|
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was
determined):
|
|
For
purposes of calculating the fee pursuant to Rule 0-11, the Registrant
valued the aggregate cash, securities and other property received
by the
Registrant in the disposition of substantially all of its assets
to be
equal to $800,000, i.e., the value realized to the Registrant by
transferring its operating subsidiary. The book value of
the operating subsidiary which is to be transferred was calculated
as
follows: $ 2.9m of assets as reflected on the Registrant's
balance sheet as of September 30, 2007 less $4.2m of liabilities
reflected
on that balance sheet plus $500,000 of liabilities of the operating
subsidiary which will be transferred to and become the obligation of
Registrant, which equals a book value of the operating subsidiary
(as
transferred) of
($800,000).
|
|
(4)
|
Proposed
maximum aggregate value of
transaction:
|
|
|
$800,000
|
|
(5)
|
Total
fee paid:
|
|
|
$160.00
|
|
¨
|
Fee
paid previously with preliminary
materials.
|
|
¨
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
|
|
(1)
|
Amount
previously paid:
|
|
|
(2)
|
Form,
Schedule or Registration Statement
No.:
|
|
|
(3)
|
Filing
Party:
|
|
|
(4)
|
Date
Filed:
|
|
1.
|
To
approve an amendment to the Company’s Certificate of Incorporation, as
previously amended, to (i) change the name of the Company to Trist
Holdings, Inc. and (ii) increase the number of shares of authorized
common
stock from 100,000,000 to
2,000,000,000.
|
2.
|
To
approve the Securities Exchange Agreement dated as of November 1,
2007, by
and among the Company and Landbank Acquisition LLC, pursuant to which
the
Company would transfer substantially all of its assets, namely its
operating subsidiary, Landbank LLC, to Landbank Acquisition LLC,
its
majority stockholder.
|
Name
Change
|
The
amendment to the Certificate of Incorporation of Landbank Group,
Inc., a
Delaware corporation (which we refer to as “the Company,” “we,” “us” or
“our”) provides for a change of the Company’s name to Trist Holdings,
Inc.
See
“NAME CHANGE AND INCREASE IN AUTHORIZED COMMON STOCK”.
|
Increase
in Authorized Shares
|
The
amendment also provides for an increase in the number of authorized
shares
of common stock from 100,000,000 to 2,000,000,000.
See
“NAME CHANGE AND INCREASE IN AUTHORIZED COMMON STOCK”.
|
Recommendations
of the Board of Directors and Written Consent of the Majority of
the
Company’s Stockholders
|
Our
Board of Directors unanimously approved the Amendment to the Company’s
Certificate of Incorporation, a copy of which is attached as Appendix
“A”
(the “Amendment”). The members of the Board of Directors
unanimously believe that the Amendment is fair to, and in the best
interests of, our stockholders. The Amendment was also approved
by a majority of the holders of our common stock by written consent
on
November 16, 2007.
See
also “NAME CHANGE AND INCREASE IN AUTHORIZED COMMON
STOCK.”
|
The
Companies
|
||
Landbank
Group, Inc.
|
We
engage in business through our wholly-owned subsidiary, Landbank
LLC, a
California limited liability company (“LLC”). We make bulk
acquisitions of parcels of land, primarily through the real property
tax
lien foreclosure process. The bulk acquisitions are then divided
into
smaller parcels for resale (the “Business”).
|
|
Landbank
Acquisition LLC
|
Landbank
Acquisition LLC, a California limited liability company (“Investor”), was
formed in May 2007. As a result of a contribution of stock and
promissory notes by its members in September 2007, Investor became
the
majority stockholder of the Company. Investor holds demand
promissory notes due and payable by LLC in the aggregate principal
amount
of $3,032,657.47 (the “Notes”). At this time,
Investor’s only line of business has been to hold the shares of Company
common stock and the Notes. Investor’s principal executive
offices are located at 7030 Hayvenhurst Ave., Van Nuys, CA
91406.
|
|
The
Securities Exchange Agreement
|
||
The
Effect of the LLC Transfer
|
On
November 1, 2007, we and Investor entered into the Securities Exchange
Agreement, a copy of which is attached hereto as Appendix
“B”. Pursuant to the Securities Exchange Agreement, we will
transfer, and Investor agreed to accept, at the closing of the
transactions contemplated by that agreement (the “Closing”), all of our
respective rights in and to the LLC and its Business. In this
Information Statement, we refer to the transfer transaction as the
“LLC
Transfer.”
See
also “THE SECURITIES EXCHANGE AGREEMENT – LLC Transfer.”
|
|
Issuance
of Shares
|
In
connection with the LLC Transfer, we will issue and deliver to Investor
79,311,256 shares of Company common stock at the Closing (the “Share
Issuance” and together with the LLC Transfer, the
“Transactions”). Following the Share Issuance, Investor will
own approximately 95% of our outstanding common stock. Investor
and the Company will enter into a Registration Rights Agreement,
a copy of
which is attached hereto as Appendix “C”, to provide Investor with certain
demand and piggyback registration rights with respect to the shares
received in the Share Issuance.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Issuance of
Shares.”
|
|
Debt
Assignment
|
Prior
to the Closing, $500,000 of the outstanding Notes shall be
assigned
from
LLC as debtor to the Company as debtor (the “Assigned Debt”).
See
also “THE SECURITIES EXCHANGE AGREEMENT – Debt Assignment.”
|
|
Assumption
of Liabilities
|
Investor
has agreed that, upon the Closing, it shall assume all of the liabilities
of both the Company and the LLC incurred prior to the Closing, other
than
the Assigned Debt.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Assumption of
Liabilities.”
|
Indemnification
for Liabilities
|
Each
of Investor and Family Products LLC, a member of Investor, has agreed
to
indemnify the Company for any losses arising from the Business related
to
events occurring prior to Closing and for all of the assumed
liabilities.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Indemnification for
Liabilities.”
|
|
Conditions
that Must Be Satisfied Prior to the Closing of the LLC
Transfer
|
Completion
of the LLC Transfer is subject to various conditions (any of which
may be
waived by the party benefited by the condition), including among
them:
• the
truth and accuracy of the representations and warranties of Company
and of
Investor;
• performance
of all covenants by Company and Investor;
• approval
by the Company’s board and stockholders;
• delivery
of the Registration Rights Agreement;
• the
absence of any material adverse change in the Business; and
• the
amendment of the Company’s Certificate of Incorporation to change the name
of the Company and to increase the number of authorized shares of
Common
Stock from 100,000,000 to 2,000,000,000.
As
described elsewhere in this Information Statement, the Company’s Board of
Directors, and stockholders holding a majority of the issued and
outstanding shares of the Company’s common stock, have approved the
Securities Exchange Agreement (and the transactions contemplated
by that
agreement) and the contemplated amendment to the Company’s Certificate of
Incorporation.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Conditions of the LLC
Transfer.”
|
|
Termination
of the Securities Exchange Agreement
|
The
Securities Exchange Agreement may be terminated, and the LLC Transfer
abandoned, at any time prior to the Closing by written mutual consent
of
us and Investor.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Termination.”
|
|
Effect
of Termination
|
If
the Securities Exchange Agreement is terminated, it will become
void
and there shall be no liability or obligation on the part of any
party
hereto or their respective, subsidiaries, stockholders, directors,
officers, employees, agents or other representatives.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Effect of
Termination.”
|
Expenses
of the LLC Transfer
|
Whether
or not the LLC Transfer is consummated, except as otherwise provided
in
the Securities Exchange Agreement, each party bears its own costs
and
expenses related to the LLC Transfer. However, in the event
that the Transactions are commenced, at or prior to the Closing,
the LLC
shall be responsible for such costs and expenses.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Expenses.”
|
|
Accounting
Treatment
|
The
LLC Transfer is intended to be treated as a “disposition” in accordance
with generally accepted accounting principles in the United
States.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Accounting
Treatment.”
|
|
Federal
Income Tax Considerations
|
There
are no income tax consequences to the Company stockholders as a result
of
the LLC Transfer.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Material Federal Income Tax
Consequences.”
|
|
Governing
Law and Regulatory Requirements
|
Other
than with respect to complying with the general corporation law of
the
State of Delaware and the applicable federal and state securities
laws,
the Company is not aware of any governmental or regulatory requirements
with which it must comply in completing the LLC Transfer.
See
also “THE SECURITIES EXCHANGE AGREEMENT – Regulatory
Approvals.”
|
|
Opinion
of Financial Advisors
|
In
connection with the LLC Transfer, our Board of Directors received
an
opinion from Gemini Valuation Services, LLC or “GVS,” as to the fairness
of the LLC Transfer and the other transactions contemplated by the
Securities Exchange Agreement, as they may be viewed together, to
the
existing holders of our common stock, from a financial point of
view. The full text of GVS’s written opinion, dated October 23,
2007, is attached to this information statement as Appendix “D”. We
encourage you to read the opinion carefully in its entirety for a
description of the assumptions made, procedures followed, matters
considered and limitations on the review undertaken.
See
also
“OPINION OF FINANCIAL ADVISORS.”
|
|
Recommendations
of the Board of Directors and Written Consent of the Majority of
the
Company’s Stockholders
|
Our
Board of Directors unanimously approved the Securities Exchange Agreement
and the transactions contemplated thereby. The members of the
Board of Directors unanimously believe that the LLC Transfer and
the
transactions contemplated by the Securities Exchange Agreement, are
fair
to, and in the best interests of, our stockholders. The conclusion
of the
Board of Directors with respect to the LLC Transfer and the transactions
contemplated by the Securities Exchange Agreement was based upon
a number
of factors that are discussed in this Information
Statement. The Securities Exchange Agreement, and the
transactions contemplated thereby, including the LLC Transfer, was
also
approved by a majority of the holders of our common stock by written
consent on November 16, 2007.
See
also “BACKGROUND OF THE LLC TRANSFER.”
|
|
NAME
OF BENEFICIAL OWNER
|
OWNERSHIP
|
||
Executive
Officers and Directors
|
Amount
of Beneficial Ownership
|
Percent
of Beneficial Ownership
|
|
Ray
Gaytan
11400
Olympic Blvd.
Los
Angeles, CA 90064
|
4,680
|
*
|
|
All
Executive Officers and Directors as a Group (1 person)
|
4,680
|
*
|
|
5%
Stockholders
|
|||
Landbank
Acquisition LLC
7030
Hayvenhurst Ave.
Van
Nuys, CA 91406
|
5,466,668
|
55.1%
|
|
John
and Joyce Beck
7030
Hayvenhurst Ave.
Van
Nuys, CA 91406
|
2,733,334
|
27.5%
|
|
*
Less than 1%.
|
·
|
did
not present us with any proposal for a potential
transaction;
|
·
|
subsequently
retracted their interest in us;
and/or
|
·
|
demonstrated
poor historical financial performance, or otherwise lacked established
business operations or successful business strategies, and therefore
did
not demonstrate to the satisfaction of the board and officers their
ability to obtain the necessary financing to complete a transaction
or to
manage our assets in a manner that would increase revenues or stockholder
value in general.
|
·
|
a
review of our results of operations and financial condition, including
our
recent operating losses;
|
·
|
our
lack of any other viable financing or strategic
transactions;
|
·
|
our
declining cash balances;
|
·
|
the
Board of Directors’ determination of the value of the LLC and its
Business;
|
·
|
the
Company and LLC’s outstanding obligations;
and
|
·
|
the
general economic downturn.
|
·
|
organization
and similar corporate matters;
|
·
|
authorization,
execution, delivery, performance and enforceability of the Securities
Exchange Agreement and related
matters;
|
·
|
ownership
of the properties, rights, interests and other tangible and intangible
assets necessary to conduct the Business as currently conducted;
and
|
·
|
issuance
of the Shares and their exemption from registration under the Securities
Act.
|
·
|
the
truth and accuracy of the representations and warranties of Company
and of
Investor;
|
·
|
performance
of all covenants by Company and
Investor;
|
·
|
approval
by the Company’s board and
stockholders;
|
·
|
delivery
of the Registration Rights
Agreement;
|
·
|
the
absence of any material adverse change in the Business;
and
|
·
|
the
amendment of the Company’s Certificate of Incorporation to change the name
of the Company and to increase the number of authorized shares of
Common
Stock from 100,000,000 to
2,000,000,000.
|
1.
|
reviewed
and analyzed the terms of the Proposed
Transaction;
|
2.
|
reviewed
and analyzed available historical business and financial information
relating to Landbank, including (i) audited and unaudited financial
statements for the fiscal years ended December 31, 2005 and December
31,
2006;
|
3.
|
reviewed
and analyzed the inventory of properties currently owned by
Landbank;
|
4.
|
reviewed
and analyzed publicly-traded companies reasonably comparable to
Landbank;
|
5.
|
reviewed
and analyzed the industry in which Landbank
operates;
|
6.
|
conversed
with the management team of Landbank regarding, amongst other things,
the
history of the company, the Proposed Transaction, and the outlook
of the
Company; and
|
7.
|
conducted
such other studies, analyses and inquiries as it deemed appropriate
for
purposes of its opinion.
|
(i)
|
Annual
Report on Form 10-KSB, for the fiscal year ended December 31,
2006.
|
(ii)
|
Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 2007, June
30,
2007 and September 30, 2007.
|
(iii)
|
Current
Reports on Form 8-K filed November 21, 2007, November 7, 2007, September
28, 2007, September 18, 2007, August 16, 2007, July 30, 2007 and
June 22,
2007.
|
|
a.
|
Article
One is hereby amended to read as
follows:
|
|
“The
name of the Corporation is Trist Holdings,
Inc.”
|
“THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE
SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE
SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION
OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED.”
|
1.
|
reviewed
and analyzed the terms of the Proposed
Transaction;
|
2.
|
reviewed
and analyzed available historical business and financial information
relating to Landbank, including (i) audited and unaudited financial
statements for the fiscal years ended December 31, 2005 and December
31,
2006;
|
3.
|
reviewed
and analyzed the inventory of properties currently owned by
Landbank;
|
4.
|
reviewed
and analyzed publicly-traded companies reasonably comparable to
Landbank;
|
5.
|
reviewed
and analyzed the industry in which Landbank operates;
and
|
6.
|
conversed
with the management team of Landbank regarding, amongst other
things, the history of the company, the Proposed Transaction,
and the outlook of the Company.
|
(MARK
ONE)
|
|
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the fiscal year ended December 31,
2006
|
OR
|
|
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the transition period from ______________ to
______________
|
Delaware
|
20-1915083
|
(State
or other jurisdiction of
incorporation
or organization)
|
(IRS
Employer
Identification
No.)
