. Legal Proceedings.

None

Item 4. Submission of Matters to a Vote of Security Holders.

None.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

LGA's common stock is currently thinly traded "over-the-counter" and is listed in the Pink Sheets(R) published by the National Quotation Bureau, Inc. as well as on the OTC Bulletin Board operated by the NASDAQ Stock Market, Inc. The following table sets forth the high and low bid prices for LGA's common stock for each of the quarters ending on the indicated date.


 
Quarter Ended
Low
Price
High
Price
 
September 30
 .81
1.20
 
December 31
1.15
 1.20
   2006
March 31
1.15
1.40
 
June 30
1.10
 2.25
 
September 30
1.00
 2.95
 
December 31
 .70
 1.95
   2007
March 31
1.01
 1.65
 
June 30
1.01
 1.65

The quotations reflect inter-dealer prices, without markup, markdown or commission and may not represent actual transactions.  The source of prices were Yahoo.com and BigCharts.com.

The number of shareholders of record for LGA's common stock as of June 30, 2007, was 345, which include depositories and broker/dealers who hold shares of common stock in "nominee" or "street" names.

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The following table provides information as of the most recently completed fiscal year with respect to compensation plans (including individual compensation agreements) under which equity securities of the Company are authorized for issuance.

Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
Weighted-average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuance under compensation plans (excluding securities reflected in column (a))
 
(a)
(b)
(c)
Equity compensation plans approved by security holders
1,000,000
$0.70
1,000,000
Equity plans not approved by security holders *
1,078,662
$.63
0
Total
2,078,662
$.66
1,000,000

Sales of Unregistered Securities

The following table sets forth information regarding recent sales of unregistered securities.

     Sales of Unregistered Securities

The following table sets forth information regarding recent sales of unregistered securities.

   
Shares of Common
  
     Date
  
Stock Sold
    
Aggregate Price
  
     August 2005
    
43,148
     $
29,987.86
  
     January 2006
    
215,738
      
149,937.91
  
     June 2006
    
215,000
      
150,500.00
  
     December 2006
    
215,000
      
150,500.00
  
     January 2007
    
100,000
      
70,000.00
  
     March 2007
    
25,000
      
31,250.00
  
     April 2007
    
40,000
      
50,000.00
  
     July 2007
    
40,000
      
50,000.00
  
     July 2007
    
60,000
      
75,000.00
  
     September 2007
    
35,350
      
25,100.00
  

All sales were either negotiated and approved by the Company's Board of Directors, or accomplished pursuant to an option exercise at the contracted exercise price.  Each of the purchases, except those occurring in July, 2007, was made by an individual investor who was an existing shareholder.  All purchasers represented that they were accredited investors as defined in the United States securities laws. The sales were exempt from registration under Section 4(2) and/or 4(6) of the Securities Act of 1933, as amended, and/or Rule 506 or Regulation D. The company is not aware of any open market purchases by affiliates.



- 11 -

Item 6 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.


Selected Operating Data
  
Fiscal Year Ended
  
   
June 30,
  
             
   
2007
    
2006
  
             
                       Revenue
    
408,707
      
336,721
  
                 
                       Cost of revenue
    
261,996
      
183,163
  
                 
                       S G & A (excluding Share-based compensation)
    
414,713
      
309,589
  
                 
                       Share-based compensation
    
295,800
      
---
  
                 
                       Research & Development
    
94,095
      
13,779
  
                 
                       Embezzlement (expense), net of recoveries
     (44,764 )     (72,801 )
                 
                       Net (loss)
     (708,180 )     (261,477 )

Year Ended June 30, 2007, compared to Year Ended June 30, 2006.

During Fiscal 2007, the Company’s revenue rose to $408,707 compared to $336,721 in revenue for Fiscal 2006.  The increase stemmed primarily from increased inquiries generated by our website and customer referrals.  We have begun to detect some seasonality in our sales directly to end users.  Sales in the spring and early summer months, and in the days leading up to the Christmas holidays are the strongest.  Our slowest period is the time from August through October.  Seasonality has been, and is anticipated to continue being, more pronounced for our hitch mounted cargo carrier products than it is for our trailers.  We anticipate a rising proportion of trailer to cargo carrier sales in the future, a trend which would reduce overall seasonality.  We also anticipate that sales to distributors and dealers will grow compared to end user sales in the future.  If this happens, our seasonality may shift forward as a result.

Cost of revenue for Fiscal 2007 was $261,996 compared to $183,163 for Fiscal 2006.  Gross margin declined from 45% to 36%, due to proportional increases in sales to dealers and distributors compared to relatively higher margin sales direct to end users.  The company anticipated this decline in gross margin percentage as a logical result of our efforts to shift our marketing focus towards distributors and dealers and away from end users.  The benefit of this strategy is an increase in unit sales volumes that makes possible meaningful decreases in per-unit production costs.

Selling, General & Administrative expenses (excluding Share-based compensation) increased to $414,713 for Fiscal 2007, compared to $309,589 for Fiscal 2006.  The increase is primarily attributable to one-time costs associated with a former employee’s embezzlement of Company resources (aside from the direct embezzlement expense, net of recoveries), and higher marketing costs.  The Company expects S G & A expenses associated with embezzlement to be immaterial during Fiscal 2008.  Advertising costs rose materially in 2007 compared to 2006 due to the substantial upgrade of our website, classified as an advertising expense, and to expanded email and print mail advertising.  Management committed these added advertising expenditures in the belief that our substantially expanded product line called for an expanded effort to alert the buying public.

Share-based compensation (included as a component of S G & A in the accompanying Statement of Operations) is the cost to the Company of non-qualified stock options awarded during the Fiscal Year, valued in accordance with the Black-Scholes option pricing formula.  The options were awarded to non-management associates of the Company as incentive for services anticipated to be rendered beyond the current period indefinitely into the future.  The value of the awards should not be considered indicative of future option award values.


- 12 -

Research and Development expense for Fiscal 2007 was $94,095 compared to $13,779 for the prior year.  The increase is attributable to the one-time expensing of accumulated prototype product not necessarily intended to be resold and the allocation to R & D of office and employee overhead used in the creative process.  In addition, R & D expenses rose due to expanded development efforts in preparing several new products for market.

The Company suffered an embezzlement of $72,801 during the year ended June 30, 2006 and an additional $44,764 for the period from July 2006 through September 28, 2006, the day the embezzlement was discovered.  Approximately $17,000 of the embezzled funds have been recovered, and we anticipate no further recoveries.  We have implemented internal control procedures which we believe will prevent any future losses.

Net loss for Fiscal 2007 increased to ($708,180) or ($0.08) per share compared to ($261,477) or ($0.03) in the prior year primarily due to the reasons discussed above.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s cash position was $-0- at both June 30, 2007 and June 30, 2006.  Occasional reductions of our cash balance to $-0-, called an “overdraft” condition, have all been for brief periods in immaterial amounts and have generated no interest expenses.  The company has met all of its financial obligations in a timely manner.  During Fiscal 2007, the Company used $436,256 to fund operating activities.

