UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
Landbank Group, Inc.
(Name of Small Business Issuer in its charter)
Delaware 20-1915083
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7030 Hayvenhurst Avenue, Van Nuys, CA 91406-3801
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (818) 464-1640
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
Securities to be registered under Section 12 (g) of the Act:
Common Stock, $0.0001 Par Value
(Title of class)
Persons who respond to the collection of information contained
in this form are not required to respond unless the form
displays a currently valid OMB control number.
SEC 2336 (05-06)
FORM 10-SB
TABLE OF CONTENTS
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NO. TITLE PAGE NO.
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PART I
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Item 1: Description of Business..............................................3
Item 2: Management's Discussion and Analysis or Plan of Operation...........10
Item 3: Description of Property.............................................15
Item 4: Security Ownership of Certain Beneficial Owners and Management......16
Item 5: Directors, Executive Officers, Promoters, and Control Persons.......17
Item 6: Executive Compensation..............................................19
Item 7: Certain Relationships and Related Transactions......................19
Item 8: Description of Securities...........................................21
PART II
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Item 1: Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters.....................................23
Item 2: Legal Proceedings...................................................24
Item 3: Changes in and Disagreements with Accountants.......................24
Item 4: Recent Sales of Unregistered Securities.............................24
Item 5: Indemnification of Directors and Officers...........................25
PART F/S
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Financial Statements.........................................................F-1
PART III
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Item 1: Index to Exhibits...................................................26
Item 2: Description of Exhibits.............................................26
Signatures....................................................................27
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This registration statement contains forward-looking statements. These
forward-looking statements are not historical facts but rather are based upon
our current expectations, estimates, and projections about our industry, our
beliefs and our assumptions. Words such as "anticipates", "expects", "intends",
"plans", "believes", "seeks" and "estimates", and variations of these words and
similar expressions, are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to risks,
uncertainties, and other factors, some of which are beyond our control, are
difficult to predict, and could cause actual results to differ materially from
those expressed, implied or forecasted in the forward-looking statements. In
addition, the forward-looking events discussed in this registration statement
might not occur. These risks and uncertainties include, among others, those
described in "Risk Factors" and elsewhere in this registration statement.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect our management's view only as of the date of this
registration statement.
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PART I
Item 1. Description of Business
Business Development:
Landbank Group, Inc., ("Landbank" or the "Company") was incorporated in
the State of Delaware as Camryn Information Services, Inc., on May 13, 1997. The
Company operated for a brief period of time before it ceased operations on
February 25, 1999 when it forfeited its charter for failure to designate a
registered agent. The Company remained dormant until 2004 when it renewed its
operations with the filing of a Certificate of Renewal and Revival of Charter
with the State of Delaware on October 29, 2004. On November 3, 2004, the Company
filed a Certificate of Amendment and the Company's name was formally changed
from Camryn Information Services, Inc. to iStorage Networks, Inc. Such change
became effective on November 8, 2004. The Company subsequently changed its name
to Landbank Group, Inc., on January 27, 2006, following the acquisition of
Landbank, LLC (see below).
Acquisition of Landbank, LLC and Divestiture of Prior Operations
----------------------------------------------------------------
On January 26, 2006, the Company acquired 100% of the membership
interests in Landbank, LLC, a California limited liability company, in exchange
for shares of common stock of the Company. The exchange of shares for membership
interests was treated as a reverse acquisition under the purchase method of
accounting. The shares delivered in connection with the acquisition were
transferred by the four former principal stockholders of the Company to the
members of Landbank, LLC in exchange for the Company receiving all of the
ownership interests in Landbank, LLC and $140,000 in cash. Concurrently with the
acquisition of Landbank, LLC, the Company spun-off its wholly owned operating
subsidiary, iStorage Networks Group, Inc. ("iSNG"). The $140,000 in cash
accompanied the spin-off of iSNG to QED Storage, an entity owned by the four
former principal stockholders of the company. The $140,000 is cash accompanied
the spin-off of iSNG. The former members of Landbank, LLC acquired approximately
a 90% ownership interest in the Company. Landbank, LLC, was formed in December
2004 but did not commence operations until, the second quarter of 2005. It
currently operates as a wholly owned subsidiary of the Company. With the
divestiture of iSNG and the acquisition of Landbank, LLC, the Company now
operates exclusively in the real estate marketplace. It no longer operates its
former iStorage business. Future references in this registration statement to
the Company shall include Landbank and its operating subsidiary, Landbank, LLC,
unless the text specifically rejects such an inclusive reference.