|
7030
Hayvenhurst Avenue, Van Nuys, California
|
91406
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of each class
|
Name
of each exchange on which registered
|
Common
Stock, $0.0001 Par Value
|
None
|
|
|
PAGE
|
PART
I.
|
|
|
|
|
|
Item
1.
|
3
|
|
Item
2.
|
10
|
|
Item
3.
|
12
|
|
Item
4.
|
12
|
|
|
|
|
PART
II.
|
|
|
|
|
|
Item
5.
|
13
|
|
Item
6.
|
14
|
|
Item
7.
|
26
|
|
Item
8.
|
46
|
|
Item
8A.
|
46
|
|
Item
8B.
|
46
|
|
|
|
|
PART
III.
|
|
|
|
|
|
Item
9.
|
46
|
|
Item
10.
|
48
|
|
Item
11.
|
52
|
|
Item
12.
|
53
|
|
Item
13.
|
56
|
|
Item
14.
|
57
|
|
|
|
|
·
|
changes
in general or local economic
conditions;
|
·
|
changes
in supply of or demand for similar or competing properties in the
area;
|
·
|
bankruptcies,
financial difficulties or lease defaults by
customers;
|
·
|
changes
in interest rates and availability of permanent mortgage financing
that
may render the sale of a property difficult or unattractive or
otherwise
reduce the returns to stockholders;
|
·
|
changes
in governmental rules, regulations, and fiscal policies, including
changes
in tax, real estate, environmental, and zoning
laws;
|
·
|
periods
of high interest rates and tight money
supply.
|
Period
Ended
|
Inventory
|
Inventory
Value
|
||||
Year
Ended 12/31/05
|
Individual
Lots
|
$
|
1,137,625
|
|||
(audited)
|
Bulk
Tracts
|
1,298,853
|
||||
|
$
|
2,436,478
|
||||
Period
Ended 12/31/06
|
Individual
Lots
|
$
|
2,047,541
|
|||
(audited)
|
Bulk
Tracts
|
1,189,722
|
||||
$
|
3,237,263
|
Actively
Marketed
|
Being
Prepared for Marketing
|
Total
|
|||||||
Arizona
|
$
|
29,614
|
$
|
-
|
$
|
29,614
|
|||
Colorado
|
314,128
|
-
|
314,128
|
||||||
Florida
|
19,600
|
-
|
19,600
|
||||||
Mexico
|
-
|
298,348
|
298,348
|
||||||
Michigan
|
15,919
|
-
|
15,919
|
||||||
Nevada
|
-
|
855,476
|
855,476
|
||||||
New
Mexico
|
60,285
|
-
|
60,285
|
||||||
Oklahoma
|
21,917
|
-
|
21,917
|
||||||
Pennsylvania
|
359,512
|
32,748
|
392,260
|
||||||
Texas
|
1,226,566
|
3,150
|
1,229,716
|
||||||
Total
|
$
|
2,047,541
|
$
|
1,189,722
|
$
|
3,237,263
|
Votes
For
|
Votes
Against
|
Abstentions
|
||
8,404,682
|
None
|
None
|
Quarter
Ended
|
Price
Range(4)
|
|||
|
High($)
|
Low($)
|
||
|
Quarter
ended 12/31/04
|
(1)
(2)
|
$
65.00
|
$
11.00
|
|
Quarter
ended 3/31/05
|
(3)
|
$
13.00
|
$
4.00
|
|
Quarter
ended 6/30/05
|
(3)
|
$
5.50
|
$
1.20
|
|
Quarter
ended 9/30/05
|
(3)
|
$
4.00
|
$
0.50
|
Quarter
ended 12/31/05
|
(3)
|
$
1.50
|
$
0.50
|
Quarter
ended 03/31/06
|
(3)
|
$
23.00
|
$
0.50
|
|
Quarter
ended 06/30/06
|
(3)
|
$
1.40
|
$
0.20
|
FY
2006
|
FY
2005
|
||||||||||||
Properties
Sold
|
Revenue
(000s)
|
Properties
Sold
|
Revenue
(000s)
|
||||||||||
Texas
|
1,588
|
$
|
2,059.5
|
701
|
$
|
1,174.5
|
|||||||
Oklahoma
|
464
|
646.1
|
67
|
89.8
|
|||||||||
Pennsylvania
|
504
|
1,211.3
|
-
|
-
|
|||||||||
New
Mexico
|
53
|
217.0
|
-
|
-
|
|||||||||
Florida
|
23
|
183.2
|
-
|
-
|
|||||||||
Colorado
|
12
|
239.2
|
-
|
-
|
|||||||||
2,644
|
$
|
4,556.3
|
768
|
$
|
1,264.3
|
FY
2006
|
FY
2005
|
||||||||||||
Total
$ (000s)
|
As
% of Net Revenue
|
Total
$ (000s)
|
As
% of Net Revenue
|
||||||||||
Cost
of goods sold:
|
|||||||||||||
Land
costs
|
$
|
2,099.6
|
46.1
|
%
|
$
|
640.5
|
50.7
|
%
|
|||||
Royalties
to affiliate
|
668.1
|
14.7
|
%
|
177.9
|
14.1
|
%
|
|||||||
Merchant
fees
|
112.3
|
2.5
|
%
|
24.9
|
2.0
|
%
|
|||||||
Processing
fees
|
210.2
|
4.6
|
%
|
40.3
|
3.2
|
%
|
|||||||
Commissions
|
189.4
|
4.2
|
%
|
41.6
|
3.3
|
%
|
|||||||
Dues
and Taxes
|
35.8
|
0.6
|
%
|
8.7
|
0.6
|
%
|
|||||||
$
|
3,315.4
|
72.7
|
%
|
$
|
933.9
|
73.9
|
%
|
FY
2006
|
FY
2005
|
||||||
(000s)
|
(000s)
|
||||||
Salaries
and related taxes
|
$
|
617.9
|
$
|
36.4
|
|||
Legal
fees
|
220.7
|
24.0
|
|||||
Investor
relations expenses
|
159.7
|
-
|
|||||
Professional
fees - related party
|
126.8
|
-
|
|||||
Professional
fees
|
81.4
|
95.4
|
|||||
Accounting/audit
expenses
|
44.7
|
-
|
|||||
Travel
|
127.0
|
46.0
|
|||||
Office
rent - related party
|
22.2
|
12.6
|
|||||
Stock
issued to consultants
|
374.7
|
-
|
|||||
Inventory
impairment
|
68.0
|
-
|
|||||
Other
|
35.5
|
(32.0
|
)
|
||||
$
|
1,878.6
|
$
|
182.4
|
FY
2006 net loss
|
$
|
1,199,070
|
||
Less
stock issued for services (non-cash)
|
(374,667
|
)
|
||
Less
fees to Piping Partners Holdings, LLC
|
(235,000
|
)
|
||
Less
merger-related fees
|
(140,000
|
)
|
||
Adjusted
FY 2006 net loss
|
$
|
449,403
|
Actively
Marketed
|
Being
Prepared for Marketing
|
Total
|
|||||||
Arizona
|
$
|
29,614
|
$
|
-
|
$
|
29,614
|
|||
Colorado
|
314,128
|
-
|
314,128
|
||||||
Florida
|
19,600
|
-
|
19,600
|
||||||
Mexico
|
-
|
298,348
|
298,348
|
||||||
Michigan
|
15,919
|
-
|
15,919
|
||||||
Nevada
|
-
|
855,476
|
855,476
|
||||||
New
Mexico
|
60,285
|
-
|
60,285
|
||||||
Oklahoma
|
21,917
|
-
|
21,917
|
||||||
Pennsylvania
|
359,512
|
32,748
|
392,260
|
||||||
Texas
|
1,226,566
|
3,150
|
1,229,716
|
||||||
Total
|
$
|
2,047,541
|
$
|
1,189,722
|
$
|
3,237,263
|
As
of 12/31/06
|
As
of 12/31/05
|
|||||
Rent
|
$
|
4,663
|
$
|
-
|
||
Insurance
|
13,417
|
-
|
||||
Merchant
fees
|
18,730
|
26,304
|
||||
Sales
commissions
|
31,530
|
43,841
|
||||
Royalties
to an affiliate
|
107,227
|
202,882
|
||||
Processing
fees
|
38,608
|
51,600
|
||||
$
|
214,175
|
$
|
324,627
|
As
of 12/31/06
|
As
of 12/31/05
|
|||||
Accounts
payable
|
$
|
163,175
|
$
|
32,187
|
||
Accrued
expenses
|
330,448
|
22,905
|
||||
Due
to related parties
|
2,640,875
|
1,493,288
|
||||
Reserve
for returns
|
-
|
26,148
|
||||
Current
portion - bank loan
|
39,195
|
59,739
|
||||
Deferred
revenue
|
794,667
|
1,333,367
|
||||
$
|
3,968,360
|
$
|
2,967,634
|
Page
|
|
28
|
|
29
|
|
29
|
|
30
|
|
31
|
|
32
|
|
33
|
LandBank
Group, Inc. and Subsidiary
|
||||
Consolidated
Balance Sheet
|
||||
As
of December 31, 2006
|
||||
ASSETS
|
||||
Current
assets
|
||||
Cash
& cash equivalents
|
$
|
265,970
|
||
Inventory
- land parcels
|
3,237,263
|
|||
Other
receivable
|
8,542
|
|||
Prepaid
expenses
|
214,175
|
|||
Total
assets
|
$
|
3,725,950
|
||
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
||||
Current
liabilities
|
||||
Accounts
payable
|
$
|
163,175
|
||
Accrued
expenses
|
330,448
|
|||
Due
to related parties
|
2,640,875
|
|||
Loan
payable - current portion
|
39,195
|
|||
Deferred
income
|
794,667
|
|||
Total
current liabilities
|
3,968,360
|
|||
Loan
payable - non-current portion
|
473,686
|
|||
Shareholders'
deficit
|
||||
Common
stock, 100,000,000 shares authorized; $0.0001
|
||||
par
value; 9,835,331 issued and outstanding
|
984
|
|||
Additional
paid in capital
|
399,617
|
|||
Accumulated
deficit
|
(1,116,697
|
)
|
||
Total
shareholders' deficit
|
(716,096
|
)
|
||
Total
liabilities and shareholders' deficit
|
$
|
3,725,950
|
Landbank
Group Inc. and Subsidiary
|
|||||||
Consolidated
Statements of Operations
|
|||||||
For
The Years Ended December 31, 2006 and 2005
|
|||||||
2006
|
2005
|
||||||
Revenue,
net
|
$
|
4,556,266
|
$
|
1,264,313
|
|||
Cost
of revenue
|
|||||||
Direct
selling expenses
|
2,647,241
|
756,071
|
|||||
Royalty
to related party
|
668,159
|
177,897
|
|||||
Total
cost of sales
|
3,315,400
|
933,968
|
|||||
Gross
profit
|
1,240,866
|
330,345
|
|||||
Operating
expenses
|
|||||||
Rent,
related party
|
22,226
|
12,570
|
|||||
Professional
fees, related parties
|
126,805
|
10,650
|
|||||
Professional
fees
|
433,167
|
-
|
|||||
Inventory
impairment
|
68,000
|
-
|
|||||
Legal
fees
|
220,693
|
24,006
|
|||||
Directors
and officers compensation
|
83,049
|
-
|
|||||
General
& administrative expenses
|
924,683
|
135,194
|
|||||
Total
operating expenses
|
1,878,623
|
182,420
|
|||||
Income
(loss) from operations
|
(637,757
|
)
|
147,925
|
||||
Other
expenses
|
|||||||
Merger-related
costs
|
(140,000
|
)
|
-
|
||||
Professional
fees
|
(235,000
|
)
|
|||||
Interest
expense - bank
|
(54,135
|
)
|
(19,118
|
)
|
|||
Interest
expense - related parties
|
(129,986
|
)
|
(40,434
|
)
|
|||
Total
other expenses
|
(559,121
|
)
|
(59,552
|
)
|
|||
Income
(loss) before income taxes
|
(1,196,878
|
)
|
88,373
|
||||
Provision
for income taxes
|
2,192
|
6,000
|
|||||
Net
income (loss)
|
$
|
(1,199,070
|
)
|
$
|
82,373
|
||
Basic
and diluted weighted average number
|
|||||||
of
common stock outstanding
|
9,627,872
|
8,200,000
|
|||||
Basic
and diluted net income (loss) per share
|
$
|
(0.12
|
)
|
$
|
0.01
|
LandBank
Group, Inc. and Subsidiary
|
||||||||||||||||
Consolidated
Statements of Shareholders' Equity (Deficit)
|
||||||||||||||||
As
of December 31, 2006
|
||||||||||||||||
Additional
|
Retained
|
|||||||||||||||
Common
Stock
|
Paid
in
|
Earnings
|
Shareholders'
|
|||||||||||||
Shares
|
Amount
|
Capital
|
(Deficit)
|
Equity
(Deficit)
|
||||||||||||
Balance
as of January 1, 2005
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Shares
issued per merger
|
8,200,000
|
820
|
(820
|
)
|
-
|
-
|
||||||||||
Net
income for the year ended December 31, 2005
|
-
|
-
|
-
|
82,373
|
82,373
|
|||||||||||
Balance
as of December 31, 2005
|
8,200,000
|
820
|
(820
|
)
|
82,373
|
82,373
|
||||||||||
Recapitalization
|
1,005,200
|
101
|
(101
|
)
|
-
|
-
|
||||||||||
Shares
issued to consultants
|
624,445
|
62
|
374,605
|
-
|
374,667
|
|||||||||||
Shares
issued for rounding up for split
|
5,686
|
1
|
(1
|
)
|
-
|
-
|
||||||||||
Amortization
of options granted to Directors
|
-
|
-
|
25,934
|
-
|
25,934
|
|||||||||||
Net
loss for the year ended December 31, 2006
|
-
|
-
|
-
|
(1,199,070
|
)
|
(1,199,070
|
)
|
|||||||||
Balance
as of December 31, 2006
|
9,835,331
|
$
|
984
|
$
|
399,617
|
$
|
(1,116,697
|
)
|
$
|
(716,096
|
)
|
LandBank
Group, Inc. and Subsidiary
|
|||||||
Consolidated
Statements of Cash Flows
|
|||||||
For
the Years Ended December 31, 2006 and 2005
|
|||||||
|
|
||||||
2006
|
2005
|
||||||
Cash
flows from operating activities:
|
|
|
|||||
Net
income (loss)
|
$
|
(1,199,070
|
)
|
$
|
82,373
|
||
Adjustments
to reconcile net income (loss) to net cash
|
|||||||
used
in operating activities:
|
|||||||
Shares
issued for service
|
374,667
|
-
|
|||||
Amortization
of options granted to Directors
|
25,934
|
-
|
|||||
Inventory
Impairment
|
68,000
|
-
|
|||||
Changes
in current assets and liabilities:
|
|||||||
(Increase)
decrease in current assets
|
|||||||
Inventory
- land parcels
|
(868,787
|
)
|
(2,436,478
|
)
|
|||
Other
receivable
|
(8,542
|
)
|
-
|
||||
Prepaid
expenses
|
110,452
|
(324,627
|
)
|
||||
Increase
(decrease) in current liabilities
|
|||||||
Accounts
payable
|
130,990
|
32,187
|
|||||
Accrued
expenses
|
307,543
|
22,905
|
|||||
Reserve
for returns
|
(26,148
|
)
|
26,148
|
||||
Deferred
income
|
(538,700
|
)
|
1,333,367
|
||||
Total
adjustments
|
(424,591
|
)
|
(1,346,498
|
)
|
|||
Net
cash used in operating activities
|
(1,623,661
|
)
|
(1,264,125
|
)
|
|||
Cash
flows from financial activities
|
|||||||
Due
to related parties
|
1,318,034
|
1,322,841
|
|||||
Repayment
of loans
|
(59,828
|
)
|
572,709
|
||||
Net
cash provided by financial activities
|
1,258,206
|
1,895,550
|
|||||
Net
change in cash and cash equivalents
|
(365,455
|
)
|
631,425
|
||||
Cash
and cash equivalents - beginning balance
|
631,425
|
-
|
|||||
Cash
and cash equivalents - ending balance
|
$
|
265,970
|
$
|
631,425
|
|||
Supplemental
disclosure of cash flows information:
|
|||||||
Taxes
paid
|
$
|
8,192
|
$
|
-
|
|||
Interest
paid
|
$
|
54,135
|
$
|
19,118
|
1. |
Requires
an entity to recognize a servicing asset or servicing liability
each time
it undertakes an obligation to service a financial asset by entering
into
a servicing contract.