LGA Capital Requirements

During Fiscal 2007, the Company raised operating capital from investors through the following transactions:  In October, 2006, an affiliated investor (the Company President) loaned the Company $60,000 on an unsecured promissory note carrying 8% annual interest, maturing June 30, 2010.  Without this immediate capital infusion, the company would not have been able to continue operations in the wake of the embezzlement discussed in Note 8 to the Financial Statements.  In December, 2006, an affiliated investor purchased 215,000 units, for $150,000.  Each unit was comprised of one share of restricted common stock and one 5-year warrant exercisable at $1.00.  This purchase completed the Company’s existing private placement offering.  In January, 2007, an unaffiliated existing shareholder exercised 100,000 options for 100,000 restricted common shares for $70,000 or $0.70 per share.  In March, 2007, an unaffiliated  investor purchased 25,000 shares of restricted common stock for $31,250 or $1.25 per share in a private placement.  In April, 2007, an unaffiliated  investor purchased 40,000 shares on the same terms, for $50,000.  In July, 2007 (subsequent to year-end), another unaffiliated  investor purchased 60,000 shares on the same terms, for $75,000, the April purchaser bought another 40,000 shares, again from the same offering, for $50,000, and a director loaned the Company $36,000 in the form of an unsecured demand note carrying 8% annual interest.  In September, 2007, the January purchaser exercised options for 35,350 restricted common shares for $24,745, and an affiliate loaned the Company $88,056 on an unsecured note carrying 8% interest maturing December 15, 2007.  No commissions were paid on these transactions.

At June 30, 2007, the Company has substantially completed initial production and inventory acquisition of three new products, all of which began selling to dealers and end users during 2007’s fourth fiscal quarter.  These products are the LGT-7 trailer, GearWagon 125 trailer, and GearCage hitch mounted cargo carrier.  Some necessary accessories to these products will be brought into the product lineup early in Fiscal 2008, and will occasion further (but significantly smaller) capital commitments for initial inventory acquisition.  The Company anticipates that sales rates for the GearWagon 125 trailer may increase during Fiscal 2008 to levels that would require investment in cast tools for more rapid production of the product’s roto-molded plastic parts.  The anticipated increased sales would most likely go to a single major distributor with whom the company is in advanced discussions.  The required  tooling, costing approximately $125,000, would most likely be financed by the major distributor.  No other significant tooling costs are anticipated for Fiscal 2008.


- 13 -

The Company is in active discussion on several product licensing and distribution opportunities with larger companies that, if completed, have the potential to generate significant additional revenues and to evolve our business model in significant ways.  We have signed a letter of intent with a nationwide discount hardware retailer.  Under the proposed terms, this retailer would have a non-exclusive license to manufacture and sell the Company’s LGT-7 trailer through its retail stores.  The Company would have rights to purchase LGT-7’s for our own sales channels from the retailer’s manufacturing facilities with preferred pricing.  We are in advanced discussions with a major outdoor recreational equipment company to test market the Company’s GearWagon 125 sport utility trailer.  The trailers are to be sold through several stores of another major company, a nationwide recreational product retailer.  The Company is in advanced discussion with a leading purveyor of convalescent transportation equipment to market the convalescent transport version of our GearCage hitch mounted cargo carrier through the purveyor’s retail stores.

No assurance can be given as to whether our letter of intent mentioned above, or any other of our plans or discussions will result in a completed transaction, nor can the Company give any assurance as to the timing or financial magnitude of these transactions.  To the extent these initiatives do come to fruition, the Company would anticipate them to cause higher total revenues and lower purchase costs due to improved economies of scale, netting improved gross margin percentages.  Offsetting these positive effects to some extent could be reductions of overall gross margin percentage resulting from an increased proportion of our sales going to distributors and dealers rather than to end users.  Even though the Company anticipates increasing revenue in all sales channels going forward, it is not able to forecast when its sales volumes will be sufficient to cover the Company’s operating expenses.

Our auditor expresses substantial doubt as to the company’s ability to continue as a going concern.  He bases this doubt on our history of operating losses and present (as of June 30, 2007) negative working capital position.  We have experienced negative cash flow from operations since our inception and we have expended, and expect to continue to expend, substantial funds to continue our research and development and marketing efforts. As a result, we have suffered recurring losses through June 30, 2007.   Based on our current operating plans, management believes that proceeds from future revenues and futures sales of common stock will be sufficient to meet operating needs for the foreseeable future. The actual funds that we will need to operate during this period will be determined by many factors, some of which are beyond our control. Lower than anticipated sales of our products or higher than anticipated expenses could require us to need additional financing sooner than expected.    There is no assurance that we will be successful in selling additional shares of common stock to the public.

While a portion of total liabilities, approximately $262,000, is owed to present officers and/or directors, there can be no assurance that these officers/directors will not seek payment in the near term.

Inflation has not had a significant impact on the Company’s operations.

Item 7.  Financial Statements.

- 14 -

 
 
 
LGA HOLDINGS, INC.

Financial Statements

June 30, 2007

(with Report of Independent Registered Public Accounting Firm Thereon)
 

 
 
 
LGA HOLDINGS, INC.

Index to Financial Statements


   
Page
     
Report of Independent Registered Public Accounting Firm
F-2
     
Balance Sheet at June 30, 2007
F-3
     
Statements of Operations, for the years ended
  
 
June 30, 2007 and 2006
F-4
     
Statement of Changes in Shareholders' Equity for the period from
  
 
July 1, 2005 through June 30, 2007
F-5
     
Statements of Cash Flows, for the years ended
  
 
June 30, 2007 and 2006
F-6
     
Notes to financial statements
F-7


F-1

Report of Independent Registered Public Accounting Firm


The Board of Directors and Shareholders
LGA Holdings, Inc.:


We have audited the accompanying balance sheet of LGA Holdings, Inc. as of June 30, 2007, and the related statements of operations, changes in shareholders’ equity, and cash flows for the years ended June 30, 2007 and 2006.  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 audits.

We conducted our audits in accordance with the standards of the Public Companies Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  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 audits provide 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 LGA Holdings, Inc. as of June 30, 2007, and the results of its operations and its cash flows for the years ended June 30, 2007 and 2006 in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has incurred recurring operating losses and has a working capital deficit at June 30, 2007, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans regarding those matters also are described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Cordovano and Honeck LLP
Cordovano and Honeck LLP
Englewood, Colorado
September 19, 2007

F-2

LGA HOLDINGS, INC.
 