On March 3, 2006, the Company by majority vote of its stockholders
approved a 10:1 reverse split of its outstanding common stock. Taking into
account the preservation of round lot ownership, the split resulted in 9,206,597
outstanding shares. As of September 30, 2006, such number was adjusted to
9,835,331 outstanding shares due to rounding. As of said date, the number of
restricted shares of common stock issued and outstanding is 8,829,447, 8,200,002
which are owned and controlled by the three (3) principal stockholders set forth
in Item 4 herein. All historical references to shares and per share prices in
this registration statement have been adjusted to reflect the 10:1 reverse
split.
The Company and/or any predecessor has not been and is not as of the
date of this filing in the process of seeking a petition in bankruptcy, in
receivership or in any similar proceeding.
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Business of Issuer:
From November 2004 until December 2005, the Company as iStorage
Networks, Inc. was engaged in the development of network storage
solutions/Internet security through its wholly owned operating subsidiary, iSNG.
Unable to achieve projected revenues from its operations, the Company
consummated the acquisition of Landbank, LLC, in exchange for stock of the
Company. Since December 2005, the Company has not operated its former iStorage
business. Since January 2006, the Company's sole operations have consisted of
the operations of Landbank, LLC.
Landbank makes bulk acquisitions of parcels of land, primarily through
the real property tax lien foreclosure process. Such bulk acquisitions are
divided into smaller parcels for resale. The real property tax lien foreclosure
process may take the form of either local government tax sales or sales by
owners of tax-defaulted parcels prior to a tax sale. Local government agencies
responsible for collecting real property taxes have the authority to force their
collection through tax sales. To collect their unpaid and overdue real property
taxes, some government agencies conduct tax lien foreclosure auctions. At these
foreclosure auctions, the real property is sold and the high bidder receives a
deed to the property. The opening bid amounts are usually equal to delinquent
taxes, interest and other costs. The process differs from state to state and
even county to county. Generally, however, properties acquired in this manner
are deeded to the purchaser by the relevant government entity, without any
warranties of title. The Company therefore undertakes appropriate due diligence
prior to bidding, including obtaining title reports and/or conducting title
searches depending on the value of the property. In some counties, properties
sold in this manner are subject to a right of redemption, whereby the defaulting
owner has a certain number of days to redeem the property. In instances where
the Company acquires properties subject to such a right, we hold the property in
inventory until the right has lapsed. If the right is exercised, the property
reverts to the defaulting owner, and we receive a return of our purchase price
plus interest. In addition, in most counties, the purchaser is responsible for
any eviction proceedings. The Company seeks to acquire unimproved land, however,
and to date has not had any exposure in this regard. Landbank considers various
criteria in terms of its land acquisitions, which include but are not limited
to, location, availability of utilities, proximity to water, geographic
desirability, and proximity of significant population centers. The current focus
of Landbank is in the Western, Southwestern, and East Coast regions of the
United States.
Landbank acquires properties "in-bulk" for resale purposes only and not
with a view toward long-term investment. Typically, the lead-time from date of
acquisition to date placed in Landbank channels of distribution is from three
(3) to seven (7) months as surveys are made of the redefined parcels.
Landbank resells the land it acquires through multiple distribution
channels, some more traditional than others. They include the Internet, through
eBay and Bid4Assets, and leads developed by Landbank, its affiliates, and
third-party wholesalers. Landbank has found that use of the Internet allows it
to market its inventory at a cost significantly lower than that of mainstream
advertising. Landbank employs acquisition teams that research and buy acreage,
lots, and houses in a number of states and in Mexico. To date, Landbank has
acquired properties in Colorado, Florida, Nevada, Oklahoma, New York,
Pennsylvania, Texas, and Chihuahua, Mexico. The real property inventory of
Landbank as of December 31, 2005 was comprised of eighteen different
pre-unbundled tracts of land.
The Company has entered into royalty agreements with several marketing
companies, namely, John Beck's Amazing Profits, LLC ("JBAP"), John Alexander
LLC, and Jeff Paul LLC. These companies are affiliates of the Company. Family
Products, LLC. ("FPLLC") is the sole member of each of these marketing
companies. FPLLC is in turn owned and controlled by two of the Company's
principal stockholders, Doug Gravink and Gary Hewitt, who are directors and
officers of the Company. These marketing companies provide customer leads for
Landbank's property sales in return for a royalty of 35% of the gross profit
less acquisition costs realized on the sale of any property. The term of each of
these agreements is ten years, with the right of the Company to terminate after
five years.