|
2. |
Requires
all separately recognized servicing assets and servicing liabilities
to be
initially measured at fair value, if practicable.
|
3. |
Permits
an entity to choose ‘Amortization method’ or ‘Fair value measurement
method’ for each class of separately recognized servicing assets and
servicing liabilities.
|
4. |
At
its initial adoption, permits a one-time reclassification of
available-for-sale securities to trading securities by entities
with
recognized servicing rights, without calling into question the
treatment
of other available-for-sale securities under Statement 115, provided
that
the available-for-sale securities are identified in some manner
as
offsetting the entity’s exposure to changes in fair value of servicing
assets or servicing liabilities that a servicer elects to subsequently
measure at fair value.
|
5. |
Requires
separate presentation of servicing assets and servicing liabilities
subsequently measured at fair value in the statement of financial
position
and additional disclosures for all separately recognized servicing
assets
and servicing liabilities.
|
1. |
A
brief description of the provisions of this Statement
|
2. |
The
date that adoption is required
|
3. |
The
date the employer plans to adopt the recognition provisions of
this
Statement, if earlier.
|
As
of December 31, 2006
|
As
of December 31, 2005
|
||||||||||||||||||
Principal
|
Interest
|
Total
|
Principal
|
Interest
|
Total
|
||||||||||||||
John
Beck's Amazing Profits, LLC
|
$
|
448,377
|
$
|
(5,179
|
)
|
$
|
443,198
|
$
|
330,015
|
$
|
-
|
$
|
330,015
|
||||||
Mentoring
of America, LLC
|
60,788
|
6,311
|
67,099
|
176,381
|
1,821
|
178,202
|
|||||||||||||
HG,
Inc.
|
1,542,675
|
99,218
|
1,641,893
|
467,405
|
9,324
|
476,729
|
|||||||||||||
HG
Marketing, LLC
|
382,606
|
67,677
|
450,283
|
482,606
|
25,736
|
508,342
|
|||||||||||||
Family
Products, LLC
|
-
|
2,393
|
2,393
|
(174,000
|
)
|
3,553
|
(170,447
|
)
|
|||||||||||
Gaytan,
Baumblatt, Leevan
|
36,009
|
-
|
36,009
|
-
|
-
|
-
|
|||||||||||||
$
|
2,470,455
|
$
|
170,420
|
$
|
2,640,875
|
$
|
1,282,407
|
$
|
40,434
|
$
|
1,322,841
|
Years
ended
|
|||
December
31,
|
|||
2007
|
$
|
39,195
|
|
2008
|
43,299
|
||
2009
|
47,833
|
||
2010
|
52,842
|
||
2011
|
58,375
|
||
Thereafter
|
271,337
|
||
Total
|
512,881
|
||
Current
portion
|
39,195
|
||
Long-term
portion
|
$
|
473,686
|
During
the year ended December 31, 2006, the Company recorded an inventory
impairment charge of $68,000 in relation to the write-down of
the
carrying, or recorded, cost of properties owned by the Company
in
Montgomery County, Texas. As stated above in note 1, the Company
performs
quarterly reviews of its inventory holdings to identify any potential
inventory impairment. As a result of the Company’s review for the quarter
ending December 31, 2006, several groups of properties within
its
Montgomery County, Texas holdings were identified as impaired
due to
zoning issues, title issues, the poor quality of the property,
or a
combination of the three. As a result, the Company’s estimate of the fair
market value (“FMV”) of these properties was significantly lower than
their recorded cost, so an impairment charge of $68,000 was recorded
to
bring the carrying cost of these properties in line with their
current
estimated FMV.
|
As
of 12/31/06
|
||||
Rent
|
$
|
4,663
|
||
Insurance
|
13,417
|
|||
Merchant
fees
|
18,730
|
|||
Sales
commissions
|
31,530
|
|||
Royalties
to an affiliate
|
107,227
|
|||
Processing
fees
|
38,608
|
|||
$
|
214,175
|
Post-Split
|
Pre-Split
|
||||||
Par Value | $ | 0.0001 | $ | 0.00001 | |||
Authorized number of shares | 100,000,000 | 1,000,000,000 | |||||
Shares issued and outstanding | 9,206,597 | 92,052,000 |
2007
|
2008
|
2009
|
||||||||
Arizona
Office
|
$
|
22,224
|
$
|
1,852
|
$
|
-
|
||||
Alameda
Office
|
25,245
|
28,392
|
2,366
|
|||||||
Total
|
$
|
47,469
|
$
|
30,244
|
$
|
2,366
|
Options
outstanding
|
Weighted
Average Exercise Price
|
Aggregate
Intrinsic Value
|
||||||||
Outstanding,
December 31, 2005
|
-
|
-
|
-
|
|||||||
Granted
|
1,400,000
|
$
|
0.02
|
-
|
||||||
Forfeited
|
-
|
-
|
-
|
|||||||
Exercised
|
-
|
-
|
||||||||
Outstanding
December 31, 2006
|
1,400,000
|
$
|
0.02
|
-
|
Outstanding
Options
|
Exercisable
Options
|
|||||
|
|
|||||
Exercise
Price
|
Number
|
Average
Remaining Contractual Life
|
Average
Exercise Price
|
Number
|
Average
Exercise Price
|
|
$0.0001
|
1,200,000
|
4.86
|
$0.0001
|
34,849
|
$0.0001
|
|
$0.12
|
200,000
|
4.99
|
$0.02
|
438
|
$0.02
|
|
1. |
Hired
additional Land Acquisition Specialists to help acquire more properties,
as well as a more diversified mix of properties, that may allow
the
Company to increase sales volume while minimizing the risk of saturating
a
particular market, or geographic location, and thereby adversely
affecting
the ability of the Company’s customers to resell their properties at a
profit.
|
2. |
Hired
consultants to assist the Company in securing additional financing
(see
note 13).
|
Name
|
Age
|
Position
Held and Tenure
|
||
Doug
Gravink
|
51
|
Director
and Chief Executive Officer
|
||
since
January 2006
|
||||
Gary
Hewitt
|
50
|
Director
and President and Secretary
|
||
since
January 2006
|
||||
John
Genesi
|
42
|
Chief
Financial Officer
|
||
since
July 2006
|
||||
John
Beck
|
64
|
Director
since January 2006
|
||
Ray
Gaytan
|
53
|
Director
since January 2006
|
||
|
||||
Stephen
Weber
|
58
|
Director
since January 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
|
||
Name
and Principal
|
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Option
Awards
|
|
|
Compensation
|
|
|
Total
|
Position
|
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|||||
(a)
|
(b)
|
|
(c)
|
|
(d)
|
|
(f)
|
|
(i)
|
|
(j)
|
|||||||
Douglas
Gravink (1)
|
2006
|
--
|
--
|
$
|
974(3
|
)
|
$
|
334,080(4
|
)
|
$
|
335,054
|
|||||||
Chief
Executive Officer
|
||||||||||||||||||
Gary
Hewitt (1)
|
2006
|
--
|
--
|
$
|
974(3
|
)
|
$
|
334,079(4
|
)
|
$
|
335,053
|
|||||||
President
and Secretary
|
||||||||||||||||||
John Genesi (2) | ||||||||||||||||||
Chief
Financial Officer
|
2006
|
$
|
57,115
|
--
|
--
|
--
|
$
|
57,115
|
·
|
Dividend
yield per share
|
$
0.00
|
|
|
|
·
|
Annualized
volatility
|
191.06%
|
|
|
|
·
|
Risk-free
interest rate
|
4.69%
|
|
|
|
·
|
Expected
life
|
5
years
|
|
|
|
·
|
Probability
of achieving market condition
|
Above
Average
|
|
|
|
·
|
Discount
Factor Applied to market condition
|
None
|
Option
Awards
|
||||||||||||||||
|
Number
of
|
Number
of
|
Equity
Incentive Plan
|
Option
|
Option
|
|||||||||||
|
Securities
Underlying
|
Securities
Underlying
|
Awards:
Number of
|
Exercise
|
Expiration
|
|||||||||||
Name
|
Unexercised
Options (#)
|
Unexercised
Options (#)
|
Securities
Underlying
|
Price
($)
|
Date
|
|||||||||||
|
Exercisable
|
Unexercisable
|
Unexercised
Unearned
|
|
|
|||||||||||
|
|
|
Options
(#)
|
|||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|||||||||||
Douglas
Gravink
|
--
|
--
|
100,000
(1
|
)
|
$
|
0.12
|
12/27/16
|
|||||||||
Gary
Hewitt
|
--
|
--
|
100,000
(1
|
)
|
$
|
0.12
|
12/27/16
|
|||||||||
John
Genesi
|
--
|
--
|
--
|
--
|
--
|
(1) |
On
December 28, 2006, both Messrs. Gravink and Hewitt were granted
an option
to purchase 100,000 shares of common stock at an exercise price
of $0.12
per share, the fair market value of our common stock on the date
of grant,
in consideration of their service as a director of the company.
Each of
the options vests as follows: 50% of the shares subject to each
option
will vest upon achievement of a specified performance goal related
to our
stock price and the remainder will vest on a quarterly basis
thereafter at
a rate of 25% per quarter. The options will not vest and the
options will
expire prior to the specified date in the table in the event
that the
performance goal is not achieved within the timeframe specified
by the
goal.
|
(2) |
The
options will expire earlier in the event the performance goal
is not met
within one year of the later of the (i) the date of grant or
(ii) the
listing of the Company's stock on the
OTCBB.
|
Name
(1)
|
Fees
Earned
|
Stock
|
Option
|
Non-Equity
|
Change
in Pension
|
All
Other
|
Total
($)
|
|||||||||||||||
|
or
Paid in
|
Awards
($)
|
Awards
($)
|
Incentive
Plan
|
Value
and
|
Compensation
($)
|
|
|||||||||||||||
|
Cash
($)
|
|
|
Compensation
($)
|
Nonqualified
|
|
|
|||||||||||||||
|
|
|
|
|
Deferred
|
|
|
|||||||||||||||
|
|
|
|
|
Compensation
|
|
|
|||||||||||||||
|
|
|
|
|
Earnings
($)
|
|
||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|||||||||||||||
Ray
Gaytan (2)
|
--
|
--
|
$
|
11,993
(3
|
)
|
--
|
--
|
$
|
126,805(4
|
)
|
$
|
138,798
|
||||||||||
Stephen
Weber (2)
|
--
|
--
|
$
|
11,993
(3
|
)
|
--
|
--
|
$
|
120,000(5
|
)
|
$
|
131,993
|
||||||||||
John
Beck
|
--
|
--
|
--
|
--
|
--
|
--
|
--(6
|
)
|
(1) |
This
table excludes information relating to Messrs. Gravink and Hewitt
as all
compensation earned in consideration of their services on the board
of
directors has been reported in the Summary Compensation Table above.
All
options granted to Messrs. Gravink and Hewitt were outstanding
as of
December 31, 2006.
|
(2) |
As
of December 31, 2006, each of Messrs. Gaytan and Weber held options
to
purchase an aggregate of 600,000 shares of our common stock, all
of which
remain outstanding.
|
(3) |
Both
Messrs. Gaytan and Weber were granted an option to purchase 600,000
shares
of common stock at an exercise price of $0.0001 per share on November
9,
2006 in consideration of their service as a director of the company.
Each
of the options vests according to the following schedule: 20% of
the
shares subject to each option vested on December 31, 2006 and 20%
of the
shares subject to each option vest each year thereafter. The fair
market
value of our common stock on the date of grant was $0.10 per share.
These
options were valued at $59,963 each on the date of grant using
the
Black-Sholes option pricing model in accordance with FAS 123R.
We expensed
$11,993 of this value for each option grant during 2006, representing
20%
of the total value of the option grant, with the remaining value
of the
option grant to be expensed over the remaining vesting period.
Assumptions
made in the valuation of stock options granted to Messrs. Gaytan
and Weber
are as follows:
|
·
|
Dividend
yield per share
|
$
0.00
|
|
|
|
·
|
Annualized
volatility
|
125.95%
|
|
|
|
·
|
Risk-free
interste rate
|
4.60%
|
|
|
|
·
|
Expected
life
|
5
years
|
|
|
|
(4)
|
Represents
fees totaling $126,805 paid to Gaytan, Baumblatt & Leevan, LLP in 2006
in relation to accounting services provided by this accounting
firm. Mr.
