China Growth Stocks

[Potse]

db7...LHSI share structure.....

"Potse, this makes it seem to me like everything is kosher?-->......In exchange, we issued to Asia-Pharm 7,000,000 shares, or approximately 65.25% of our common stock."

I'm about 99.9% certain that LHSI and the consultant on this deal have somewhat of a mess on their hands at the moment. At the very least the company is going to need to do some clarification of the situation. It wouldn't surprise me if LHSI needs to do a number of amended filings and/or perhaps make changes/adjustments to the merger agreement.

Regarding that "7M shares representing 65.25% of our stock" statement.....

1) I'm pretty sure that the 10.7M shares (7M/.6525 = 10.7M)indicated in that statement is the number of total shares outstanding if all the warrants (2.5M) are exercised. Note this statement in one of the 8-k filings (page 41).....

Assuming the exercise of the Warrants, as of September 30, 2009, we have 10,728,571 shares of common stock outstanding.

http://knobias.10kwizard.com/filing.php?param=&ipage=6546869&DSEQ=1&SEQ=&SQDESC=SECTION_BODY&exp=

2) Subtract the 2.5M warrants from that 10.7M number and you get 8.2M shares outstanding. That number matches the number you can derive from the press releases, and it also matches the number that can be found in the main text bodies of the various filings.

3) 8.2M post merger shares minus the 7M shares issued to the China company gives you 1.2M shell shares. So just prior to issuing those 7M shares to the China company we know there are only 1.2M shell shares outstanding. And this is where we run into a problem. As I mentioned in my previous post, it is very clear that after the cancellation of the 5M shares from the CEO there are 4.3M shell shares outstanding. Since there are no references of any kind in the filings regarding any further/additional cancellation of those shell shares prior to the merger, the only other way to get those 4.3M shares down to the 1.2M level is via a 2:7 reverse split. From the 8-k filing (page 41).....

Pursuant to the share exchange agreement of September 30, 2009, Eric Anderson transfer red 5,000,000 shares of common stock of Lid Hair Studios to Lid Hair Studios in exchange for 100% of the issued and outstanding shares of Lid Hair Studios’ wholly-owned subsidiary, Belford Enterprises B.C. Ltd., d/b/a Lid Hair Studio. Lid Hair Studios cancelled the shares of common stock received from Eric Anderson prior to affecting the reverse stock split which reduce the amount of common stock then issued and outstanding. Eric Anderson and Lid Hair Studios entered into a binding agreement with respect to such transaction on September 30, 2009.

http://knobias.10kwizard.com/filing.php?param=&ipage=6546869&DSEQ=1&SEQ=&SQDESC=SECTION_BODY&exp=

So it certainly appears to me that the only way that the 8.2M share count can be accurate, as agreed upon by both the press releases and the main body text of the filings, is if LHSI's 4.3M shell shares underwent a 2:7 reverse split prior to the 7M shares being issued to the China company. And as far as I have been able to determine, that reverse split never occurred. The numbers don't seem to work any other way.