The real estate industry is a highly fragmented and regional business.
There are approximately 30,000 municipalities in the United States, each with
its own set of property valuation criteria and regional regulations. As a
result, the majority of the Company's competitors that are engaged in acquiring
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properties through the real property tax lien foreclosure process focus on
specific regions. One of the Company's strategies in differentiating itself has
been to attempt to cross these regional boundaries and offer properties in as
many jurisdictions as possible. In time, as the Company becomes more familiar
with state and local rules and regulations, it hopes to develop a nationwide
inventory of properties.
A majority of the Company's competitors also rely primarily on the
Internet and live auctions to resell their parcels. The Company devotes
significant time and effort in the development of a distribution database as a
strategy for further differentiating itself from its competitors. This database
has become a primary source of buyers for the Company's properties.
The Company believes that its principal challenge will be in
identification and acquisition of suitable properties. Since the bulk of the
competition is region-specific, the Company feels that by pursuing a broad based
national approach; it will continue to maintain a competitive advantage.
Competitors engaged in acquiring similar properties include National
Recreational Properties, LandAuction.com, Landwatch.com, and a number of smaller
companies.
Certain of the Company's property acquisitions are subject to the
requirements of the Interstate Land Sales Full Disclosure Act of 1968, depending
upon the specific characteristics of the transaction. This Act mandates certain
registration and disclosure requirements in connection with the development and
sale of certain subdivisions where the number of non-exempt lots exceeds a
predetermined threshold and development satisfies several pre-established
criteria. The applicability of this Act to a particular project can increase
costs of doing business and cause a delay in the Company's ability to market the
subject properties and/or to provide potential purchasers with a wider window in
which to rescind offers to purchase. This could result in a surplus of
properties in inventory, which could adversely affect the Company's business and
results of operation.
The total number of Company employees is fifteen, all of whom are
full-time employees,
Reports to Security Holders:
The Company is filing Form 10-SB in order to become a reporting company
with the Securities and Exchange Commission ("SEC") and thereby have the ability
to present quotes on the Over-the-Counter ("OTC") Bulletin Board. The Company is
presently listed for trading in the "Other" OTC or "Grey Market" and accordingly
has a limited ability for fund-raising. The Company believes that listing on the
OTC Bulletin Board will enable the Company to have greater access to the public
markets. This will benefit the Company in terms of its ability to raise
additional capital if and when needed. The Company believes that the anticipated
increase in liquidity that should result from listing on the OTC Bulletin Board
will benefit its stockholders.
Following the effective date of this registration statement, the
Company will be required to file annual reports in accordance with the
Securities Exchange Act of 1934 (`"34 Act"). The Company has a December 31
year-end. The Company will not furnish its stockholders with annual reports
containing audited financial statements, but will make them available upon
request. Additionally, the Company is evaluating making such reports available
on its website.
The Company may from time to time, as applicable, furnish its
stockholders with such additional information, as it deems appropriate, relative
to the business operations of the Company. Such information may include news of
5
a change in management, purpose and/or control of the Company or any material
condition that may impact the Company's operations.
The public may read and copy any materials filed with the SEC at the
SEC's Public Reference Room located at 100 F Street, NE, Washington, D.C. 20549.
Information as to the operation of the Public Reference Room can be obtained by
calling 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC at http://www.sec.gov. The
Company's website domain is: http://www.landbankgroupinc.com.
Risk Factors:
The Company's operations and its securities are subject to a number of
substantial risks, including those described below. If any of these or other yet
unforeseen risks actually occur, the Company's business, financial condition,
and operating results, as well as the trading price or value of its securities
could be materially adversely affected. No attempt has been made to rank these
risks in the order of their likelihood or potential harm. In addition to those
general risks enumerated elsewhere, any purchaser of the Company's common stock
should also consider the following risk factors:
Risks Related to the Company's Operations:
We have a limited operating history and cannot guarantee profitability.
The Company acquired its current operations in January of 2006 through
the purchase of Landbank LLC. Landbank, LLC itself commenced operations during
the second quarter of 2005. At this stage, the Company has only a limited
operating history upon which an evaluation of performance and future prospects
can be made. There can be no assurance that the Company will be able to continue
to generate revenues in the future.
The Company is subject to all of the business risks associated with a
new enterprise, including, but not limited to the risk of unforeseen capital
requirements, lack of fully-developed products, failure of market acceptance,
failure to establish time proven business relationships, and a competitive
disadvantage vis-a-vis larger and more established companies.