Gaytan is a partner in this firm.
|
(5)
|
Represents
consulting fees paid to Investment Capital Researchers, Inc. ("ICR"),
a
company owned by Mr. Weber for consulting services rendered to
Landbank,
LLC. Payment of these fees was made by issuing 200,000 shares of
the
Company's common stock, valued at
$120,000.
|
(6)
|
Excludes
profit participation received by Mr. Beck for services provided
to our
affiliate, John Beck Amazing Profits, LLC equal to 50% of any royalty
payments received by John Beck Amazing Profits, LLC from us. Also
excludes
salaries earned by Mr. Beck's three children who are employed as
acquisition specialists by the
Company.
|
(1)
Title
of Class
|
(2)
Name
and Address of Beneficial Owner
|
(3)
Amount
and Nature of Beneficial Ownership (1)
|
(4)
Percent
of Class (2)
|
|||
1.
Common
|
Doug
Gravink
7030
Hayvenhurst Ave.
Van
Nuys, CA 91406
|
2,733,334
|
27.8%
|
|||
2.
Common
|
Gary
Hewitt
7030
Hayvenhurst Ave.
Van
Nuys, CA 91406
|
2,733,333
|
27.8%
|
|||
3.
Common
|
John
Beck (3)
7030
Hayvenhurst Ave.
Van
Nuys, CA 91406
|
2,733,333
|
27.8%
|
|||
4.
Common
|
John
Genesi
7030
Hayvenhurst Ave.
Van
Nuys, CA 91406
|
-0-
|
-0-
|
|||
5.
Common
|
Ray
Gaytan (4)
11400
Olympic Blvd.
Los
Angeles, CA 90064
|
124,680
|
1.3%
|
|||
6.
Common
|
Stephen
Weber (5)
5808
Varna Ave.
Van
Nuys, CA 91401
|
320,000
|
3.2
%
|
|||
7.
Common
|
Directors
and Executive Officers as a
Group
(6 persons)
|
8,644,680
|
87.8%
|
(1)
|
"Beneficial
Owner" means having or sharing, directly or indirectly (i)
voting power,
which includes the power to vote or to direct the voting, or
(ii)
investment power, which includes the power to dispose or to
direct the
disposition, of shares of the common stock of an issuer. The
definition of
beneficial ownership includes shares, underlying options or
warrants to
purchase common stock, or other securities convertible into
common stock,
that currently are exercisable or convertible or that will
become
exercisable or convertible within 60 days. Unless otherwise
indicated, the
beneficial owner has sole voting and investment power.
|
(2)
|
Percentages
are based on 9,835,331 shares of common stock issued and outstanding
as of
December 31, 2006.
|
(3)
|
Held
as JTWRS with his wife.
|
(4)
|
Includes
120,000 shares subject to options exercisable within 60 days of
December
31, 2006.
|
(5)
|
Includes
200,000 shares issued to Investment Capital Researchers, Inc.
(“ICR”)
pursuant to an agreement dated August 1, 2005, and amended June
27, 2006
for the provision of advisory services to the Company.
Stephen Weber is the sole stockholder and director of ICR.
Includes 120,000 shares subject to options exercisable within 60
days of
December 31, 2006.
|
Principal
|
Interest
|
Total
|
|||||||
John
Beck's Amazing Profits, LLC
|
$
|
448,377
|
$
|
(5,179
|
)
|
$
|
443,198
|
||
Mentoring
of America, LLC
|
60,788
|
6,311
|
67,099
|
||||||
HG,
Inc.
|
1,542,675
|
99,218
|
1,641,893
|
||||||
HG
Marketing, LLC
|
382,606
|
67,677
|
450,283
|
||||||
Family
Products, LLC
|
-
|
2,393
|
2,393
|
||||||
$
|
2,434,446
|
$
|
170,420
|
$
|
2,604,866
|
Thomas
Makmann
|
50
|
%
|
||
Gregory
Pelletier
|
13
|
%
|
||
James
R. Kirkland
|
13
|
%
|
||
Douglas
Donsbach
|
13
|
%
|
||
Total
|
89
|
%
|
Gary
Hewitt
|
|
|
2,733,334
|
|
|
27.8
|
%
|
John
Beck
|
|
|
2,733,333
|
|
|
27.8
|
%
|
Doug
Gravink
|
|
|
2,733,333
|
|
|
27.8
|
%
|
|
|
|
8,200,000
|
|
|
83.4
|
%
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
|
|
|
|
2.1*
|
Stock
Purchase Agreement dated January 23, 2006 between iStorage Networks,
Inc.
and Landbank, LLC.
|
|
2.2*
|
Stock
Purchase Agreement dated January 23, 2006 between M. Thomas Makmann
and
iStorage Networks, Inc.
|
|
3.1*
|
Certificate
of Incorporation of the Company, formerly Camryn Information
Services,
Inc., dated May 13, 1997.
|
|
3.2*
|
Certificate
of Renewal and Revival of Charter dated October 29,
2004.
|
|
3.3*
|
Certificate
of Amendment to the Certificate of Incorporation to change name
to
iStorage Networks, Inc., dated November 8, 2004.
|
|
3.4*
|
Certificate
of Amendment to the Certificate of Incorporation to change name
to
Landbank Group, Inc., dated January 27, 2006.
|
|
3.5*
|
Certificate
of Amendment to the Certificate of Incorporation, dated June
29, 2006,
reflecting the reverse split of the Company’s common
stock.
|
|
3.6*
|
Amended
and Restated By-Laws of the Company adopted November 2,
2006.
|
|
10.1*
|
Agreement
with ICR dated August 1, 2005 as amended June 27, 2006.
|
|
10.2*
|
2006
Stock Incentive Plan
|
|
10.3*
|
Form
of Stock Option Agreement under 2006 Stock Incentive
Plan.
|
|
11
|
Statement
re computation of per share earnings (see Statement of Operations
and
Notes to Financial Statements).
|
|
21*
|
Subsidiaries
of the Company.
|
|
23
|
Consent
of Kabani & Company, Inc., independent auditors.
|
|
31.1
|
Certifications
of President and CEO required by Rule 13a-14(a) or Rule 15d-14(a)
of the
Securities Exchange Act.
|
|
31.2
|
Certification
of CFO required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities
Exchange Act.
|
|
32.1
|
Section
1350 certifications by President and Chief Executive
Officer.
|
|
32.2
|
Section
1350 certification by Chief Financial
Officer.
|
*
|
Incorporated
by reference to Amendment No. 2 to the Registrant's Registration
Statement
on Form 10-SB, filed with the Securities and Exchange Commission
on
January 4, 2007.
|
LANDBANK GROUP, INC. | ||
|
|
|
Date: March 30, 2007 | By: | /s/ Douglas Gravink |
Douglas Gravink | ||
CEO |
SIGNATURE
|
TITLE
|
DATE
|
/s/Doug
Gravink
|
Chief
Executive Officer and Director
|
March
30, 2007
|
Doug
Gravink
|
(Principal
Executive Officer)
|
|
/s/Gary
Hewitt
|
President,
Secretary and Director
|
March
30, 2007
|
Gary
Hewitt
|
(Principal
Executive Officer)
|
|
/s/John
Genesi
|
Chief
Financial Officer
|
March
30, 2007
|
John
Genesi
|
(Principal
Financial Officer)
|
|
/s/John
Beck
|
Director
|
March
30, 2007
|
John
Beck
|
||
/s/Ray
Gaytan
|
Director
|
March
30, 2007
|
Ray
Gaytan
|
||
/s/Stephen
Weber
|
Director
|
March
29, 2007
|
Stephen
Weber
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
|
|
|
|
2.1*
|
Stock
Purchase Agreement dated January 23, 2006 between iStorage
Networks, Inc.
and Landbank, LLC.
|
|
2.2*
|
Stock
Purchase Agreement dated January 23, 2006 between M. Thomas
Makmann and
iStorage Networks, Inc.
|
|
3.1*
|
Certificate
of Incorporation of the Company, formerly Camryn Information
Services,
Inc., dated May 13, 1997.
|
|
3.2*
|
Certificate
of Renewal and Revival of Charter dated October 29,
2004.
|
|
3.3*
|
Certificate
of Amendment to the Certificate of Incorporation to change
name to
iStorage Networks, Inc., dated November 8, 2004.
|
|
3.4*
|
Certificate
of Amendment to the Certificate of Incorporation to change
name to
Landbank Group, Inc., dated January 27, 2006.
|
|
3.5*
|
Certificate
of Amendment to the Certificate of Incorporation, dated June
29, 2006,
reflecting the reverse split of the Company’s common
stock.
|
|
3.6*
|
Amended
and Restated By-Laws of the Company adopted November 2,
2006.
|
|
10.1*
|
Agreement
with ICR dated August 1, 2005 as amended June 27, 2006.
|
|
10.2*
|
2006
Stock Incentive Plan
|
|
10.3*
|
Form
of Stock Option Agreement under 2006 Stock Incentive
Plan.
|
|
11
|
Statement
re computation of per share earnings (see Statement of Operations
and
Notes to Financial Statements).
|
|
21*
|
Subsidiaries
of the Company.
|
|
23
|
Consent
of Kabani & Company, Inc., independent auditors.
|
|
31.1
|
Certifications
of President and CEO required by Rule 13a-14(a) or Rule 15d-14(a)
of the
Securities Exchange Act.
|
|
31.2
|
Certification
of CFO required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities
Exchange Act.
|
|
32.1
|
Section
1350 certifications by President and Chief Executive
Officer.
|
|
32.2
|
Section
1350 certification by Chief Financial
Officer.
|
*
|
Incorporated
by reference to Amendment No. 2 to the Registrant's Registration
Statement
on Form 10-SB, filed with the Securities and Exchange Commission
on
January 4, 2007.
|
Delaware
|
20-1915083
|
(State
of incorporation)
|
(IRS
Employer Identification No.)
|
7030
Hayvenhurst Avenue, Van Nuys, CA
|
91406
|
(Address
of principal executive offices)
|
(Zip
Code)
|
TABLE
OF CONTENTS
|
||
|
|
|
|
|
|
|
|
|
PART
I Financial
Information
|
|
|
|
|
|
Item
1
|
2
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
|
|
Item
2
|
18
|
|
|
|
|
Item
3
|
29
|
|
|
|
|
PART
II Other
Information
|
|
|
|
|
|
Item
1
|
30
|
|
|
|
|
Item
2
|
30
|
|
|
|
|
Item
3
|
30
|
|
|
|
|
Item
4
|
30
|
|
|
|
|
Item
5
|
30
|
|
|
|
|
Item
6
|
30
|
|
Page
|
|
Consolidated
financial statements
|
|
Consolidated
Balance Sheet (Unaudited)
|
2
|
Consolidated
Statements of Operations (Unaudited)
|
3
|
Consolidated
Statements of Cash Flows (Unaudited)
|
4
|
Notes
to consolidated financial statements (Unaudited)
|
5 -
17
|
LandBank
Group, Inc. and Subsidiary
|
||||
As
of March 31, 2007
(Unaudited)
|
||||
ASSETS
|
||||
Current
assets
|
||||
Cash
& cash equivalents
|
$
|
439,251
|
||
Inventory
- land parcels
|
2,956,908
|
|||
Other
receivable
|
3,807
|
|||
Prepaid
expenses
|
189,279
|
|||
Total
current assets
|
3,589,245
|
|||
Property
& equipment, net
|
17,325
|
|||
Total
assets
|
$
|
3,606,570
|
||
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
||||
Current
liabilities
|
||||
Accounts
payable
|
$
|
94,906
|
||
Due
to related parties
|
|
2,767,987
|
||
Accrued
expenses
|
322,721
|
|||
Loan
payable - current portion
|
43,183
|
|||
Deferred
income
|
758,511
|
|||
Total
current liabilities
|
3,987,308
|
|||
Loan
payable - non-current portion
|
460,262
|
|||
Shareholders'
deficit
|
||||
Common
stock, 100,000,000 shares authorized; $0.0001
|
||||
par
value; 9,835,331 issued and outstanding
|
984
|
|||
Additional
paid in capital
|
413,461
|
|||
Accumulated
deficit
|
(1,255,445
|
)
|
||
Total
shareholders' deficit
|
(841,000
|
)
|
||
Total
liabilities and shareholders' deficit
|
$
|
3,606,570
|
Landbank
Group Inc. and Subsidiary
|
|||||||
For
The Three Month Periods Ended March 31, 2007 and 2006
(Unaudited)
|
|||||||
2007
|
2006
|
||||||
Revenue,
net
|
$
|
901,707
|
$
|
1,657,341
|
|||
Cost
of revenue
|
|||||||
Direct
selling expenses
|
494,507
|
939,865
|
|||||
Royalty
to related party
|
142,520
|
251,117
|
|||||
Total
cost of sales
|
637,027
|
1,190,982
|
|||||
Gross
profit
|
264,680
|
466,359
|
|||||
Operating
expenses
|
|||||||
Rent,
related party
|
5,556
|
5,553
|
|||||
Professional
fees, related parties
|
5,383
|
30,700
|
|||||
Professional
fees
|
28,759
|
91,310
|
|||||
Legal
fees
|
63,777
|
71,703
|
|||||
Directors
and officers compensation
|
41,344
|
-
|
|||||
General
& administrative expenses
|
204,884
|
90,070
|
|||||
Total
operating expenses
|
349,703
|
289,336
|
|||||
Income
(loss) from operations
|
(85,023
|
)
|
177,023
|
||||
Other
expenses
|
|||||||
Merger-related
costs
|
-
|
(140,000
|
)
|
||||
Interest
expenses - bank
|
(12,411
|
)
|
(14,830
|
)
|
|||
Interest
expenses - related parties
|
(39,714
|
)
|
(18,549
|
)
|
|||
Total
other expenses
|
(52,125
|
)
|
(173,379
|
)
|
|||
Income
(loss) before income taxes
|
(137,148
|
)
|
3,644
|
||||
Provision
for income taxes
|
1,600
|
-
|
|||||
Net
income (loss)
|
$
|
(138,748
|
)
|
$
|
3,644
|
||
*Basic
and diluted weighted average number
|
|||||||
of
common stock outstanding
|
9,835,331
|
9,630,538
|
|||||
Basic
and diluted net income (loss) per share
|
$
|
(0.01
|
)
|
$
|
0.00
|
LandBank
Group, Inc. and Subsidiary
|
|||||||
For
the Three Month Periods Ended March 31, 2007 and 2006
(Unaudited)
|
|||||||
|
|
||||||
2007
|
2006
|
||||||
Cash
flows from operating activities:
|
|
|
|||||
Net
income (loss)
|
$
|
(138,748
|
)
|
$
|
3,644
|
||
Adjustments
to reconcile net income (loss) to net cash
|
|||||||
Provided
by (used in) operating activities:
|
|||||||
Depreciation
- capital equipment
|
3,464
|
-
|
|||||
Options
granted to Directors & Officers
|
13,844
|
-
|
|||||
Changes
in current assets and liabilities:
|
|||||||
(Increase)
decrease in current assets
|
|||||||
Inventory
- land parcels
|
280,355
|
346,740
|
|||||
Other
receivable
|
4,736
|
-
|
|||||
Prepaid
expenses
|
24,896
|
196,557
|
|||||
Increase
(decrease) in current liabilities
|
|||||||
Accounts
payable
|
(39,297
|
)
|
43,466
|
||||
Accrued
expenses
|
(7,726
|
)
|
2,536
|
||||
Deferred
income
|
(36,156
|
)
|
(849,535
|
)
|
|||
Total
adjustments
|
244,116
|
(260,236
|
)
|
||||
Net
cash provided by (used in) operating activities
|
105,368
|
(256,592
|
)
|
||||
Cash
flows from investing activities
|
|||||||
Equipment
purchases
|
(20,789
|
)
|
-
|
||||
Cash
flows from financial activities
|
|||||||
Due
to related parties
|
98,138
|
(177,581
|
)
|
||||
Repayment
of loans
|
(9,436
|
)
|
(32,800
|
)
|
|||
Net
cash provided by (used) in financial activities
|
88,702
|
(210,381
|
)
|
||||
Net
increase (decrease) in cash and cash equivalents
|
173,281
|
(466,973
|
)
|
||||
Cash
and cash equivalents - beginning balance
|
265,970
|
631,425
|
|||||
Cash
and cash equivalents - ending balance
|
$
|
439,251
|
$
|
164,452
|
|||
Supplemental
disclosure of cash flows information:
|
|||||||
Taxes
paid
|
$
|
1,600
|
$
|
-
|
|||
Interest
paid
|
$
|
12,411
|
$
|
14,830
|
1. |
A
brief description of the provisions of this Statement
|
2. |
The
date that adoption is required
|
3. |
The
date the employer plans to adopt the recognition provisions of
this
Statement, if earlier.