Balance Sheet
 
June 30, 2007
 
 
 
Current assets:
      
Accounts receivable (Note 1)
   $
9,683
 
Inventory, at lower of cost or market (Note 3)
    
165,851
 
Prepaid expenses
    
20,084
 
                    Total current assets
    
195,618
 
         
Property and equipment, at cost,
        
net of accumulated depreciation of $140,860 (Note 3)
    
135,709
 
Intangible assets (Note 3)
    
97,777
 
Other assets
    
2,605
 
         
                    Total assets
   $
431,709
 
         
Liabilities and Shareholders’ Equity
  
         
Current liabilities:
        
Bank overdraft
   $
238
 
Accounts payable
    
93,199
 
Accrued payroll
    
123,161
 
Accrued interest, related party (Note 2)
    
2,804
 
                    Total current liabilities
    
219,402
 
         
Long-term debt, related party (Note 2)
    
60,000
 
         
                    Total liabilities
    
279,402
 
         
Commitments and contingencies (Note 6)
    
—
  
         
Shareholders’ equity (Notes 2 and 5):
        
Common stock, $.001 par value;  authorized 100,000,000 shares,
        
issued and outstanding, 8,972,960 shares
    
8,973
 
Additional paid-in capital
    
1,754,066
 
Retained deficit
     (1,610,732 )
         
                    Total shareholders' equity
    
152,307
 
         
                    Total liabilities and shareholders' equity
   $
431,709
 
 
 
See accompanying notes to financial statements

F-3

LGA HOLDINGS, INC.
 
Statements of Operations

 
   
For the Years Ended
  
   
June 30,
  
   
2007
    
2006
  
Sales and revenue:
            
Product sales
   $
345,411
    $
270,719
 
Royalty revenue
    
63,296
     
66,002
 
                 
Total sales and revenues
    
408,707
     
336,721
 
                 
Costs and expenses:
                
Costs of sales and revenue
    
261,996
     
183,163
 
Research and development
    
94,095
     
13,779
 
General and administrative
    
710,513
     
309,589
 
                 
Total costs and expenses
    
1,066,604
     
506,531
 
                 
Operating loss
     (657,897 )     (169,810 )
                 
Other income (expense):
                
Other income
    
229
     
834
 
Interest expense
     (5,748 )     (19,700 )
Embezzlement expense, net of recoveries (Note 8)
     (44,764 )     (72,801 )
                 
Loss before income taxes
     (708,180 )     (261,477 )
                 
Income tax provision (Notes 1 and 7)
    
—
      
—
  
                 
Net loss
   $ (708,180 )   $ (261,477 )
                 
Basic and diluted loss per share
   $ (0.08 )   $ (0.03 )
                 
Weighted average common shares outstanding
    
8,703,345
     
8,216,424
 

 
See accompanying notes to financial statements
 

F-4

 
 
LGA HOLDINGS, INC.
Statement of Changes in Shareholders' Equity

 
               
Additional
              
   
Common Stock
    
Paid-in
    
Retained
        
   
Shares
    
Par Value
    
Capital
    
Deficit
    
Total
  
                               
Balance at July 1, 2005
    
8,119,074
    $
8,119
    $
620,966
    $ (653,135 )   $ (24,050 )
                                         
Common stock options
                                        
exercised at $.695 per share  (Note 2)
    
258,886
     
259
     
179,667
     
—
      
179,926
 
Sale of call option  (Note 2)
    
—
      
—
      
200,000
     
—
      
200,000
 
Sale of units at $.70 per unit  (Note 5)
    
215,000
     
215
     
150,285
     
—
      
150,500
 
Net loss
    
—
      
—
      
—
       (261,477 )     (261,477 )
                                         
Balance at June 30, 2006
    
8,592,960
     
8,593
     
1,150,918
      (914,612 )    
244,899
 
                                         
Adjustment for uncorrected immaterial
                                        
financial statement differences (Note 9)
    
—
      
—
      
—
      
12,060
     
12,060
 
Contributed interest (Note 2)
    
—
      
—
      
6,478
     
—
      
6,478
 
Common stock options
                                        
exercised at $.70 per share  (Note 5)
    
100,000
     
100
     
69,900
     
—
      
70,000
 
Sale of units at $.70 per unit  (Note 2)
    
215,000
     
215
     
149,785
     
—
      
150,000
 
Sale of common stock at $1.25 per share  (Note 5)
    
65,000
     
65
     
81,185
     
—
      
81,250
 
Stock options granted  (Notes 2 and 5)
    
—
      
—
      
295,800
     
—
      
295,800
 
Net loss
    
—
      
—
      
—
       (708,180 )     (708,180 )
                                         
Balance at June 30, 2007
    
8,972,960
    $
8,973
    $
1,754,066
    $ (1,610,732 )   $
152,307
 
 
 
See accompanying notes to financial statements
 

F-5

 
LGA HOLDINGS, INC.
 
Statements of Cash flows
 
 
 
   
For the Years Ended
  
   
June 30,
  
   
2007
    
2006
  
Cash flows from operating activities:
            
Net loss
   $ (708,180 )   $ (261,477 )
Adjustments to reconcile net loss to net cash
                
used in operating activities:
                
Depreciation and amortization
    
31,638
     
15,872
 
Share-based payment (Notes 2 and 5)
    
295,800
     
—
  
Contributed interest (Note 2)
    
6,478
     
—
  
Changes in operating assets and liabilities:
                
Receivables, inventory and other assets
    
12,243
      (65,990 )
Payables, deferred income and other liabilities
     (74,235 )    
1,818
 
Net cash used in
            
operating activities
     (436,256 )     (309,777 )
                 
Cash flows from investing activities:
                
Purchase of equipment and other assets
     (75,494 )     (96,031 )
Net cash used in
                
investing activities
     (75,494 )     (96,031 )
                 
Cash flows from financing activities:
                
Proceeds from related party debt (Note 2)
    
60,000
     
—
  
Proceeds from collection of stock
                
subscription receivable (Note 5)
    
150,500
     
—
  
Proceeds from sale of common stock (Notes 2 and 5)
    
301,250
     
179,926
 
Proceeds from sale of call option (Note 5)
    
—
      
200,000
 
Net cash provided by
            
financing activities
    
511,750
     
379,926
 
Net change in cash and
            
cash equivalents
    
—
       (25,882 )
             
Cash and cash equivalents:
            
Beginning of year
    
—
      
25,882
 
                 
   End of year
   $
—
     $
—
  
                 
Supplemental disclosure of cash flow information:
                
Cash paid during the year for:
                
Income taxes
   $
—
     $
—
  
       Interest
   $
—
     $
—
  
                 
Noncash investing and financing transactions:
                
Debt converted to accrued payroll (Note 2)
   $
106,408
    $
—
  
Accrued salaries and interest converted to debt
   $
—
     $
106,408
 
 
 
See accompanying notes to financial statements
 

F-6

LGA HOLDINGS, INC.
Notes to Financial Statements


(1) Organization and summary of significant accounting policies

Organization, basis of presentation and Liquidity

LGA Holdings, Inc. (“LGA”, “We”, “Us” or “Our”) was incorporated in Colorado on April 14, 1998 as Let’s Go Aero, Inc. We develop intellectual property for the automotive, recreation vehicle and recreation industries.  We also manufacture and distribute various types of specialty trailers and cargo carrying enhancements as well as related parts, accessories and services for the automobile, recreational vehicle and recreational equipment industries. Our specialty trailers are manufactured by third party vendors and assembled in our facilities in Colorado Springs.   We sell our products directly to distributors, dealers, and end-user customers.
 