We may need to raise capital in the future, and if such capital is not available
on acceptable terms, we may have to curtail or cease operations.
The Company's business is dependent in part on being able to acquire
and make available a broad selection of properties. Acquisition of these
properties requires significant capital expenditure. While the Company intends
to generate sufficient revenues in the future to fund our acquisitions, it is
possible that we may need to raise additional capital. Consequently, we may be
unable to raise sufficient additional capital on terms deemed acceptable. In
that event, the Company may have to curtail or cease operations and/or limit the
number of properties maintained in inventory. This could have an adverse impact
on the Company's ability to effectively compete with other companies, which are
able to offer customers a broader range of properties. If additional funds are
raised through the issuance of debt securities or preferred stock, these
securities could have rights that are senior to the holders of the common stock,
and any debt securities could contain covenants that would restrict the
Company's operations. In addition, if the Company raises funds by selling common
stock or convertible securities, existing stockholders could face dilution of
their shares.
We may be unable to identify or acquire suitable properties at a low cost, which
could affect our ability to generate revenues.
The Company's ability to generate revenues is highly dependent on its
ability to maintain low acquisition costs while offering a wide range of
suitable properties. There can be no assurance that the Company's acquisition
teams will be successful in locating suitable properties on financially
attractive terms.
6
Competition for properties may increase costs and reduce returns.
The Company competes to acquire real property with individuals and
other entities engaged in similar activities. Many of our competitors have
greater financial resources, and thus, a greater ability to borrow funds and to
acquire properties. Competition for properties may reduce the number of suitable
acquisition opportunities available and may have the effect of increasing
acquisition costs thereby adversely impacting Company profits.
We acquire a substantial number of our properties through the tax-lien
foreclosure process, and may therefore be subject to additional costs for
eviction and/or clearing title.
When acquiring properties through the tax-lien foreclosure process, the
property is deeded to the buyer by the relevant government entity without any
warranties as to title, and in some instances, subject to a right of the
original owner to redeem the property within a certain number of days. In
addition, the buyer of the property remains responsible for any eviction of a
prior owner who remains in possession of the property. The majority of parcels
that we acquire are unimproved lots with no owner in possession, and we attempt
to perform adequate due diligence in connection with the purchase of each piece
of property to ensure that there are no material liens or encumbrances affecting
title to the property. We cannot however guarantee that we will not be required
to undertake eviction or other proceedings in connection with properties
purchased in this process, or that we will not encounter undisclosed
encumbrances. In the event such a situation arises, we may incur significant
additional acquisition costs which may adversely affect our net revenues and/or
results of operations. In counties where there is a right of redemption, we hold
the property in inventory until the right has lapsed. The Company does not
currently acquire significant amounts of properties in counties where such
rights exist, however, if we do, any exercise of these rights could delay our
ability to generate revenues from these properties.
We may be unable to sell a property, if or when we decide to do so, which could
delay revenues needed to fund operations.
The real estate market is affected by many factors, such as general
economic conditions, availability of financing, interest rates, and other
factors, including supply and demand, that are beyond the Company's control. The
Company cannot predict whether it will be able to sell any property for the
price or on the terms that it sets or whether any price or other terms offered
by a prospective purchaser would be acceptable. The Company cannot predict the
length of time needed to find a willing purchaser and to close the sale of a
property.
The Company may be required to expend funds to correct defects or to
make improvements before a property can be sold. The Company cannot make any
assurance that it will have funds available to correct such defects or to make
such improvements.
Our principal stockholders have broad control over our operations.
The Company's principal stockholders beneficially own approximately 86%
of the issued and outstanding share capital of the Company. As a result these
stockholders are able to exercise significant influence over the Company,
including the election of directors, amendments to the articles of incorporation
or by-laws of the Company, the approval of mergers or other business
combinations, and the sale or purchase of material assets. The interests of
these stockholders in deciding these matters and the factors they consider in
making such decisions could be different from the interests of the Company's
other stockholders.
We may lose key personnel and/or be unable to maintain current
relationships with affiliates upon which we depend.
The Company's success depends to a significant degree upon the
continued relationship with certain of its affiliates and the contribution of
its executive management team. If any of the Company's executives decide to
leave the Company, we could lose access to important affiliate services and/or
acquisition or sales channels, which could adversely affect our operations
and/or financial condition.