|
As
of March 31, 2007
|
As
of March 31, 2006
|
||||||||||||||||||
Principal
|
Interest
|
Total
|
Principal
|
Interest
|
Total
|
||||||||||||||
John
Beck's Amazing Profits, LLC
|
$
|
543,773
|
$
|
-
|
$
|
543,773
|
$
|
(3,222
|
)
|
$
|
(3,849
|
)
|
$
|
(7,071
|
)
|
||||
Mentoring
of America, LLC
|
54,928
|
7,523
|
62,451
|
41,333
|
3,201
|
44,534
|
|||||||||||||
HG,
Inc.
|
1,546,679
|
130,067
|
1,676,746
|
467,405
|
18,672
|
486,077
|
|||||||||||||
HG
Marketing, LLC
|
382,606
|
75,330
|
457,936
|
582,606
|
36,721
|
619,327
|
|||||||||||||
Family
Products, LLC
|
-
|
2,393
|
2,393
|
-
|
2,393
|
2,393
|
|||||||||||||
Gaytan,
Baumblatt, Leevan
|
24,688
|
-
|
24,688
|
-
|
-
|
-
|
|||||||||||||
$
|
2,552,673
|
$
|
215,313
|
$
|
2,767,987
|
$
|
1,088,122
|
$
|
57,138
|
$
|
1,145,260
|
Deferred
revenue
|
$
|
758,511
|
||
Direct
costs:
|
||||
Land
|
380,708
|
|||
Royalty
to affiliated party
|
65,282
|
|||
Processing
fees
|
42,950
|
|||
Merchant
fees
|
18,276
|
|||
Sales
commissions
|
29,433
|
|||
Total
direct costs
|
536,649
|
|||
Gross
profit
|
$
|
221,862
|
||
As
a % of net revenue
|
29.2
|
%
|
Years
ended
|
|
|
|
March
31,
|
|
|
|
|
|
|
|
2008
|
|
$
|
40,183
|
2009
|
|
|
44,391
|
2010
|
|
|
49,039
|
2011
|
|
|
54,174
|
2012
|
|
|
59,847
|
Thereafter
|
255,811
|
||
Total
|
503,445
|
||
Current
portion
|
43,183
|
||
Long-term
portion
|
$
|
460,262
|
As
of 3/31/07
|
|||
Rent
|
2,368
|
||
Insurance
|
7,970
|
||
Audit
fees
|
22,500
|
||
Travel
advance
|
500
|
||
Merchant
fees
|
18,276
|
||
Sales
commissions
|
29,433
|
||
Royalties
to an affiliate
|
65,282
|
||
Processing
fees
|
42,950
|
||
189,279
|
Post-Split
|
|
Pre-Split
|
||||
Par
Value
|
$
|
0.0001
|
$
|
0.00001
|
||
Authorized
number of shares
|
100,000,000
|
1,000,000,000
|
||||
Shares
issued and outstanding
|
9,206,597
|
92,052,000
|
2007
|
2008
|
2009
|
||||||||
Arizona
Office
|
$
|
22,224
|
$
|
1,852
|
$
|
-
|
||||
Alameda
Office
|
12,623
|
14,196
|
1,183
|
|||||||
Total
|
$
|
34,847
|
$
|
16,048
|
$
|
1,183
|
As
of March 31, 2007, the Company had paid PPH the above mentioned
$10,000
advance for legal services and an additional $70,000 advance towards
fees
incurred by PPH in relation to their services provided to the Company.
The
remaining $155,000 owed to PPH was recorded as an accrued liability
as of
March 31, 2007.The entire $235,000 owed to PPH was expensed during
the
Company’s fiscal year 2006, which ended December 31,
2006.
|
Options
outstanding
|
Weighted
Average Exercise Price
|
Aggregate
Intrinsic Value
|
|||||||
Outstanding,
December 31, 2006
|
1,400,000-
|
-
|
-
|
||||||
Granted
|
100,000
|
-
|
-
|
||||||
Forfeited
|
-
|
-
|
-
|
||||||
Exercised
|
-
|
||||||||
Outstanding
March 31, 2007
|
1,500,000
|
$
|
0.02
|
-
|
Outstanding
Options
|
Exercisable
Options
|
||||||||||||||
|
|
||||||||||||||
Exercise
Price
|
Number
|
Average
Remaining Contractual Life
|
Average
Exercise Price
|
Number
|
Average
Exercise Price
|
||||||||||
$0.0001
|
1,200,000
|
|
|
4.86
|
|
$
|
0.0001
|
|
|
240,000
|
|
$
|
0.0001
|
||
$0.12
|
|
|
200,000
|
|
|
4.99
|
|
$
|
0.12
|
|
|
-
|
|
$
|
0.12
|
$0.02
|
|
|
100,000
|
|
|
3.95
|
|
$
|
0.02
|
|
|
-
|
|
$
|
0.02
|
1. |
Hired
additional Land Acquisition Specialists to help acquire more properties,
as well as a more diversified mix of properties, that will allow
the
Company to increase sales volume while minimizing the risk of saturating
a
particular market, or geographic location, and thereby adversely
affecting
the ability of the Company’s customers to resell their properties at a
profit.
|
2. |
Hired
consultants to assist the Company in securing additional financing
(see
note 13).
|
Three
Months Ended March 31,
|
||||||||||||
2007
|
2006
|
|||||||||||
Units
|
Revenue
(000s)
|
Units
|
Revenue
(000s)
|
|||||||||
Arizona
|
4
|
$
|
6.2
|
-
|
$
|
-
|
||||||
Colorado
|
7
|
56.3
|
-
|
-
|
||||||||
Florida
|
(1
|
)
|
(9.5
|
)
|
-
|
-
|
||||||
New
Mexico
|
(1
|
)
|
(6.1
|
)
|
-
|
-
|
||||||
Oklahoma
|
8
|
5.3
|
251
|
421.3
|
||||||||
Pennsylvania
|
172
|
482.8
|
842
|
70.8
|
||||||||
Texas
|
199
|
366.7
|
38
|
1,165.2
|
||||||||
388
|
$
|
901.7
|
1,131
|
$
|
1,657.3
|
Three
Months Ended March 31,
|
||||||||||||
2007
|
2006
|
|||||||||||
Total
(000s)
|
Per
lot average
|
Total
(000s)
|
Per
lot average
|
|||||||||
Land
cost
|
$
|
370.8
|
$
|
956
|
$
|
737.3
|
$
|
652
|
||||
Processing
fees
|
51.7
|
133
|
73.4
|
65
|
||||||||
Merchant
fees
|
31.9
|
82
|
42.7
|
38
|
||||||||
Royalty
to related party
|
142.5
|
367
|
251.1
|
222
|
||||||||
Sales
commissions
|
40.1
|
103
|
61.9
|
55
|
||||||||
Dues
& taxes
|
-
|
-
|
24.5
|
22
|
||||||||
$
|
637.0
|
$
|
1,642
|
$
|
1,190.9
|
$
|
1,053
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
|||||
Salaries
& related
|
$
|
148.9
|
$
|
59.9
|
||
Directors
& Officers compensation
|
41.3
|
-
|
||||
Legal
fees
|
63.8
|
71.7
|
||||
Accounting/audit
fees
|
15.0
|
3.0
|
||||
Investor
relations
|
9.3
|
7.6
|
||||
Professional
fees
|
4.3
|
111.4
|
||||
Office
rent
|
7.9
|
5.6
|
||||
Travel
|
15.5
|
20.5
|
||||
Insurance
|
14.0
|
-
|
||||
Depreciation
|
1.7
|
-
|
||||
Other
|
28.0
|
9.6
|
||||
$
|
349.7
|
$
|
289.3
|
Cash
as of 12/31/06
|
$
|
265,970
|
||
Net
loss for three months ended 3/31/07
|
(138,748
|
)
|
||
Add
back depreciation - capital equipment
|
3,464
|
|||
Add
back amortization - options
|
13,844
|
|||
Less
cash used to pay down accounts
|
||||
payable
and accrued expenses
|
(47,023
|
)
|
||
Less
reduction in deferred revenue
|
(36,156
|
)
|
||
Less
principal payments on bank loan
|
(9,436
|
)
|
||
Less
capital equipment purchases
|
(20,789
|
)
|
||
Add
cash from inventory sold
|
280,355
|
|||
Add
cash borrowed from related parties
|
98,138
|
|||
Add
cash from reduction in prepaid expenses
|
24,896
|
|||
Add
cash from reduction in other receivables
|
4,736
|
|||
Cash
provided during three months ended 3/31/07
|
173,281
|
|||
Cash
as of 3/31/07
|
$
|
439,251
|
Actively
marketed
|
Being
prepared for marketing
|
Total
|
|||||||
Arizona
|
26,973
|
-
|
26,973
|
||||||
Colorado
|
269,861
|
-
|
269,861
|
||||||
Florida
|
23,574
|
-
|
23,574
|
||||||
Michigan
|
17,347
|
-
|
17,347
|
||||||
Mexico
|
-
|
298,348
|
298,348
|
||||||
Nevada
|
-
|
859,072
|
859,072
|
||||||
New
Mexico
|
61,910
|
-
|
61,910
|
||||||
Oklahoma
|
17,499
|
-
|
17,499
|
||||||
Pennsylvania
|
252,338
|
66,353
|
318,691
|
||||||
Texas
|
1,062,133
|
1,500
|
1,063,632
|
||||||
1,731,635
|
1,225,273
|
2,956,908
|
Prepaid
Expenses as of March 31, 2007
|
|||
|
(000s)
|
||
Accounting/audit
fees
|
$
|
22.5
|
|
Rent
- Alameda office
|
2.4
|
||
Travel
advance
|
0.5
|
||
Insurance
|
8.0
|
||
Processing
fees
|
42.9
|
||
Merchant
fees
|
18.3
|
||
Royalty
to related party
|
65.3
|
||
Sales
commissions
|
29.4
|
||
$
|
189.3
|
Current
Liabilities as of March 31, 2007
|
|||
|
(000s)
|
||
Accounts
payable
|
$
|
94.9
|
|
Due
to related parties (principal & accrued interest)
|
2,768.0
|
||
Accrued
expenses
|
266.9
|
||
Accrued
payroll
|
55.8
|
||
Bank
loan - current portion
|
43.2
|
||
Deferred
revenue
|
758.5
|
||
$
|
3,987.3
|
· |
changes
in general or local economic
conditions;
|
· |
changes
in supply of or demand for similar or competing properties in the
area;
|
· |
bankruptcies,
financial difficulties or lease defaults by
customers;
|
· |
changes
in interest rates and availability of permanent mortgage financing
that
may render the sale of a property difficult or unattractive or
otherwise
reduce the returns to stockholders;
|
· |
changes
in governmental rules, regulations, and fiscal policies, including
changes
in tax, real estate, environmental, and zoning
laws;
|
· |
periods
of high interest rates and tight money
supply.
|
No.
|
Description
|
|
|
|
|
31.1
|
Certification
of Principal Executive Officers Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2
|
Certification
of Principal Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.1
|
Certification
of Principal Executive Officers Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.2
|
Certification
of Principal Financial Officers Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
||
|
|
|
Date: May
15, 2007
|
By:
|
/s/
Doug
Gravink
|
|
Doug
Gravink
Chief
Executive Officer
|
|
|
|
Date: May
15, 2007
|
By:
|
/s/
Gary
Hewitt
|
|
Gary
Hewitt
President
|
Delaware
|
20-1915083
|
(State
of incorporation)
|
(IRS
Employer Identification No.)