Going Concern

Inherent in our business are various risks and uncertainties, including historical operating losses and dependence upon strategic alliances.   The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
 
We have experienced negative cash flow from operations since our inception and we have expended, and expect to continue to expend, substantial funds to continue our research and development and marketing efforts. As a result, we have suffered recurring losses through June 30, 2007.   Based on our current operating plans, management believes that proceeds from future revenues and futures sales of common stock will be sufficient to meet operating needs for the foreseeable future. The actual funds that we will need to operate during this period will be determined by many factors, some of which are beyond our control. Lower than anticipated sales of our products or higher than anticipated expenses could require us to need additional financing sooner than expected.    There is no assurance that we will be successful in selling additional shares of common stock to the public.  Our business plan projects profits during fiscal 2008.

Fair Values of Financial Instruments

Statement of Financial Accounting Standards No. 107 (“SFAS 107”), Disclosures about Fair Value of Financial Instruments requires disclosure of the fair value of financial instruments held by the Company. SFAS 107 defines the fair value of financial instruments as the amount at which the instrument could be exchanged in a current transaction between willing parties.  The carrying value of financial instruments including cash, receivables, prepaid expenses, and accounts payable approximates their fair value at the reporting balance sheet date due to the relatively short-term nature of these instruments.  The fair market value of long-term debt cannot be determined due to a lack of comparability of similar market instruments.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The more significant estimates are used for such items as: recoverability of inventory and property and equipment, valuation allowance for doubtful accounts, reserves for warranty, and fair valuation of stock options. As better information becomes available or as actual amounts are determinable, the recorded estimates are revised. Ultimate results could differ from these estimates.

F-7

LGA HOLDINGS, INC.
Notes to Financial Statements


Cash and Cash Equivalents

We consider all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents.  At June 30, 2007, there were no cash equivalents.

Concentrations

We purchase our plastic shells from two suppliers. The purchases represented approximately 20% and 50% of cost of sales for the years ended June 30, 2007 and 2006, respectively. Although there are a limited number of manufacturers of plastic shells, management believes that other suppliers could provide similar shells on comparable terms.

Accounts Receivable

Trade receivable consists of amounts due from customers, which are mainly end-users and dealers. We generally consider accounts more than 30 days old to be past due. We allow for estimated losses on accounts receivable based on prior bad debt experience and a review of existing receivables.   Bad debt recoveries are charged against the allowance account as realized.  At June 30, 2007, we considered accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required.

Inventories

Inventories are stated at the lower of cost, as determined on average cost basis, or market.  Raw materials consist of the cost of materials required to produce trailers and accessories and to support parts sales and service.

Prepaid expenses

Prepaid expenses primarily include the unamortized portion of annual casualty and third party liability insurance premiums. These premiums are amortized to expense over the insurance year.

Property and Equipment

Property and equipment are stated at cost.  Expenditures that extend the useful lives of assets are capitalized.  Repairs, maintenance and renewals that do not extend the useful lives of the assets are expensed as incurred.    Depreciation is provided for financial reporting purposes using straight-line method over estimated useful lives ranging from 3 to 7 years for machinery, tooling, furniture and equipment.

Certain tooling used to make our plastic shells is held for use at our subcontractors’ facilities in Denver, Colorado and Middlebury, Indiana.

Intangible Assets

We have patents issued and pending to protect our intellectual property.  These patents relate to how cargo can be attached and carried on a vehicle’s hitch receiver, frame, or body surface.  Patent costs are amortized on a straight-line basis and charged to amortization expense over the expected useful life of the patent.  Costs of patent applications are deferred until the patent is granted.   We will begin amortization when the patent is granted.

F-8

LGA HOLDINGS, INC.
Notes to Financial Statements


Impairment of Long-Lived Assets

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we evaluate our long-lived assets, including related intangibles, of identifiable business activities for impairment when events or changes in circumstances indicate, in management's judgment, that the carrying value of such assets may not be recoverable. The determination of whether impairment has occurred is based on management's estimate of undiscounted future cash flows attributable to the assets as compared to the carrying value of the assets. If impairment has occurred, estimating the fair value for the assets and recording a provision for loss if the carrying value is greater than fair value determine the amount of the impairment recognized. For assets identified to be disposed of in the future, the carrying value of these assets is compared to the estimated fair value less the cost to sell to determine if impairment is required. Until the assets are disposed of, an estimate of the fair value is re-determined when related events or circumstances change.

When determining whether impairment of one of our long-lived assets has occurred, we must estimate the undiscounted cash flows attributable to the asset or asset group. Our estimate of cash flows is based on assumptions that could change in the future.

 
Any significant variance in any of the above assumptions or factors could materially affect our cash flows, which could require us to record an impairment of an asset. No impairment charges were recognized during each of the years ended June 30, 2007 and 2006.

Revenue Recognition

We recognize revenue from the sale of trailers and accessories when there is persuasive evidence that title and risks of ownership are transferred to the customer, which generally is upon shipment or customer pick-up. Accordingly, no provision for sales allowances or returns is normally required except in unusual circumstances.

Revenue from sales of parts is recognized when the part has been shipped. Revenues related to shipping and deliveries are included as a component of net sales and the related shipping costs are included as a component of cost of sales.

Royalty income is recognized based on the terms specified in contractual settlement agreements.

Product Warranty

Our products are covered by product warranties for one year after the date of sale. At the time of sale, the Company recognizes estimated warranty costs, based on prior history and expected future claims, by a charge to cost of sales and records an accrued liability. The accrued liability is reduced as actual warranty costs are paid and is evaluated periodically to validate previous estimates and known requirements and adjusted as necessary.  At June 30, 2007, we have not accrued a reserve for warranty expense as management determined the amount to be immaterial with respect to overall operations and financial position.


F-9

LGA HOLDINGS, INC.
Notes to Financial Statements


Advertising Costs

All advertising costs are expensed as incurred. Advertising expenses were $60,896 and $13,046 for the years ended June 30, 2007 and 2006, respectively.

Research and Development Expenses

Research and development expenses were incurred in fiscal 2007 and 2006 and totaled $94,106 and $13,779, respectively.  R&D costs are expensed as incurred.

Income Taxes

We account for income taxes under the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS No. 109).  SFAS No. 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax liabilities and assets are determined based on the difference 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.

Stock-based Compensation

Effective July 1, 2005, the Company adopted SFAS No. 123 (Revised 2004), Share-Based Payment, which requires that compensation related to all stock-based awards, including stock options, be recognized in the financial statements based on their estimated grant-date fair value. We have previously recorded stock compensation pursuant to the intrinsic value method under APB Opinion No. 25, whereby compensation was recorded related to performance share and unrestricted share awards and no compensation was recognized for most stock option awards. We are using the modified prospective application method of adopting SFAS No. 123R, whereby the estimated fair value of unvested stock awards granted prior to July 1, 2005 will be recognized as compensation expense in periods subsequent to June 30, 2005, based on the same valuation method used in our prior pro forma disclosures. We have estimated expected forfeitures, as required by SFAS No. 123R, and we are recognizing compensation expense only for those awards expected to vest. Compensation expense is amortized over the estimated service period, which is the shorter of the award’s time vesting period or the derived service period as implied by any accelerated vesting provisions when the common stock price reaches specified levels. All compensation must be recognized by the time the award vests. The cumulative effect of initially adopting SFAS No. 123R was immaterial.