We are subject to general real estate risks.
The Company is subject to risks generally associated with the ownership
of real estate, including:
o changes in general or local economic conditions;
o changes in supply of or demand for similar or competing properties in
the area;
o bankruptcies, financial difficulties or lease defaults by customers;
o 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;
o changes in governmental rules, regulations, and fiscal policies,
including changes in tax, real estate, environmental, and zoning laws;
7
o periods of high interest rates and tight money supply.
The Company's operations can be negatively affected by the occurrence
of any of these or other factors beyond the Company's control.
We may be subject to litigation, which could divert substantial time and money
from our business.
The Company may be subject to claims from customers or other third
parties. If such parties are successful, they may be able to obtain injunctive
or other equitable relief, which could effectively diminish the Company's
ability to further acquire, subdivide, and sell properties, and could result in
the award of substantial damages. Management may be required to devote
substantial time and energy in defending any such claims.
Risks Related to the Ownership of the Company's Stock:
There is a limited market for the Company's common stock. If a substantial and
sustained market for the Company's common stock does not develop, the Company's
stockholders may have difficulty selling, or be unable to sell, their shares.
The Company's common stock is presently traded in the "Other"
Over-the-Counter or "Grey Market" market on an unsolicited quote basis wherein
trades are reported by broker-dealers to their Self-Regulatory Organization
("SRO") which distributes the trade data to market data vendors and financial
websites. Since bids and offers are not collected in a central location, market
transparency and best execution are more elusive. There is only a limited market
for the Company's common stock and there can be no assurance that this market
will be maintained or broadened. If a substantial and sustained market for the
Company's common stock does not develop, the Company's stockholders may have
difficulty selling, or be unable to sell, their shares.
The Company has filed this registration statement to register its
common stock under the '34 Act in order to meet the current requirements for
quotation on the OTC Bulletin Board. The Company's stock can be quoted on the
OTC Bulletin Board if, and only if:
o the Securities and Exchange Commission ("SEC") has no further
substantive comments on the Company's registration statement, and
o a broker-dealer files a Form 15c-211 with the NASD to permit the
Company's common stock to be quoted on the OTC Bulletin Board and the
broker is granted the right to quote the Company's stock.
Accordingly, we cannot provide any assurance that we will achieve
quotation of our stock on the OTC Bulletin Board.
Substantial sales of the Company's common stock could cause stock price to fall.
As of September 30, 2006, the Company had 9,835,331 shares of common
stock outstanding of which approximately 8,829,447 shares are considered
"restricted securities" as that term is defined under Rule 144 promulgated under
the Securities Act of 1933 ("'33 Act"). These restricted shares are eligible for
sale under Rule 144 at various times. No prediction can be made as to the
affect, if any, that the sales of shares of common stock or the availability of
such shares for sale will have on the market prices prevailing from time to
time. Nevertheless, the possibility that substantial amounts of the Company's
common stock may be sold in the public market may adversely affect prevailing
market prices for the common stock and could impair the Company's ability to
raise capital through the sale of its equity securities.
8
The Company has a significant number of shares authorized but unissued. These
shares may be issued without stockholder approval. Significant issuances of
stock would dilute the percentage ownership of the Company's current
stockholders and could likely have an adverse impact on the market price of the
common stock.
As of September 30, 2006, the Company had an aggregate of 90,164,669
shares of common stock authorized, but unissued. 3,000,000 shares have been
reserved for issuance under the Company's 2006 Stock Incentive Plan, approved on
November 2, 2006, and an additional 10% has been reserved for issuances to
consultants. for any specific purpose. All of such remaining shares of common
stock may be issued without any action or approval by the Company's
stockholders. Any such shares issued would further dilute the percentage
ownership of the Company's current stockholders and would likely have an adverse
impact on the market price of the common stock.
The Company does not intend to pay dividends in the near future.
The Company's board of directors determines whether to pay dividends on
the Company's issued and outstanding shares. The declaration of dividends will
depend upon the Company's future earnings, its capital requirements, its
financial condition, and other relevant factors. The Company's Board of
Directors does not intend to declare any dividends on the Company's shares for
the foreseeable future. The Company anticipates that it will retain any earnings
to finance the growth of its business and for general corporate purposes.
Our securities are currently classified as a "Penny Stock" which may limit our
stockholders' ability to sell their securities.