|
7030
Hayvenhurst Avenue, Van Nuys, CA
|
91406
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
|
|
|
|
|
|
|
|
PART
I Financial Information
|
|
|
|
|
|
Item
1
|
3
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
|
|
Item
2
|
17
|
|
|
|
|
Item
3
|
30
|
|
|
|
|
PART
II Other Information
|
|
|
|
|
|
Item
1
|
31
|
|
|
|
|
Item
2
|
31
|
|
|
|
|
Item
3
|
32
|
|
|
|
|
Item
4
|
32
|
|
|
|
|
Item
5
|
32
|
|
|
|
|
Item
6
|
32
|
|
|
LandBank
Group, Inc. and
Subsidiary
|
||||||||
Unaudited
Consolidated Balance Sheet
|
||||||||
As
of June 30, 2007
|
||||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
& cash equivalents
|
$ |
2,851
|
||||||
Inventory
- land parcels
|
2,842,383
|
|||||||
Prepaid
expenses
|
25,382
|
|||||||
Total
current assets
|
2,920,616
|
|||||||
Computers,
net
|
12,129
|
|||||||
Total
assets
|
$ |
2,882,745
|
||||||
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ |
122,250
|
||||||
Due
to related parties
|
2,947,594
|
|||||||
Accrued
expenses
|
155,118
|
|||||||
Loan
payable - current portion
|
41,196
|
|||||||
Deferred
income
|
168,035
|
|||||||
Total
current liabilities
|
3,434,193
|
|||||||
Loan
payable - non-current portion
|
452,575
|
|||||||
Shareholders'
deficit
|
||||||||
Common
stock, 100,000,000 shares authorized; $0.0001
|
||||||||
par
value; 9,928,664 issued and outstanding
|
993
|
|||||||
Additional
paid in capital
|
509,296
|
|||||||
Accumulated
deficit
|
(1,514,312)
|
|||||||
Total
shareholders' deficit
|
(1,004,023)
|
|||||||
Total
liabilities and shareholders' deficit
|
$ |
2,882,745
|
Landbank
Group
Inc. and Subsidiary
|
||||||||||||||||
Consolidated
Statements of Operations
|
||||||||||||||||
For
the Three and Six Month Periods Ended June 30, 2007 and
2006
|
||||||||||||||||
Three
Months ended June 30,
|
Six
Months ended June 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenue,
net
|
$ |
650,590
|
$ |
569,742
|
$ |
1,552,297
|
$ |
2,227,083
|
||||||||
Cost
of revenue
|
||||||||||||||||
Direct
selling expenses
|
477,200
|
390,187
|
971,707
|
1,330,052
|
||||||||||||
Royalty
to related party
|
35,055
|
54,817
|
177,575
|
305,934
|
||||||||||||
Total
cost of sales
|
512,255
|
445,004
|
1,149,282
|
1,635,986
|
||||||||||||
Gross
profit
|
138,335
|
124,738
|
403,015
|
591,097
|
||||||||||||
Operating
expenses:
|
||||||||||||||||
Rent,
related party
|
5,556
|
5,556
|
11,112
|
11,109
|
||||||||||||
Professional
fees, related parties
|
-
|
48,584
|
5,383
|
79,284
|
||||||||||||
Professional
fees
|
39,205
|
518,124
|
67,964
|
609,434
|
||||||||||||
Legal
fees
|
25,408
|
37,558
|
89,185
|
109,261
|
||||||||||||
Directors
and officers compensation
|
39,344
|
-
|
80,688
|
-
|
||||||||||||
Settlement
on Nevada property, nonrecurring
|
50,000
|
-
|
50,000
|
-
|
||||||||||||
General
& administrative expenses
|
185,594
|
158,728
|
390,478
|
248,798
|
||||||||||||
Total
operating expenses
|
345,107
|
768,550
|
694,810
|
1,057,886
|
||||||||||||
Loss
from operations
|
(206,772 | ) | (643,812 | ) | (291,795 | ) | (466,789 | ) | ||||||||
Other
expenses:
|
||||||||||||||||
Merger
related expenses
|
-
|
-
|
-
|
(140,000 | ) | |||||||||||
Interest
expense - bank
|
(12,508 | ) | (13,123 | ) | (24,919 | ) | (27,953 | ) | ||||||||
Interest
expense - related parties
|
(39,587 | ) | (30,439 | ) | (79,301 | ) | (48,988 | ) | ||||||||
Total
other expenses
|
(52,095 | ) | (43,562 | ) | (104,220 | ) | (216,941 | ) | ||||||||
Loss
before income taxes
|
(258,867 | ) | (687,374 | ) | (396,015 | ) | (683,730 | ) | ||||||||
Provision
for income taxes
|
-
|
-
|
1,600
|
-
|
||||||||||||
Net
loss
|
$ | (258,867 | ) | $ | (687,374 | ) | $ | (397,615 | ) | $ | (683,730 | ) | ||||
Basic
and diluted weighted average number
|
||||||||||||||||
of
common stock outstanding
|
9,924,561
|
9,630,538
|
9,880,193
|
9,417,700
|
||||||||||||
Basic
and diluted net loss per share
|
$ | (0.03 | ) | $ | (0.07 | ) | $ | (0.04 | ) | $ | (0.07 | ) |
LandBank
Group, Inc. and Subsidiary
|
||||||||
Unaudited
Consolidated Statements of Cash Flows
|
||||||||
For
the Six Month Periods Ended June 30, 2007 and
2006
|
||||||||
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
|
|
||||||
Net
loss
|
$ | (397,615 | ) | $ | (683,730 | ) | ||
Adjustments
to reconcile net loss to net cash
|
||||||||
used
in operating activities:
|
||||||||
Depreciation
- capital equipment
|
8,660
|
-
|
||||||
Amortization
of options granted to Directors & Officers
|
25,688
|
-
|
||||||
Shares
issued for service
|
-
|
374,667
|
||||||
Changes
in current assets and liabilities:
|
||||||||
(Increase)
decrease in current assets
|
||||||||
Inventory
- land parcels
|
394,880
|
(845,558 | ) | |||||
Advance
- land purchases
|
-
|
(97,448 | ) | |||||
Other
receivable
|
8,542
|
-
|
||||||
Prepaid
expenses
|
188,793
|
77,769
|
||||||
Increase
(decrease) in current liabilities
|
||||||||
Accounts
payable
|
(40,925 | ) |
13,418
|
|||||
Accrued
expenses
|
(91,330 | ) |
31,348
|
|||||
Reserve
for returns
|
-
|
53,975
|
||||||
Deferred
income
|
(626,632 | ) | (511,993 | ) | ||||
Total
adjustments
|
(182,324 | ) | (903,822 | ) | ||||
Net
cash used in operating activities
|
(529,939 | ) | (1,587,552 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Capital
equipment purchases
|
(20,789 | ) |
-
|
|||||
Cash
flows from financial activities:
|
||||||||
Due
to related parties
|
306,719
|
1,115,966
|
||||||
Repayment
of loans
|
(19,110 | ) | (41,557 | ) | ||||
Net
cash provided by financial activities
|
287,609
|
1,074,409
|
||||||
Net
change in cash and cash equivalents
|
(263,119 | ) | (513,143 | ) | ||||
Cash
and cash equivalents - beginning balance
|
265,970
|
631,425
|
||||||
Cash
and cash equivalents - ending balance
|
$ |
2,851
|
$ |
118,282
|
||||
Supplemental
disclosure of cash flows information:
|
||||||||
Taxes
paid
|
$ |
1,600
|
$ |
-
|
||||
Interest
paid
|
$ |
24,919
|
$ |
27,953
|
1.
|
A
brief description of the provisions of this
Statement
|
2.
|
The
date that adoption is required
|
3.
|
The
date the employer plans to adopt the recognition provisions
of this
Statement, if earlier.
|
|
Principal
|
Interest
|
Total
|
||||||||
John
Beck's Amazing Profits, LLC
|
$ |
513,546
|
$ |
-
|
$ |
513,546
|
|||||
Mentoring
of America, LLC
|
52,460
|
8,608
|
61,068
|
||||||||
HG,
Inc.
|
1,719,394
|
160,916
|
1,880,310
|
||||||||
HG
Marketing, LLC
|
382,606
|
82,983
|
465,589
|
||||||||
Family
Products, LLC
|
-
|
2,393
|
2,393
|
||||||||
Joyce
Beck
|
-
|
-
|
-
|
||||||||
Gaytan,
Baumblatt, Leevan
|
24,688
|
-
|
24,688
|
||||||||
|
$ |
2,692,694
|
$ |
254,900
|
$ |
2,947,594
|
Years
ended
|
|||
June
30,
|
|||
2008
|
$ |
41,196
|
|
2009
|
45,510
|
||
2010
|
50,276
|
||
2011
|
55,540
|
||
2012
|
61,356
|
||
Thereafter
|
239,893
|
||
Total
|
493,771
|
||
Current
portion
|
41,196
|
||
Long-term
portion
|
$ |
452,575
|
As
of 6/30/07
|
|||
Rent
|
4,663
|
||
Insurance
|
5,719
|
||
Audit
fees
|
15,000
|
||
25,382
|
Accrued
payroll
|
$ |
58,173
|
|
Accrued
payment (see note 15)
|
50,000
|
||
Accrued
legal fees
|
25,000
|
||
Accrued
consultant fees
|
13,600
|
||
Accrued
audit fees
|
7,500
|
||
Accrued
insurance
|
845
|
||
Total
|
$ |
155,118
|
2007
|
2008
|
2009
|
|||||||||
Arizona
Office
|
$ |
22,224
|
$ |
1,852
|
$ |
-
|
|||||
Alameda
Office
|
12,623
|
14,196
|
1,183
|
||||||||
Total
|
$ |
34,847
|
$ |
16,048
|
$ |
1,183
|
|
Joint
Marketing Agreement with Aurelius Consulting Group,
Inc.
|
|
Agreement
with Piping Partners Holdings,
Inc.
|
Options
outstanding
|
Weighted
Average Exercise Price
|
Aggregate
Intrinsic
Value
|
|||||||||
Outstanding,
December 31, 2005
|
-
|
-
|
-
|
||||||||
Granted
|
1,400,000
|
-
|
-
|
||||||||
Forfeited
|
-
|
-
|
-
|
||||||||
Exercised
|
3,333
|
$ |
0.02
|
-
|
|||||||
Outstanding
December 31, 2006
|
1,400,000
|
$ |
0.02
|
-
|
Outstanding
Options
|
Exercisable
Options
|
||||||||||||||||||||
Exercise
Price
|
Number
|
Average
Remaining Contractual Life
|
Average
Exercise Price
|
Number
|
Average
Exercise Price
|
||||||||||||||||
$ |
0.0001
|
1,200,000
|
4.86
|
$ |
0.0001
|
-
|
$ |
0.0001
|
|||||||||||||
$ |
0.12
|
200,000
|
4.99
|
$ |
0.12
|
3,333
|
$ |
0.12
|
|
On
July 9, 2007, the Company reached an agreement with an unrelated
third
party in relation to two (2) lawsuits filed by the Company
against the
third party. Per the terms of the proposed settlement, the
Company will
pay the third party a one-time cash payment of $50,000 as
final resolution
to the disputed matter. The Company recorded the $50,000
as a nonrecurring
operating expense during the three month period ended June
30,
2007.
|
|
As
of this filing, the agreement has not been finalized in writing,
therefore
the $50,000 cash payment has not been made by the Company.
The pending
payment is recorded as an accrued expense as of June 30,
2007 (see note
9).
|
1.
|
Hired
additional Land Acquisition Specialists to help acquire more
properties,
as well as a more diversified mix of properties, that will
allow the
Company to increase sales volume while minimizing the risk
of saturating a
particular market, or geographic location, and thereby adversely
affecting
the ability of the Company’s customers to resell their properties at a
profit.
|
2.
|
Hired
consultants to assist the Company in securing additional
financing.