Loss Per Share
 
SFAS 128, Earnings Per Share, requires presentation of “basic” and “diluted” earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period.  Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.  At June 30, 2007, the company has options outstanding that could be exercised representing a total of 2,742,595 additional shares.  All have been excluded from the weighted average share calculation because they would be anti-dilutive.
 
The weighted average number of common shares outstanding was calculated based upon post-split shares for all periods presented.

F-10

LGA HOLDINGS, INC.
Notes to Financial Statements
 

 
New Accounting Pronouncements

In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48, which is an interpretation of SFAS No. 109, “Accounting for Income Taxes,” provides guidance on the manner in which tax positions taken or to be taken on tax returns should be reflected in an entity’s financial statements prior to their resolution with taxing authorities. The Company is required to adopt FIN 48 during the first quarter of fiscal 2008. The Company is currently evaluating the requirements of FIN 48 and has not yet determined the impact, if any; this interpretation may have on its financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The provisions of SFAS 157 apply under other accounting pronouncements that require or permit fair value measurements. We are required to adopt SFAS 157 effective for our fiscal year 2009. The impact on our financial statements has not been determined.

In February 2007, the FASB issued SFAS No.159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). This statement permits companies to measure many financial instruments and certain other items at fair value. We are required to adopt SFAS 159 effective for our fiscal year 2009. The impact on our financial statements has not been determined.

(2) Related Party Transactions

During the year ended June 30, 2007, the Company signed promissory notes totaling $60,000 payable to its President, for working capital purposes.   The promissory notes bear interest rates of 8% per annum and are due on June 30, 2010.  We incurred interest expense of $2,804 on the notes for the year ended June 30, 2007.  At June 30, 2007, accrued interest related to the promissory notes totaled $2,804 and is reflected in the accompanying financial statements.

In March 2007, we granted to one of our directors an option to purchase a total of 100,000 shares of the Company’s common stock.  The option carries an exercise price of $1.75 per share and vested at the date of grant.  We determined the fair value of the options at $1.65 per share and recorded share-based payment $165,000 in accordance with SFAS 123R.  See footnote 5.

In December 2006, we conducted a private placement offering whereby we sold 215,000 units to an affiliate at $.70 per unit or $150,000.  Each unit comprised of one share of the Company’s common stock and one option to purchase the Company’s common stock at $1.00 per share.

In September 2006, our Board of Directors approved the reclassification of $106,408 from notes payable to officers to accrued payroll.  Accrued interest related to the notes payable in the amount of $6,478 as of June 30, 3006 was forgiven by the officers and recorded as contributed capital and is shown in the accompanying financial statements.

In December 2004, we sold 1,250,000 shares of our restricted common stock, callable at $.40 per share through November 2006, to an affiliate for $.20 per share or $250,000.  In April 2006, the parties involved determined that the Company’s share price increased to $1.15, which gave our affiliate the incentive to retain the shares.  As a result, we sold the call option on the 1,250,000 shares for $200,000 to our affiliate.  We recorded the gain of $200,000 as contributed capital in the accompanying financial statements, as the transaction was with a substantial shareholder of the Company

F-11

LGA HOLDINGS, INC.
Notes to Financial Statements


During the year ended June 30, 2006, an affiliate exercised options to purchase 258,886 restricted shares of common stock at the price of $.695 or $179,926.

(3) Balance Sheet Components

Inventory

At June 30, 2007, inventory consisted of:
 
Raw materials
   $
93,126
  
Finished goods
    
72,725
  
    $
165,851
  
 
Property and Equipment
 
At June 30, 2007, major classes of property and equipment were:
 
 
Leasehold improvements
   $
4,212
  
Furniture and fixtures
    
25,377
  
Equipment
    
92,321
  
Tooling, held offsite
    
154,659
  
     
276,569
  
Less: accumulated depreciation
     (140,860 )
    $
135,709
  
 
Depreciation expense during the years ended June 30, 2007 and 2006 totaled $30,050 and $13,558, respectively.

Intangible Assets
 
At June 30, 2007, intangible assets consisted of:
 
         
Weighted
  
         
Average
  
         
Amortization
  
   
Total
    
Period
  
Patents, net of $20,501 in accumulated
            
amortization
   $
46,557
    
13 years
  
Deferred patent application costs
    
51,220
      
          n/a
  
    $
97,777
          
 
 
F-12

LGA HOLDINGS, INC.
Notes to Financial Statements

 
 
Estimated annual amortization expenses are as follows for years ending June 30:
 
2008
   $
3,172
  
2009
   $
3,172
  
2010
   $
3,172
  
2011
   $
3,172
  
2012
   $
3,172
  

Amortization expense during the years ended June 30, 2007 and 2006 totaled $1,588 and $2,314, respectively.

(4) Unearned Revenue

In May 2002, we licensed certain intellectual property to Advanced Accessory Systems, LLC, (AAS) for five years.  We received an upfront payment against future royalties of $300,000, which we deferred.   For accounting purposes, we reflect the payment in royalty income, pro-rata, over the life of the licenses.  In fiscal years 2007 and 2006, respectively, we recognized $55,000 and $60,000 in royalty revenue related to this license.  The balance of unearned revenue was $-0- as of June 30, 2007.

(5) Shareholders’ Deficit

Features of Preferred Stock

Our preferred stock may be issued from time-to-time in one or more series.  Our Board of Directors is authorized to (1) divide the preferred stock into series; (2) establish the number of preferred shares in a series; and (3) fix and determine the relative rights and preferences of any series of our preferred stock.

Sale of Common Stock

In fiscal year 2007, we commenced a private placement offering of 240,000 of our common shares priced at $1.25 per share.  As of June 30, 2007, we sold 65,000 shares of common stock at the price of $1.25 per share or $81,250.   No commissions were paid in connection with this transaction.

In January 2007, a former employee exercised options to purchase 100,000 shares of the Company’s common stock for proceeds of $70,000.

In June 2006, we conducted a private placement offering whereby we sold 215,000 units to two unaffiliated investors at $.70 per unit or $150,500.  Each unit comprised of one share of our common stock and one option to purchase the Company’s common stock at $1.00 per share.  No commissions were paid in connection with this transaction.