The price of our common stock is currently below $5.00 per share, and
is therefore considered "penny stock" under Rule 3a51-1 of the '34 Act. As such,
additional sales practice requirements are imposed on broker-dealers who sell to
persons other than established customers and "accredited investors" as defined
in Rule 501 of Regulation D as promulgated under the '33 Act. The prerequisites
required by broker-dealers engaged in transactions involving "penny stocks" have
discouraged, or even barred, many brokerage firms from soliciting orders for
certain low priced stocks.
With respect to the trading of penny stocks, broker-dealers have an
obligation to satisfy certain special sales practice requirements pursuant to
Rule 15g-9 of the '34 Act, including a requirement that they make an
individualized written suitability determination for the purchase and receive
the purchaser's written consent prior to the transaction.
Broker-dealers have additional disclosure requirements as set forth in
the Securities Enforcement Act Remedies and Penny Stock Reform Act of 1990.
These disclosure requirements include the requirement for a broker-dealer, prior
to a transaction in a penny stock, to deliver a standardized risk disclosure
document that provides information about penny stocks and the risks of the penny
stock market.
Additionally, broker-dealers must provide customers with current bid
and offer quotations for penny stocks, the compensation payable the
broker-dealer and its salesperson in the transaction, and the monthly account
statements showing the market value of each penny stock held in a customer's
account.
Accordingly, the market liquidity of the Company's common stock and the
ability of any present and prospective stockholder-investors to sell their
securities in the secondary market is limited due to the above penny stock
regulations and the associated broker-dealer requirements.
9
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion of our financial condition and results of operations
should be read in conjunction with our financial statements and the notes to
those statements included elsewhere in this registration statement. In addition
to the historical financial information, the following discussion and analysis
contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this registration statement.
Overview
The Company acquired Landbank, LLC and its real property operations in
January 2006. Concurrent with this acquisition, there was also a change in
management and principal ownership of the Company. Prior to its acquisition of
Landbank, LLC, the Company was engaged, through its former operating subsidiary,
iSNG, in the development of computer network storage solutions. From 1999
through November 2004, the Company was dormant, with no operations. It was only
during the period from November 2004 to December 2005 that the Company, as
iStorage Networks, Inc., was operational. Landbank, LLC had only a limited
operating history prior to being acquired by the Company, commencing operations
in the second quarter of 2005 and had no operations assets or liabilities as of
December 31, 2004. Accordingly, we have not included below any discussion of
changes in the Company's financial condition or results of operations for the
fiscal year ended December 31, 2005 compared to 2004 or for any prior years, as
we believe such discussion would not be meaningful. See Operating Results below.
Since January 2006, the Company has been engaged solely in the business
of acquiring parcels of land in bulk, primarily through the real property tax
lien foreclosure process and then reselling the land as individual parcels. The
Company's business is asset intensive. Since the business is predicated on
identifying, repackaging, and selling properties, long-term investment decisions
do not play a significant role. Interest rate trends do not necessarily impact
the Company's business; as such rates tend to produce a canceling effect in
terms of both the purchase and the resale prices.
We currently have operations in nine states, and have also acquired
properties in Mexico. We are not dependent on any single customer and no
customer represents over 10% of our total revenues.
The objective of the Company is to achieve and sustain a manageable
growth rate that will enable it to become a market leader in its field.
Management believes that this objective can be achieved by expanding the
Company's "direct to consumer" marketing efforts, developing networking
responsiveness to assess buyer satisfaction, and dedicating additional resources
to acquisition efforts. To date, marketing efforts have confirmed that customers
who buy have a recurring need to buy for investment and/or resale purposes.
Consequently, each customer represents the potential for multiple sales. The
fact that the Company operates in several geographical regions tends to mitigate
any seasonal or regional factors that might impact its business operations.
The Company finances its operations by loans from affiliated companies
and revenues generated from operations. From the commencement of current
operations in the second quarter of 2005 through September 30, 2006, the Company
has net borrowings from its affiliates of $2,285,683 and net revenues totaling
$4,598,293, of which $1,254,542 was gross profit, which is defined as revenue
less the cost of the land, processing fees, merchant fees, dues and taxes, and
royalties. The Company's net revenues currently provide enough cash to sustain
operations. We derive revenue solely from the sale of the properties we acquire.
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We incur the following costs of revenue:
Operating Expenses
Sales and Marketing Expenses. Our sales and marketing expenses,
excluding royalty agreements, consist primarily of personnel costs for our sales
and marketing staff, in addition to commissions, travel and lodging, marketing
programs, and allocated facilities, and other related overhead. We pay
commissions as we recognize revenue and collect receivables.
