LHSI...possible problem with this merger.....
I'm not 100% certain about this, but after extensively reviewing the last few filings by LHSI it is my belief that the company and/or consultant have made an extremely serious mistake on this merger.
As far as I have been able to figure out, I believe that LHSI's common stock was supposed to have undergone a 2:7 reverse split prior to the issuance of shares to the Chinese merger candidate. Unless I am completely mistaken, that reverse split never occurred.
According to both the press releases and the filings, there are supposed to be roughly 8.2M shares outstanding after the closing of the merger, which according to the filings occurred at the end of September. But after looking at the merger agreement closer, the only way that 8.2M number can be achieved is if a 2:7 reverse split occurred prior to the shares being issued to the Chinese company. Here are the 3 steps this merger was supposed to have taken.....
1) The shell had 9.3M shares. The CEO sold 5M, which were then cancelled. That left the shell with 4.3M shares.
2) Those 4.3M shares undergo a 2:7 reverse split. That leaves the shell with 1.2M shares.
3) The Chinese company is issued 7M new shares to complete the merger. That leaves a grand total of 8.2M shares post merger.
Notice what appears at the beginning of the 10Q filed on October 15. If the merger closed at the end of September, then the outstanding share count two weeks later should be 8.2M and not the 4.3M that the company reports....
The number of shares outstanding of the registrant's Class A common stock as of October 12, 2009 was 4,300,000.
AI