Stock Options

A summary of changes in the number of stock options outstanding for the years ended June 30, 2007 and 2006 is as follows:

F-13

LGA HOLDINGS, INC.
Notes to Financial Statements


 
           
Weighted
  
Weighted
    
           
Average
  
Average
    
           
Exercise
  
Remaining
  
Aggregate
           
Price
  
Contractual
  
Intrinsic
       
Shares  
 
Per Share
  
Life
  
Value
Outstanding at June 30, 2005
3,276,008
  
$0.67
  
6.39 years
    
                     
Granted
215,000
  
$1.00
  
5.08 years
    
Exercised
(258,886)
  
$0.70
  
N/A
    
Cancelled/Expired
(679,575)
  
$0.70
  
N/A
    
Outstanding at June 30, 2006
2,552,547
  
$0.70
  
6.28 years
    
Granted
395,000
  
$1.34
  
6.6
    
Exercised
(100,000)
  
$0.70
  
N/A
    
Cancelled/Expired
(104,952)
  
$0.70
  
N/A
    
Outstanding at June 30, 2007
2,742,595
  
$0.79
  
5.8 years
  
 $  333,250
                     
Exercisable at June 30, 2007
2,742,595
  
$0.79
  
5.8 years
  
 $  333,250
 
The weighted-average grant-date fair value of options granted during the years ended June 30, 2007 and 2006 were $1.64 and $-0-, respectively.  The total intrinsic value of options exercised during the years ended June 30, 2007 and 2006 were $-0- and $-0-, respectively.

In March 2007, the Company granted to a director options to purchase an aggregate of 100,000 shares of the Company’s common stock at an exercise price of $1.75 per share. The options vested on the date of grant and expire on March 31, 2017. The quoted market price of the stock on the date of grant was $1.65 per share. The Company valued the option at $1.65 per share, or $165,000, in accordance with SFAS 123(R). The expense of $165,000 was recorded as share-based payments in the accompanying financial statements.

In January 2007, the Company granted an employee options to purchase an aggregate of 5,000 shares of the Company’s common stock at an exercise price of $1.50 per share. The options vested on the date of grant and expire on January 15, 2012. The quoted market price of the stock on the date of grant was $1.41 per share. The Company valued the option at $1.41 per share, or $7,050, in accordance with SFAS 123(R). The expense of $7,050 was recorded as share-based payments in the accompanying financial statements.

In March 2007, the Company granted two consultants options to purchase an aggregate of 75,000 shares of the Company’s common stock at an exercise price of $1.75 per share. The options vested on the date of grant and expire on March 31, 2017. The quoted market price of the stock on the date of grant was $1.65 per share. The Company valued the option at $1.65 per share, or $123,750, in accordance with SFAS 123(R). The expense of $123,750 was recorded as share-based payments in the accompanying financial statements.

The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

F-14

LGA HOLDINGS, INC.
Notes to Financial Statements



 
Risk-free interest rate
  
4.74%
  
 
Dividend yield
  
0.00%
  
 
Volatility factor
  
286.850%
  
 
Weighted average expected life
  
 5 to 10 years
  
 
Total compensation cost for share-based payment arrangements at June 30, 2007 and 2006:
 
   
2007
    
2006
  
Stock options, related party
   $
165,000
     $
—
  
Stock options, other
    
130,800
      
—
  
Total compensation cost
    
295,800
      
—
  
Income tax
    
—
      
—
  
Net compensation cost
   $
295,800
     $
—
  

At June 30, 2007, all compensation costs have been recognized, as all options granted were fully vested on the grant date.
(6) Commitments

We lease our office space under a non-cancelable operating lease through May 2008.  Future minimum lease payments for the year ending June 30 2008 is $48,952.

We recorded rent expense in the amount of $57,291 and $48,167 for the years ended June 30, 2007 and 2006, respectively.
 
(7) Income Taxes
 
A reconciliation of U.S. statutory federal income tax rate to the effective rate follows for the years ended June 30, 2007 and 2006:
 
   
June 30,   
  
   
2007
    
2006
  
             
U.S. statutory federal rate
     34.00 %     30.49 %
State income tax rate
     3.06 %     3.22 %
Deferred income
     0.00 %     -7.09 %
Net operating loss for which no tax
                
   benefit is currently available
     -37.06 %     -26.62 %
      0.00 %     0.00 %
 
At June 30, 2007, deferred tax assets consisted of net tax asset of $259,809 due to net operating loss carryforward for federal income tax purposes of approximately $1,552,930, which was fully allowed for in the valuation allowance of $259,809.  The valuation allowance offsets the net deferred tax asset for which there is no assurance of recovery.  The change in the valuation allowance for the year ended June 30, 2007 was $190,201.  The net operating loss carryforward will expire through 2027.

F-15

LGA HOLDINGS, INC.
Notes to Financial Statements

The valuation allowance is evaluated at the end of each year, considering positive and negative evidence about whether the deferred tax asset will be realized.  At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax assets is no longer impaired and the allowance is no longer required.

(8)  Embezzlement

The Company suffered an embezzlement of $72,801 during the year ended June 30, 2006 and an additional $44,764 for the period from July 2006 through September 28, 2006, the day the embezzlement was discovered.  We have implemented internal control procedures which we believe will prevent any future losses.

(9)  Adjustment for Immaterial Uncorrected Financial Statement Differences

During the year ended June 30, 2007, we evaluated and quantified accumulated immaterial uncorrected financial statement differences through June 20, 2006, in accordance with SAB 108, as follows:

   
Financial Statements Effect
  
   
Amount of Over (Under) Statement of:
  
   
Total Assets
    
Total Liabilities
    
Loss Before Taxes
      
Net Loss
    
Net Loss Per Share
  
                     
 
        
Inventory
   $ (7,658 )   $
-
     $
7,658
     $
7,658
     $
0.00
  
Accrued interest
    
-
      
12,062
       (12,062 )     (12,062 )   $ (0.00 )
                                         
      (7,658 )    
12,062
       (4,404 )     (4,404 )   $ (0.00 )
                                         
Net Unadjusted
                                        
Audit Differences—June 30, 2006
     (7,658 )    
12,062
       (4,404 )     (4,404 )   $ (0.00 )
Net Audit Differences
   $ (7,658 )   $
12,062
     $ (4,404 )   $ (4,404 )   $ (0.00 )
 
During the year ended June 30, 2006, basic accounting errors were made and were left uncorrected as they were considered immaterial to our overall financial statements.  The overstatement of interest expense is corrected in the current year as an adjustment to the opening balance of retained earnings in the accompanying condensed financial statement.  The difference in inventory was subsequently adjusted through our physical inventory count during the year ended June 30, 2007.

(10)  Subsequent Events- Financing

In September 2007, an affiliate loaned the Company $88,056 in the form of an unsecured note carrying 8% annual interest maturing December 15, 2007.

In July 2007, we sold an additional 100,000 shares of common stock to two unaffiliated investors at $1.25 per share, as part of the private placement discussed in Note 5.  Total cash proceeds received were $125,000.  No commissions were paid in connection with this transaction.

In July 2007, a director loaned the Company $36,000 in the form of an unsecured demand note carrying 8% annual interest.

 
 
F-16
 
 
Item 8.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

Not Applicable

Item 8A.  Controls and Procedures.

Prior to September, 2006, LGA’s internal disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) and internal control over financial reporting(as defined in Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act) were not effective.  As part of the audit of the June 30, 2006, financial statements, the auditors discovered indications of embezzlement by the Company’s bookkeeper.  The embezzled amount was approximately $134,000 and occurred between June, 2005, and October, 2006.