Acquisition Team. We have a team of seven acquisition specialists
responsible for identifying and acquiring suitable properties. Expenses consist
primarily of personnel costs for team members, in addition to commissions,
travel and lodging, and other related overhead. We pay commissions only upon
completion of the purchase transaction, including transfer of the deed. Due to
of the hiring of additional acquisition specialists in February 2006, expenses
in this category increased significantly in February 2006.
General and Administrative Expenses. Our general and administrative
expenses consist of personnel costs for executives, finance/accounting, and
human resources as well as costs relating to travel and lodging,
accounting/audit services, legal, and other professional services.
Acquisition Costs. We have acquired all of our properties to date, with
the exception of certain parcels in Nevada, for cash. The average cost of
properties that we acquire varies depending on the size, location and other
specific characteristics of each property.
Income Taxes. Our income tax expense includes the tax obligations for
the multiple tax jurisdictions in which we operate. The income tax expense is
affected by the profitability of our operations in the jurisdictions in which we
operate, the applicable tax rate for these jurisdictions, and our tax policies.
We make significant estimates in determining our consolidated income tax
expense. If our actual amounts differ from these estimates, our provision for
income taxes could be materially impacted.
Royalty payments. We derive a significant number of customers from
databases developed by certain of our affiliates. Pursuant to royalty
agreements, we pay a royalty to these affiliates equal to 35% of gross profits
(less acquisition costs) earned by us on any cash sale of a property to a
customer referred to us under these royalty agreements. Our ability to draw on
these customer databases significantly reduces our direct sales and marketing
expenses.
In the future, the Company intends to continue to make use of its
affiliate databases, but also hopes to develop other distribution methods,
particularly where the Company acquires a significant number of lots in one
area. The Company intends to continue to expand into new states for the purchase
of suitable properties.
Operating Results
Provided below is a discussion of the financial condition and results
of operations relating to the Company's current operations, which commenced in
January 2006 with the Company's acquisition of Landbank, LLC. Since that time
the Company has had no other operations. The consolidated financial results for
the nine-month period ended September 30, 2006 and the audited financial results
11
for the year ended December 31, 2005 presented in Part F/S of the registration
statement and discussed below therefore represent the results of operations of
Landbank, LLC. Accordingly, we have not included any discussion of the results
of the Company's former operations, as we do not believe such discussion would
be meaningful.
Nine months ended September 30, 2006 compared to the nine-month period
ended September 30, 2005.
For purposes of meaningful discussion, the consolidated financial
results for the nine-month period ended September 30, 2006 have been compared
with the results of operations for Landbank, LLC for the same period in 2005.
Note that significant changes are primarily a result of the fact that Landbank,
LLC did not commence operations until the second quarter of 2005, and had only
limited operations during such period.
Net revenue for the first nine months of 2006 was $3,333,980, compared
to $516,689 for the same period in 2005. The significant increase in net
revenues, on a year-to-year basis, is due to the Company's limited business
operations during the nine-month period ending September 30, 2005. The Company
generated revenue during the entire nine-month period ending September 30, 2006.
Cost of goods sold during the period ending September 30, 2006 was
$2,409,783, which consisted of land costs ($1,534,952), royalties to an
affiliate ($485,426), processing fees ($142,467), sales commissions ($134,641),
dues and taxes ($35,817), and merchant fees ($76,480). During the same period in
fiscal year 2005, cost of goods sold totaled $413,054, which consisted of land
costs ($310,827), royalties to an affiliate ($55,804), sales commissions
($16,984), merchant fees ($10,189), dues and taxes ($7,658), and processing fees
($11,592). The significant increase is due to the fact that the Company had
limited operations during the nine-month period ending June 30, 2005, with the
result being far less properties sold as compared to the same period in fiscal
year 2006.
Gross profit for the nine months ending September 30, 2006 was
$924,197, as compared to $103,635 in the same period ending September 30, 2005.
Operating expenses for the first nine months of 2006 were $1,440,724,
compared to $74,669 for the same period in 2005. Operating expenses for the nine
months ending September 30, 2006 consisted primarily of salaries and related
taxes ($388,883), legal/professional/accounting fees ($850,378), and travel
expenses ($114,782). Salaries and related taxes increased as the Company
increased headcount from one (1) employee as of September 30, 2005 to fifteen
(15) as of September 30, 2006. Professional fees increased as the result of (1)
the transaction involving the acquisition of LandBank, LLC by the Company, (2)
audit fees for fiscal year 2005, (3) consulting fees incurred in relation to
fundraising and public relations (the Company expensed $374,667 in relation to
stock issued to consultants), and (4) fees incurred in connection with the
preparation and filing of this Registration Statement.