|
As
of June 30, 2007
|
As
of June 30, 2006
|
|||||||||||||||||||||||||||||||
3-Months
|
6-Months
|
3-Months
|
6-Months
|
|||||||||||||||||||||||||||||
Properties
Sold
|
Revenue
(000)
|
Properties
Sold
|
Revenue
(000)
|
Properties
Sold
|
Revenue
(000)
|
Properties
Sold
|
Revenue
(000)
|
|||||||||||||||||||||||||
Arizona
|
27
|
$ |
40.0
|
31
|
$ |
46.2
|
-
|
$ |
-
|
-
|
$ |
-
|
||||||||||||||||||||
Colorado
|
1
|
33.2
|
8
|
89.5
|
2
|
20.7
|
2
|
20.7
|
||||||||||||||||||||||||
Florida
|
2
|
10.0
|
1
|
0.5
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Michigan
|
8
|
12.8
|
8
|
12.8
|
-
|
|||||||||||||||||||||||||||
New
Mexico
|
22
|
49.0
|
21
|
42.9
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Oklahoma
|
18
|
16.5
|
26
|
21.8
|
89
|
79.4
|
340
|
500.7
|
||||||||||||||||||||||||
Pennsylvania
|
102
|
219.4
|
274
|
702.2
|
106
|
127.8
|
144
|
198.6
|
||||||||||||||||||||||||
Texas
|
193
|
269.7
|
392
|
636.4
|
394
|
341.8
|
1,236
|
1,507.1
|
||||||||||||||||||||||||
373
|
$ |
650.6
|
761
|
$ |
1,552.3
|
591
|
$ |
569.7
|
1,722
|
$ |
2,227.1
|
As
of June 30, 2007
|
As
of June 30, 2006
|
|||||||||||||||||||||||||||||||
3-Months
|
6-Months
|
3-Months
|
6-Months
|
|||||||||||||||||||||||||||||
Total
(000)
|
Per
lot average
|
Total
(000)
|
Per
lot average
|
Total
(000)
|
Per
lot average
|
Total
(000)
|
Per
lot average
|
|||||||||||||||||||||||||
Land
Cost
|
$ |
336.0
|
$ |
901
|
$ |
706.8
|
$ |
929
|
$ |
277.2
|
$ |
469
|
$ |
1,014.5
|
$ |
589
|
||||||||||||||||
Royalty
to related party
|
35.1
|
94
|
177.6
|
233
|
54.8
|
93
|
305.9
|
178
|
||||||||||||||||||||||||
Processing
fees
|
53.2
|
143
|
104.9
|
138
|
26.6
|
45
|
100.0
|
58
|
||||||||||||||||||||||||
Merchant
fees
|
29.7
|
80
|
61.6
|
81
|
11.3
|
19
|
53.7
|
31
|
||||||||||||||||||||||||
Sales
commissions
|
30.0
|
80
|
70.1
|
92
|
28.1
|
47
|
90.4
|
52
|
||||||||||||||||||||||||
Dues
& taxes
|
28.3
|
75
|
28.3
|
37
|
47.0
|
80
|
71.5
|
42
|
||||||||||||||||||||||||
$ |
512.3
|
$ |
1,373
|
$ |
1,149.3
|
$ |
1,510
|
$ |
445.0
|
$ |
753
|
$ |
1,636.0
|
$ |
950
|
FY
2007
|
FY
2006
|
||||||||||||||
3-Months
|
6-Months
|
3-Months
|
6-Months
|
||||||||||||
Salaries
& related
|
$ |
146.8
|
$ |
295.7
|
$ |
150.4
|
$ |
210.3
|
|||||||
Directors
& Officers compensation
|
39.4
|
80.7
|
-
|
-
|
|||||||||||
Legal
fees
|
25.4
|
89.2
|
37.6
|
109.3
|
|||||||||||
Accounting/audit
fees
|
15.0
|
30.0
|
13.5
|
16.5
|
|||||||||||
Investor
relations
|
-
|
9.3
|
50.0
|
57.6
|
|||||||||||
Professional
fees
|
18.8
|
23.1
|
423.9
|
535.3
|
|||||||||||
Office
rent
|
8.9
|
16.8
|
5.5
|
11.1
|
|||||||||||
Travel
|
2.8
|
18.3
|
46.9
|
67.4
|
|||||||||||
Insurance
|
9.6
|
23.6
|
-
|
-
|
|||||||||||
Depreciation
|
2.6
|
4.3
|
-
|
-
|
|||||||||||
Nonrecurring
charge – Nevada properties
|
50.0
|
50.0
|
-
|
-
|
|||||||||||
Other
|
25.8
|
53.8
|
40.8
|
50.4
|
|||||||||||
$ |
345.1
|
$ |
694.8
|
$ |
768.6
|
$ |
1,057.9
|
Cash
as of 12/31/06
|
$ |
265,970
|
||
Net
loss for the six months ended 6/30/07
|
(397,615 | ) | ||
Add
back depreciation - capital equipment
|
8,660
|
|||
Add
back amortization - options
|
25,688
|
|||
Add
back shares issued for services
|
84,000
|
|||
Less
cash used to pay down accounts
|
||||
payable
and accrued expenses
|
(216,255 | ) | ||
Less
reduction in deferred revenue
|
(626,632 | ) | ||
Less
principal payments on bank loan
|
(19,110 | ) | ||
Less
capital equipment purchases
|
(20,789 | ) | ||
Add
cash from inventory sold
|
394,880
|
|||
Add
cash borrowed from related parties
|
306,719
|
|||
Add
cash from reduction in prepaid expenses
|
188,793
|
|||
Add
cash from reduction in other receivables
|
8,542
|
|||
Cash
provided during the six months ended 6/30/07
|
(263,119 | ) | ||
Cash
as of 6/30/07
|
$ |
2,851
|
Actively
Marketed
|
Being
prepared for marketing
|
Total
|
|||||||||
Arizona
|
$ |
1,350
|
$ |
-
|
$ |
1,350
|
|||||
Colorado
|
261,870
|
-
|
261,870
|
||||||||
Michigan
|
11,191
|
-
|
11,191
|
||||||||
Mexico
|
-
|
298,348
|
298,348
|
||||||||
Nevada
|
-
|
973,929
|
973,929
|
||||||||
New
Mexico
|
16,301
|
-
|
16,301
|
||||||||
Oklahoma
|
8,210
|
-
|
8,210
|
||||||||
Pennsylvania
|
158,216
|
66,353
|
224,569
|
||||||||
Texas
|
868,080
|
74,920
|
943,000
|
||||||||
Deferred
inventory (see note 4 of the financial statements)
|
103,615
|
-
|
103,615
|
||||||||
$ |
1,428,833
|
$ |
1,413,550
|
$ |
2,842,383
|
Prepaid
expenses as of June 30, 2007
|
|||
Audit
fees
|
$ |
15,000
|
|
Rent
|
4,663
|
||
Insurance
|
5,719
|
||
$ |
25,382
|
Current
liabilities as of June 30, 2007
|
|||
Accounts
payable
|
$ |
122,250
|
|
Due
to related parties - principal
|
2,692,694
|
||
Due
to related parties - accrued interest
|
254,900
|
||
Accrued
expenses
|
96,945
|
||
Accrued
payroll
|
58,173
|
||
Loan
payable - current portion
|
41,196
|
||
Deferred
income
|
168,035
|
||
$ |
3,434,193
|
Accounts
payable
|
$ | (40,925 | ) | |
Due
to related parties – principal
|
293,529
|
|||
Due
to related parties – accrued interest
|
13,190
|
|||
Accrued
expenses
|
(182,055 | ) | ||
Accrued
payroll
|
6,725
|
|||
Loan
payable – current portion
|
2,001
|
|||
Deferred
revenue
|
(626,632 | ) | ||
Total
decrease
|
$ | (534,167 | ) |
Summary
of Shareholders' Deficit as of June 30, 2007
|
||||||||||||||||||||
Common
Shares
|
Common
Par
|
Additional
Paid in Capital
|
Accumulated
Deficit
|
Shareholders'
Deficit
|
||||||||||||||||
Balance
as of December 31, 2006 (audited)
|
9,835,331
|
$ |
984
|
$ |
399,617
|
$ | (1,116,697 | ) | $ | (716,096 | ) | |||||||||
Amortization
of options granted to Directors & Officers
|
-
|
-
|
25,688
|
-
|
25,688
|
|||||||||||||||
Shares
issued for services
|
93,333
|
9
|
83,991
|
-
|
84,000
|
|||||||||||||||
Net
loss for the six month period ended June 30, 2007
|
-
|
-
|
-
|
(397,615 | ) | (397,615 | ) | |||||||||||||
Balance
as of June 30, 2007
|
9,928,664
|
$ |
993
|
$ |
509,296
|
$ | (1,514,312 | ) | $ | (1,004,023 | ) |
·
|
changes
in general or local economic
conditions;
|
·
|
changes
in supply of or demand for similar or competing properties
in the
area;
|
·
|
bankruptcies,
financial difficulties or lease defaults by
customers;
|
·
|
changes
in interest rates and availability of permanent mortgage financing
that
may render the sale of a property difficult or unattractive
or otherwise
reduce the returns to stockholders;
|
·
|
changes
in governmental rules, regulations, and fiscal policies, including
changes
in tax, real estate, environmental, and zoning
laws;
|
·
|
periods
of high interest rates and tight money
supply.
|
No.
|
|
Description
|
|
|
|
31.1
|
|
Certification
of Principal Executive Officers Pursuant to Section 302 of
the
Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification
of Principal Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification
of Principal Executive Officers Pursuant to Section 906 of
the
Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification
of Principal Financial Officers Pursuant to Section 906 of
the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
Date:August
14, 2007
|
By:
|
/s/
Doug
Gravink
|
|
Doug
Gravink
Chief
Executive Officer
|
|
|
|
Date: August
14, 2007
|
By:
|
/s/
Gary
Hewitt
|
|
Gary
Hewitt
President
|
Delaware
|
20-1915083
|
(State
of incorporation)
|
(IRS
Employer Identification No.)
|
7030
Hayvenhurst Avenue, Van Nuys,
CA
|
91406
|
(Address
of principal executive offices)
|
(Zip
Code)
|
TABLE
OF
CONTENTS
|
||
|
|
|
|
|
|
|
|
|
PART
I Financial Information
|
|
|
|
|
|
Item
1
|
3
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
|
|
Item
2
|
17
|
|
Item
3
|
32
|
|
|
|
|
PART
II Other Information
|
|
|
|
|
|
Item
1
|
33
|
|
Item
2
|
33
|
|
Item
3
|
33
|
|
Item
4
|
33
|
|
Item
5
|
33
|
|
Item
6
|
34
|
|
|
Landbank
Group, Inc. and
Subsidiary
|
Consolidated
Balance Sheet
|
As
of September 30, 2007
|
(Unaudited)
|
ASSETS
|
||||
Current
assets
|
||||
Cash
& cash equivalents
|
$ |
3,618
|
||
Inventory
- land parcels
|
2,854,874
|
|||
Prepaid
expenses
|
40,292
|
|||
Total
current assets
|
2,898,784
|
|||
Property
& Equipment, net
|
6,933
|
|||
Total
assets
|
$ |
2,905,717
|
||
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
||||
Current
liabilities
|
||||
Accounts
payable & Accrued Expenses
|
$ |
368,379
|
||
Due
to related parties
|
3,110,031
|
|||
Loan
payable - current portion
|
40,367
|
|||
Deferred
revenue
|
300,633
|
|||
Total
current liabilities
|
3,819,410
|
|||
Loan
payable - non-current portion
|
421,938
|
|||
Shareholders'
deficit
|
||||
Common
stock, 100,000,000 shares authorized; $0.0001
|
||||
par
value; 9,928,664 issued and outstanding
|
993
|
|||
Additional
paid in capital
|
513,244
|
|||
Accumulated
deficit
|
(1,849,868 | ) | ||
Total
shareholders' deficit
|
(1,335,631 | ) | ||
Total
liabilities and shareholders' deficit
|
$ |
2,905,717
|
Landbank
Group Inc. and Subsidiary
|
||||||||||||||||
Consolidated
Statements of Operations
|
||||||||||||||||
For
the Three and Nine Month Periods Ended September 30, 2007
and
2006
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three
Months ended September 30,
|
Nine
Months ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenue,
net
|
$ |
190,204
|
$ |
1,106,897
|
$ |
1,742,501
|
$ |
3,333,980
|
||||||||
Cost
of revenue
|
||||||||||||||||
Direct
selling expenses
|
171,935
|
594,305
|
1,143,642
|
1,924,357
|
||||||||||||
Royalty
to related party
|
6,394
|
179,492
|
183,969
|
485,426
|
||||||||||||
Total
cost of sales
|
178,329
|
773,797
|
1,327,611
|
2,409,783
|
||||||||||||
Gross
profit
|
11,875
|
333,100
|
414,890
|
924,197
|
||||||||||||
Operating
expenses:
|
||||||||||||||||
Rent,
related party
|
5,556
|
5,554
|
16,668
|
16,663
|
||||||||||||
Professional
fees, related parties
|
-
|
25,366
|
5,383
|
104,650
|
||||||||||||
Professional
fees
|
36,763
|
91,396
|
104,727
|
700,830
|
||||||||||||
Legal
fees
|
44,109
|
40,288
|
133,294
|
149,549
|
||||||||||||
Directors
and officers compensation
|
31,448
|
27,500
|
112,136
|
27,500
|
||||||||||||
Settlement
on Nevada property, nonrecurring
|
-
|
-
|
50,000
|
-
|
||||||||||||
General
& administrative expenses
|
172,556
|
192,734
|
563,034
|
441,532
|
||||||||||||
Total
operating expenses
|
290,432
|
382,838
|
985,242
|
1,440,724
|
||||||||||||
Loss
from operations
|
(278,557 | ) | (49,738 | ) | (570,352 | ) | (516,527 | ) | ||||||||
Other
expenses:
|
||||||||||||||||
Merger
related expenses
|
-
|
-
|
-
|
(140,000 | ) | |||||||||||
Interest
expense - bank
|
(12,458 | ) | (13,204 | ) | (37,377 | ) | (41,157 | ) | ||||||||
Interest
expense - related parties
|
(43,741 | ) | (41,454 | ) | (123,042 | ) | (90,442 | ) | ||||||||
Total
other expenses
|
(56,199 | ) | (54,658 | ) | (160,419 | ) | (271,599 | ) | ||||||||
Loss
before income taxes
|
(334,756 | ) | (104,396 | ) | (730,771 | ) | (788,126 | ) | ||||||||
Provision
for income taxes
|
800
|
-
|
2,400
|
-
|
||||||||||||
Net
loss
|
$ | (335,556 | ) | $ | (104,396 | ) | $ | (733,171 | ) | $ | (788,126 | ) | ||||
Basic
and diluted weighted average number
|
||||||||||||||||
of
common stock outstanding
|
9,928,664
|
9,833,903
|
9,896,527
|
9,557,959
|
||||||||||||
Basic
and diluted net loss per share
|
$ | (0.03 | ) | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.08 | ) |
LandBank
Group, Inc. and Subsidiary
|
||||||||
Consolidated
Statements of Cash Flows
|
||||||||
For
the Nine Month Periods Ended September 30, 2007 and
2006
|
||||||||
(Unaudited)
|
||||||||
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
|
|
||||||
Net
loss
|
$ | (733,171 | ) | $ | (788,126 | ) | ||
Adjustments
to reconcile net loss to net cash
|
||||||||
used
in operating activities:
|
||||||||
Depreciation
- capital equipment
|
13,856
|
-
|
||||||
Amortization
of options granted to Directors & Officers