Internal control over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act) should be adequate and effective 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 include those policies and procedures that:

(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

(2) 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 issuer are being made only in accordance with authorizations of management and directors of the issuer; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the financial statements.

LGA did not have formal internal control over financial reporting (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) as of June 30, 2006, and through September, 2006, when the embezzlement was discovered.  The weaknesses in internal controls and procedures that were exploited by the Company’s bookkeeper were (1) a lack of segregation of duties over cash management (including credit cards) and (2) insufficient supervision by management over accounting functions.

Management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal controls over financial reporting were implemented in late 2006 and the Company’s principal executive officer and principal financial officer have concluded that they are now effective.

The Company’s principal executive officer and principal financial officer have concluded that disclosure controls and procedures are minimal, but also effective due to the Company’s small size and the regular communications among its seven full-time employees.

Item 8B.      Other Information.

None
 
 
- 15 -
 
Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.

Directors serve terms of 1 year or until his or her successor has been elected and qualified.

              Name
Age
Position
Director Since
  
         
     Marty Williams*
47
                Chief Executive Officer,
June 2004
  
   
                President Director
    
 
 
      
     Sara Williams*
38
                Secretary, Treasurer,
June 2004
  
   
                Director
    
         
     Eric Nickerson
56
                Director
June 1990
  
         
     Matthew Drabczyk
48
                Vice President Engineering,
May 2006
  
   
                Director
    
__________

* Marty Williams and Sara Williams are husband and wife.

MARTY WILLIAMS, Chief Executive Officer, President, Director. Mr. Williams was appointed to his positions upon the acquisition of Aero by LGA effective June 30, 2004. Mr. Williams has been Chief Executive Officer, President and a Director of Aero since its inception in 1998. At Aero he is responsible for establishing and maintaining the corporate mission and culture. He is responsible for product creation, strategic planning, and the entrepreneurial spirit. He also directs and coordinates Aero's financing to provide funding for new and continuing operations. Mr. Williams' professional experience includes many different areas in the securities industry where he applied his knowledge of small business operations, finance, strategic development and business modeling. As an independent broker at Schneider Securities, Inc., Denver, Colorado, from 1988 to 1991 and again from 1993 to 1999, Marty was principally involved in development of private placement offerings for early stage companies and the subsequent sales of those offerings. From 1991 to 1993 he was a stock broker with RAF Financial, Denver, Colorado. He has a Bachelor of Science in Business Administration, University of South Dakota.

SARA WILLIAMS, Secretary, Treasurer, Director. Ms. Williams was appointed to her positions upon the acquisition of Aero by LGA effective June 30, 2004. Ms. Williams has been Treasurer and a Director of Aero since its inception in 1998. She has been Secretary of Aero since June 30, 2004. At Aero Ms. Williams manages daily business flow, business development, product inquiries, marketing, promotions, account management, dealer relations, sales and customer service, order fulfillment, shipping and accounting. Mrs. Williams' professional experience includes many areas in sales, advertising, software development, operations, and product development. She has been involved in direct sales, account management and start-up business management in the areas of print advertising, new business development, customer relations, and marketing. At Sunset Publishing Corporation, Menlo Park, California, as a Direct Sales Representative from 1993 to 1995 and 1996 to 1998, Mrs. Williams was responsible for generating sales of new advertising programs and account management. While working for Saligent, Inc., Colorado Spring, Colorado for a short period in 1995, Mrs. Williams was occupied with inside sales management, program development, supervision and training. She has a Bachelor of Arts in Political Science, The Colorado College.

ERIC J. NICKERSON has served as a Director of LGA since June of 1990 and as a Director of Aero since April 2001.  Mr. Nickerson joined the Company in the position of Controller in November, 2006.  Mr. Nickerson was a member of the faculty of the United States Military Academy at West Point, New York from 1989 to 1993. In June 1993, Mr. Nickerson retired as a United States Air Force officer. Currently, Mr. Nickerson is a private investor and directs personal accounts in an investing partnership, Third Century II. Third Century II is a major shareholder in LGA.

MATTHEW DRABCZYK has served as Vice President and Director of LGA since May, 2006.  Mr. Drabczyk has been President of Restaurant Interiors, Inc. for more than five years where he is responsible for sales, engineering and accounting.  Restaurant Interiors constructs and installs commercial dining facilities.

Legal Proceedings

None.

- 16 -



Audit Committee

LGA does not have an audit committee and neither LGA nor Aero have a financial expert on their respective Boards of Directors or as an employee. LGA's Board of Directors acts as its audit committee. LGA is a company with annual revenue of less than $500,000 and its accounting is relatively simple. Therefore, the Company's management did not believe having a financial expert offered shareholders much benefit considering the costs that would have been involved.  See Item 8A, above.  None of the Board of Directors is independent as defined in Rule 10A-3 of the Exchange Act.

Section 16(a) Beneficial Ownership Reporting Compliance

The following table sets forth information determined by LGA with respect to the indicated person's requirements to file Forms 3, 4 and 5 for LGA's most recent fiscal year.

Name
Number of
Late Reports
Number of Transactions
That Were Not Reported
Known Failures to File
       
Eric Nickerson
1
1
1
       
Third Century II
1
1
1
       

Code of Ethics

LGA has not adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company has only 7 full time employees and limited revenues. Its two principal officers, majority shareholders and half of the Board of directors are husband and wife. Mr. & Mrs. Williams do not believe that the Company presently needs written standards that are reasonably designed to deter wrongdoing and to promote:

     (1)  Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

     (2)  Full, fair, accurate, timely, and understandable disclosure in reports and documents that a small business issuer files with, or submits to,  the Commission and in other public communications made by the small business issuer;

     (3)  Compliance with applicable governmental laws, rules and regulations;

     (4)  The prompt internal reporting of violations of the code to an  appropriate person or persons identified in the code; and

     (5)  Accountability for adherence to the code.

Mr. & Mrs. Williams believe that they act ethically with respect to the above categories despite the lack of a written code of ethics.

Item 10. Executive Compensation.

The following table sets forth information with respect to all officers of LGA and Aero who received $100,000 or more of annual compensation for all services rendered in all capacities in the three most recent fiscal years and for the CEO regardless of compensation.

- 17 -



Summary Compensation Table
 
Name and Principal Position
Year
Salary
Bonus
Stock Awards
Option Awards
Nonequity Incentive Plan Compensation
Nonqualified Deferred Compensation Earnings
All Other Compensation
Total
Marty Williams
CEO, President, Director
2007
48,000
0
0
0
0
0
0
48,000
 
2006
48,000
0
0
0
0
0
0
48,000
                   
Matthew Drabczyk, Vice President Engineering, Director
2007
0
0
0
165,000
0
0
0
165,000
 
2006
0
0
0
0
0
0
0
0

The following table contains information regarding equity awards outstanding at the end of the last completed fiscal year held by the named executive officers.

Outstanding Equity Awards at fiscal Year End

Name
Number of Securities Underlying Unexercised Options (#) Exercisable
Number of Securities Underlying Unexercised Options (#) Unexercisable
Equity Incentive Plan Awards:  Number of Securities Underlying Unexercised Unearned Options (#)
Option Exercise Price ($)
Option
Expiration
Date
Number of Shares or Units of Stock That Have Not Vested (#)
Market Value of Shares of Units of Stock That Have Not Vested ($)
Equity Incentive Plan Awards:  Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
Equity Incentive Plan Awards:  Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Marty Williams
500,000
0
0
0.70
2010
0
0
0
0
Sara Williams
500,000
0
0
0.70
2010
0
0
0
0
Matthew Drabczyk
250,000
0
0
0.70
2015
0
0
0
0
Matthew Drabczyk
100,000
0
0
1.75
2017
0
0
0
0
Third Century II
215,000
0
0
1.00
2012
0
0
0
0


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Director Compensation

Directors as a group are currently not compensated as such for their services.  The following table provides information regarding compensation received by persons who are directors.

Name
Fees Earned or Paid in Cash ($)
Stock Awards ($)
Option Awards ($)
Non-equity Incentive Plan Compensation ($)
Nonqualified Deferred Compensation Earnings ($)
All Other Compensation ($)
Total ($)
Matthew Drabczyk
$0
  
165,000
      
165,000

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table contains information as of September 24, 2007, summarizing the beneficial ownership of LGA common stock by (1) each person known to LGA to be the beneficial owner of more than 5% of its issued and outstanding common stock, (2) LGA's executive officers and directors individually, and (3) all LGA's executive officers and directors as a group. Except as stated in the footnotes to the table, each of these persons exercises sole voting and investment power over the shares of common stock listed for that person.

Name and Address
Position
Number of LGA
Common Shares
Held
Percentage of
Outstanding
Share Held
       
       
Marty Williams (1), (2)
         President, Chief
2,854,999
28.2%
5565 Teakwood Terrace
         Executive Officer,
    
Colorado Springs, CO 80918
        Director
    
       
Sara Williams 1, (3)
        Secretary,
    
5565 Teakwood Terrace
        Treasurer,
2,854,999
28.2%
Colorado Springs, CO 80918
        Director
    
       
Eric J. Nickerson (4)
      
1711 Chateau Ct.
        Director
3,813,560
40.9%
Fallston, MD 21047
      
       
Matthew Drabczyk (5)
        Vice President
    
Restaurant Interiors
        Engineering,
    
5530 Joliet St.
        Director
 608,886
6.4%
Denver, CO 80239
      
       
All Officers and Directors
as  a Group (3 persons) (6)
           NA
7,277,445
68.2%
       
Floyd Murray
      
13020 Caraway Dr.
           NA
2,069,069
22%
Sun City West, AZ 85375
      
       
Third Century II
      
1711 Chateau Ct. (7)
           NA
3,659,403
39.3%
Falston, MD 21047
      
       
 
 
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Notes to Table:

(1)  Sara Williams and Marty Williams are husband and wife.

(2)  Includes 1,854,999 shares owned as joint tenant with Sara Williams, options to acquire 500,000 shares and options to acquire 500,000 shares owned by Sara Williams.

(3)  Includes 1,854,999 shares owned as joint tenant with Marty Williams, options to acquire 500,000 shares and options to acquire 500,000 shares owned by Marty Williams.

(4) Includes 3,659,403 shares deemed owned by Third Century II. Mr. Nickerson is Senior Partner of the investment company Third Century II. Mr. Nickerson disclaims beneficial ownership of all of the shares and options owned by Third Century II.

(5)  Includes options to acquire 350,000 shares.

(6)  The Directors are Marty Williams, Sara Williams, Eric J. Nickerson and Matthew Drabczyk and includes the shares deemed directly or indirectly beneficially owned by each of them.

(7)  Includes options to acquire 215,000 shares.

Note: Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares subject to options, warrants and convertible notes currently exercisable or convertible, or exercisable or convertible within 60 days are deemed outstanding for computing the percentage of the person or entity holding such securities, but are not outstanding for computing the percentage of any other person or entity. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them.

Item 12. Certain Relationships and Related Transactions.

Please refer to Note 2 to the Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

During the year ended June 30, 2007, Mr. Williams, the Company’s Chief Executive Officer, President and an Officer, loaned the Company $60,000 at 8% interest with principal and interest due June 30, 2010.

In September 2006, the Company reclassified $106,408 from a note payable to Marty and Sara Williams to accrued payroll.  This was a reversal of an earlier transaction in order to avoid having to restate earlier financial statements that incorrectly described the transaction.  The accrued interest of $6,478 was forgiven by the Williams and deemed a contribution to the Company’s capital.

The grant of 100,000 options described in note 2 to the financial statements was to Matt Drabczyk.

The sale of 215,000 units described in note 2 to the financial statements was to Third Century II.  This transaction was part of a private placement that was available to other investors on the same terms.  Mr. Nickerson, Controller and a Director of the Company, is Senior Partner of Third Century II.  The sale of the call option described in note 2 to the financial statements was to Third Century II.


Item 13. Exhibits.

        31.1   - A Rule 13a-14(a)/15d-14(a) Certifications
        31.2   - A Rule 13a-14(a)/15d-14(a) Certifications

        33.1   - A Certification Pursuant To 18 U.S.C. Section. 1350
        33.2  - A Certification Pursuant To 18 U.S.C. Section. 1350

 
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Item 14. Principal Accountant Fees and Services.

Audit Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for the audit of LGA's and Aero's annual financial statements and review of financial statements included in the registrant's Form 10-QSB or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $16,269 for 2006 and $37,900 for 2007.  This amount is a substantial increase over 2006 and is a result of costs involved in the embezzlement.

Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant's financial statements and are not reported under Item 9(e)(1) of Schedule 14A were $-0- for 2006 and $-0- for 2007.

Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $-0- for 2006 and $-0- for 2007.

All Other Fees

The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A were $-0-for 2006 and $-0- for 2007.

Audit Committee Policies

Neither LGA nor Aero has an audit committee. Such authority is exercised by the full Boards of Directors of each company.  The board has delegated hiring authority to the Company President.  All directors are intimately involved with the day-to-day operations of the Company, which include its financial operations.  Therefore, all Directors are aware of and involved with the engagement of the auditor. Neither Board currently has any pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X; or (ii) approved any services described in each of Items 9(e)(2) through 9(e)(4) of Schedule 14A that were subject to approval by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.



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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LGA Holdings, Inc.
(Registrant)
By: /s/ Marty Williams
Marty Williams, Chief Executive Officer, President
Date September 28, 2007

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:  /s/ Marty Williams
Marty Williams, Chief Executive Office, Director
Date September 28, 2007

By: /s/ Sara Williams
Sara Williams, Treasurer (principal financial officer), Director
Date September 28, 2007

By:  /s/ Eric Nickerson
Eric Nickerson, Director
Date September 28, 2007

By:  /s/ Matthew Drabczyk
Matthew Drabczyk, Director
Date September 28, 2007



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