|
29,636
|
-
|
||||||
Shares
issued for service
|
-
|
374,667
|
||||||
Shares
to be issued for service
|
-
|
36,000
|
||||||
Changes
in current assets and liabilities:
|
||||||||
(Increase)
decrease in current assets
|
||||||||
Inventory
- land parcels
|
382,389
|
(1,009,162 | ) | |||||
Other
receivable
|
8,542
|
(51,781 | ) | |||||
Prepaid
expenses
|
173,883
|
58,597
|
||||||
Increase
(decrease) in current liabilities
|
||||||||
Accounts
payable
|
110,672
|
24,831
|
||||||
Accrued
expenses
|
(151,916 | ) |
138,341
|
|||||
Reserve
for returns
|
-
|
(26,148 | ) | |||||
Deferred
income
|
(494,034 | ) | (255,145 | ) | ||||
Total
adjustments
|
73,028
|
(709,800 | ) | |||||
Net
cash used in operating activities
|
(660,143 | ) | (1,497,926 | ) | ||||
Cash
flows from investing activities
|
||||||||
Capital
equipment purchases
|
(20,789 | ) |
-
|
|||||
Cash
flows from financial activities
|
||||||||
Due
to related parties
|
469,156
|
1,136,694
|
||||||
Repayment
of loans
|
(50,576 | ) | (50,624 | ) | ||||
Net
cash provided by financial activities
|
418,580
|
1,086,070
|
||||||
Net
change in cash and cash equivalents
|
(262,352 | ) | (411,856 | ) | ||||
Cash
and cash equivalents - beginning balance
|
265,970
|
631,425
|
||||||
Cash
and cash equivalents - ending balance
|
$ |
3,618
|
$ |
219,569
|
||||
Supplemental
disclosure of cash flows information:
|
||||||||
Taxes
paid
|
$ |
2,400
|
$ |
-
|
||||
Interest
paid
|
$ |
37,377
|
$ |
41,157
|
||||
Supplemental
disclosures of non-cash investing and financing
activities:
|
||||||||
Shares
issued to settle accrued expenses
|
$ |
84,000
|
$ |
-
|
|
As
of 9/30/07
|
||
Rent
|
$ |
4,663
|
|
Insurance
|
5,495
|
||
Legal
retainers
|
8,150
|
||
Prepaid
royalties
|
14,484
|
||
Other
|
7,500
|
||
|
$ |
40,292
|
Accrued
payroll
|
$ |
54,496
|
|
Accrued
legal & professional fees
|
31,350
|
||
Accrued
quarterly review fees
|
7,500
|
||
Accrued
insurance
|
1,186
|
||
Total
|
$ |
94,532
|
Principal
|
Interest
|
Total
|
|||||||||
Landbank
Acquisition, LLC (formerly owed to JBAP)
|
$ |
534,424
|
$ |
-
|
$ |
534,424
|
|||||
Landbank
Acquisition, LLC (formerly owed to MOA)
|
47,900
|
9,623
|
57,523
|
||||||||
Landbank
Acquisition, LLC (formerly owed to HGI)
|
1,789,372
|
195,989
|
1,985,361
|
||||||||
Landbank
Acquisition, LLC (formerly owed to HGM)
|
382,606
|
90,636
|
473,242
|
||||||||
Landbank
Acquisition, LLC (formerly owed to FP)
|
-
|
2,393
|
2,393
|
||||||||
Joyce
Beck
|
32,400
|
-
|
32,400
|
||||||||
Gaytan,
Baumblatt, Leevan
|
24,688
|
-
|
24,688
|
||||||||
$ |
2,811,390
|
$ |
298,641
|
$ |
3,110,031
|
Years
ended
|
|
||
September
30,
|
|
||
|
|
||
2008
|
$ |
40,367
|
|
2009
|
44,594
|
||
2010
|
49,263
|
||
2011
|
54,422
|
||
2012
|
60,120
|
||
Thereafter
|
213,539
|
||
|
|||
Total
|
462,305
|
||
Current
portion
|
40,367
|
||
|
|||
Long-term
portion
|
$ |
421,938
|
|
2007
|
2008
|
2009
|
||||||||
Arizona
Office
|
$ |
22,224
|
$ |
1,852
|
$ |
-
|
|||||
|
|||||||||||
Alameda
Office
|
12,623
|
14,196
|
1,183
|
||||||||
|
|||||||||||
Total
|
$ |
34,847
|
$ |
16,048
|
$ |
1,183
|
As
of September 30, 2007
|
As
of September 30, 2006
|
||||||||||||||||||||||||||||||
3-Months
|
9-Months
|
3-Months
|
9-Months
|
||||||||||||||||||||||||||||
Properties
Sold
|
Revenue
(000)
|
Properties
Sold
|
Revenue
(000)
|
Properties
Sold
|
Revenue
(000)
|
Properties
Sold
|
Revenue
(000)
|
||||||||||||||||||||||||
Arizona
|
7
|
$ |
8.0
|
38
|
$ |
54.2
|
-
|
$ |
-
|
-
|
$ |
-
|
|||||||||||||||||||
Colorado
|
1
|
8.8
|
9
|
98.3
|
8
|
146.2
|
10
|
166.9
|
|||||||||||||||||||||||
Florida
|
1
|
7.1
|
2
|
7.6
|
16
|
117.4
|
16
|
117.4
|
|||||||||||||||||||||||
Michigan
|
-
|
-
|
8
|
12.8
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
New
Mexico
|
7
|
15.4
|
28
|
58.3
|
46
|
167.2
|
46
|
167.2
|
|||||||||||||||||||||||
Oklahoma
|
2
|
1.1
|
28
|
22.9
|
81
|
91.6
|
421
|
592.3
|
|||||||||||||||||||||||
Pennsylvania
|
(8 | ) | (17.7 | ) |
266
|
684.5
|
136
|
351.9
|
280
|
550.5
|
|||||||||||||||||||||
Texas
|
145
|
167.5
|
537
|
803.9
|
181
|
232.6
|
1,417
|
1,739.7
|
|||||||||||||||||||||||
155
|
$ |
190.2
|
916
|
$ |
1,742.5
|
468
|
$ |
1,106.9
|
2,190
|
$ |
3,334.0
|
As
of September 30, 2007
|
As
of September 30, 2006
|
||||||||||||||||||||||||||||||
3-Months
|
9-Months
|
3-Months
|
9-Months
|
||||||||||||||||||||||||||||
Total
(000)
|
Per
lot average
|
Total
(000)
|
Per
lot average
|
Total
(000)
|
Per
lot average
|
Total
(000)
|
Per
lot average
|
||||||||||||||||||||||||
Land
Cost
|
$ |
122.1
|
$ |
787.7
|
$ |
828.9
|
$ |
904.9
|
$ |
520.5
|
$ |
1,112.2
|
$ |
1,535.0
|
$ |
700.9
|
|||||||||||||||
Royalty
to related party
|
6.4
|
41.3
|
184.0
|
200.9
|
179.5
|
383.5
|
485.4
|
221.6
|
|||||||||||||||||||||||
Processing
fees
|
11.1
|
71.6
|
116.0
|
126.6
|
42.4
|
90.6
|
142.5
|
65.1
|
|||||||||||||||||||||||
Merchant
fees
|
7.2
|
46.5
|
68.8
|
75.1
|
22.8
|
48.7
|
76.5
|
34.9
|
|||||||||||||||||||||||
Sales
commissions
|
-
|
-
|
70.1
|
76.5
|
44.2
|
94.4
|
134.6
|
61.5
|
|||||||||||||||||||||||
Dues
& taxes
|
31.5
|
203.2
|
59.8
|
65.3
|
(35.6 | ) | (76.1 | ) |
35.8
|
16.3
|
|||||||||||||||||||||
$ |
178.3
|
$ |
1,150.3
|
$ |
1,327.6
|
$ |
1,449.3
|
$ |
773.8
|
$ |
1,653.4
|
$ |
2,409.8
|
$ |
1,100.4
|
FY
2007
|
FY
2006
|
||||||||||||||
3-Months
|
9-Months
|
3-Months
|
9-Months
|
||||||||||||
Salaries
& related
|
$ |
120.1
|
$ |
391.9
|
$ |
136.2
|
$ |
331.4
|
|||||||
Directors
& Officers compensation
|
31.4
|
112.1
|
27.5
|
27.5
|
|||||||||||
Legal
fees
|
44.1
|
133.3
|
40.3
|
149.5
|
|||||||||||
Accounting/audit
fees
|
15.0
|
45.0
|
20.7
|
37.2
|
|||||||||||
Investor
relations
|
-
|
9.3
|
45.1
|
102.7
|
|||||||||||
Professional
fees
|
41.2
|
64.3
|
25.2
|
560.5
|
|||||||||||
Office
rent
|
9.0
|
25.8
|
5.6
|
16.7
|
|||||||||||
Travel
|
2.7
|
21.0
|
50.7
|
118.1
|
|||||||||||
Insurance
|
9.4
|
33.0
|
2.5
|
2.5
|
|||||||||||
Depreciation
|
2.6
|
6.9
|
-
|
-
|
|||||||||||
Non-recurring
charge - Nevada properties
|
-
|
50.0
|
-
|
-
|
|||||||||||
Other
|
14.9
|
92.6
|
29.0
|
94.6
|
|||||||||||
$ |
290.4
|
$ |
985.2
|
$ |
382.8
|
$ |
1,440.7
|
Cash
as of 12/31/06
|
|
$
|
265,970
|
|
|
|
|
|
|
Net
loss for the nine months ended 9/30/07
|
|
|
(593,128
|
)
|
Add
back depreciation - capital equipment
|
|
|
13,856
|
|
Less
cash used to pay down accounts
|
|
|
|
|
payable
and accrued expenses
|
|
|
(41,244
|
)
|
Less
reduction in deferred revenue
|
|
|
(494,034
|
)
|
Less
funds loaned to Landbank Group, Inc.
|
(110,407
|
)
|
||
Less
principal payments on bank loan
|
|
|
(50,576
|
)
|
Less
capital equipment purchases
|
|
|
(20,789
|
)
|
Add
cash from inventory sold
|
|
|
382,389
|
|
Add
cash borrowed from related parties
|
|
|
469,156
|
|
Add
cash from reduction in prepaid expenses
|
|
|
173,883
|
|
Add
cash from reduction in other receivables
|
|
|
8,542
|
|
Cash
provided during the nine months ended 9/30/07
|
|
|
(262,352
|
)
|
|
|
|
|
|
Cash
as of 9/30/07
|
|
$
|
3,618
|
|
|
Actively
Marketed
|
Being
prepared for marketing
|
Total
|
||||||||
Colorado
|
211,103
|
-
|
211,103
|
||||||||
Florida
|
11,775
|
-
|
11,775
|
||||||||
Michigan
|
10,277
|
-
|
10,277
|
||||||||
Missouri
|
-
|
3,892
|
3,892
|
||||||||
Mexico
|
-
|
298,348
|
298,348
|
||||||||
Nevada
|
47,291
|
935,066
|
982,357
|
||||||||
New
Mexico
|
11,411
|
-
|
11,411
|
||||||||
Oklahoma
|
11,288
|
-
|
11,288
|
||||||||
Pennsylvania
|
259,641
|
2,160
|
261,801
|
||||||||
Texas
|
848,247
|
9,634
|
857,881
|
||||||||
Deferred
inventory (see note 4 of the financial statements)
|
194,741
|
-
|
194,741
|
||||||||
|
$ |
1,605,774
|
$ |
1,249,100
|
$ |
2,854,874
|
|
As
of 9/30/07
|
||
Rent
|
$ |
4,663
|
|
Insurance
|
5,495
|
||
Legal
retainers
|
8,150
|
||
Prepaid
royalties (see note 10 of the financial statements)
|
14,484
|
||
Other
|
7,500
|
||
|
$ |
40,292
|
Current
liabilities as of September 30, 2007
|
|||
Accounts
payable
|
$ |
273,847
|
|
Due
to related parties - principal
|
2,811,390
|
||
Due
to related parties - accrued interest
|
298,641
|
||
Accrued
expenses
|
40,036
|
||
Accrued
payroll
|
54,496
|
||
Loan
payable - current portion
|
40,367
|
||
Deferred
income
|
300,633
|
||
|
$ |
3,819,410
|
Accounts
payable (Landbank, LLC)
|
|
$
|
110,672
|
|
Due
to related parties – principal (Landbank, LLC)
|
|
|
340,935
|
|
Due
to related parties – accrued interest (Landbank,
LLC)
|
|
|
128,221
|
|
Accrued
expenses (Landbank, LLC)
|
|
|
(154,964
|
)
|
Accrued
payroll (Landbank, LLC)
|
|
|
3,048
|
|
Loan
payable – current portion (Landbank, LLC)
|
|
|
1,172
|
|
Deferred
revenue (Landbank, LLC)
|
|
|
(494,034
|
)
|
Accrued
expenses (Landbank Group, Inc.)
|
(84,000
|
)
|
||
Total
decrease
|
|
$
|
(148,950
|
)
|
Summary
of Shareholders' Deficit as of September 30, 2007
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Common
Shares
|
|
|
Common
Par
|
|
|
Additional
Paid in Capital
|
|
|
Accumulated
Deficit
|
|
|
Shareholders'
Deficit
|
|
|||||
Balance
as of December 31, 2006 (audited)
|
|
|
9,835,331
|
|
|
$
|
984
|
|
|
$
|
399,617
|
|
|
$
|
(1,116,697
|
)
|
|
$
|
(716,096
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of options granted to Directors & Officers
|
|
|
-
|
|
|
|
-
|
|
|
|
29,636
|
|
|
|
-
|
|
|
|
29,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services
|
|
|
93,333
|
|
|
|
9
|
|
|
|
83,991
|
|
|
|
-
|
|
|
|
84,000
|
|
Net
loss for the nine- month period ended September 30, 2007
– Landbank Group,
Inc.
|
(140,043
|
)
|
||||||||||||||||||
Net
loss for the nine- month period ended September 30, 2007
– Landbank, LLC
(the operations to be discontinued)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(593,128
|
)
|
|
|
(733,171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of September 30, 2007
|
|
|
9,928,664
|
|
|
$
|
993
|
|
|
$
|
513,244
|
|
|
$
|
(1,849,868
|
)
|
|
$
|
(1,335,631
|
)
|
·
|
changes
in general or local economic
conditions;
|
·
|
changes
in supply of or demand for similar or competing properties
in the
area;
|
·
|
bankruptcies,
financial difficulties or lease defaults by
customers;
|
·
|
changes
in interest rates and availability of permanent mortgage
financing that
may render the sale of a property difficult or unattractive
or otherwise
reduce the returns to stockholders;
|
·
|
changes
in governmental rules, regulations, and fiscal policies,
including changes
in tax, real estate, environmental, and zoning
laws;
|
·
|
periods
of high interest rates and tight money
supply.
|
No.
|
|
Description
|
2.1
|
Securities
Exchange Agreement dated November 1, 2007 by and among
Landbank Group,
Inc., Landbank Acquisition LLC and Family Products LLC.
(1)
|
|
10.1
|
Consulting,
Confidentiality and Proprietary Rights Agreement between
Landbank Group,
Inc. and Venor, Inc., dated September 27, 2007.
|
|
10.2
|
Form
of Option Termination Agreement.
|
|
10.3
|
Letter
of Termination, dated September 12, 2007, between Landbank
Group, Inc. and
Aziz Munir and Ray Dirks
|
|
10.4
|
Letter
of Termination, dated September 12, 2007, between Landbank
Group, Inc. and
Investment Capital Researchers, Inc.
|
|
10.5
|
Form
of Demand Promissory Note issued by Landbank, LLC.
|
|
10.6
|
Form
of Assignment of Promissory Note, agreed to by Landbank,
LLC.
|
|
31.1
|
Certification
of Principal Executive Officers Pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification
of Principal Financial Officer Pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of Principal Executive Officers Pursuant to Section 906
of the
Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification
of Principal Financial Officers Pursuant to Section 906
of the
Sarbanes-Oxley Act of 2002.
|
|
LANDBANK GROUP, INC. | |||
Date:
November 14, 2007
|
By:
|
/s/ Eric Stoppenhagen | |
Eric
Stoppenhagen
|
|||
President
|
|||