The Company incurred a one-time charge during the period ending
September 30, 2006 of $140,000 relating to its acquisition of LandBank, LLC.
This non-recurring charge represents a cash payment made by Landbank, LLC per
the terms of the acquisition agreement.
Interest expense for the nine months ending June 30, 2006 totaled
$131,599, of which $90,442 was interest accrued on funds owed to affiliates and
the remaining $41,157 being interest paid on the loan for the Pershing County,
Nevada properties. During the nine months ending September 30, 2005, interest
expense totaled $22,421, of which $17,536 was accrued on funds owed to
affiliates and $4,885 was paid on the bank loan.
For the nine-month period ended September 30, 2006, the Company had a
net loss, before taxes, of $788,126. The comparable result for the same period
in 2005 was net income of $$6,545. The Company's operating results during the
nine month period ending September 30, 2006 were adversely impacted by (1) the
one-time charge of $140,000 to acquire Landbank, LLC, (2) the legal and
professional fees incurred in the acquisition of Landbank, LLC, (3) the $374,667
one-time charge for stock issued to consultants, and (4) the preparation and
filing of this registration statement.
12
Fiscal Year ended December 31, 2005
The discussion below refers to the results of operations of the Company's
wholly-owned operating subsidiary, Landbank, LLC prior to its acquisition by the
Company in January 2006. Landbank, LLC's first year of operation was 2005.
Revenue for the twelve-month period ended December 31, 2005 was $1,264,313, with
cost of goods sold totaling $933,968. Cost of goods sold consisted of the
following:
Land costs $640,529
Royalties to affiliate 177,878
Sales commissions 41,570
Processing fees 40,334
Merchant fees 24,942
Dues and taxes 8,715
--------
$933,968
========
Gross profit for fiscal year 2005 was $330,345.
Fiscal year 2005 operating expenses totaled $182,420, which consisted
primarily of legal and professional fees of $119,406, travel expenses of
$46,045, salaries and related taxes of $36,400, and office rent to an affiliate
of $12,570. These expenses were partially offset by other income totaling
$36,266.
Income from operations for the twelve month period in 2005 was
$147,925, which was offset by interest expense of $59,552, of which $19,118 was
paid on the loan for the Nevada property with the remaining $40,434 of interest
expense being accrued on funds borrowed from affiliates.
Income before taxes was $88,373 for fiscal year 2005, while net income
was $82,373 after a $6,000 provision for income taxes.
Assets and Liabilities
As stated above under "Operating Results," for meaningful comparison
purposes, the assets and liabilities of the Company as of September 30, 2006
based on its consolidated financial statements for the nine-month period
then-ended, have been compared with the assets and liabilities as of December
31, 2005 (the end of our most recent fiscal year) as set forth in the 2005
audited financial statements for its operating subsidiary, Landbank, LLC, as
opposed to the assets and liabilities of the Company's former operations.
13
The Company had a cash balance of $219,569 as of September 30, 2006, a
decrease of $411,856 from the $631,425 on hand as of December 31, 2005. Cash
decreased as the result of (1) the Company's net loss during the nine-month
period ending September 30, 2006, and (2) the purchase of additional properties.
Inventory was $3,445,640 as of September 30, 2006, an increase of
$1,009,162 from the $2,436,478 that was held as of December 31, 2005. The
Company purchased significant new holdings in Pennsylvania, Texas, and Colorado
during the first nine months of fiscal year 2006.
Prepaid expenses totaled $266,030 as of September 30, 2006, which
consisted of accrued royalties to an affiliate ($144,847), dues and taxes
($37,946), sales commissions ($41,318), processing fees ($46,300), and merchant
fees ($23,770) and other prepaid expenses totaling $9,795. Prepiad expenses were
$324,627 as of December 31, 2005, which consisted of accrued royalties to an
affiliate ($202,882), processing fees ($51,600), sales commissions ($43,841),
and merchant fees ($26,304).
As of September 30, 2006, the Company owed $2,459,535 to affiliates, an
increase of $1,136,694 from the $1,322,841 owed to affiliates as of December 31,
2005. The increase in the amounts owed to affiliates is primarily the result of
the Company borrowing cash to purchase additional properties. As of September
30, 2006, the amount owed to affiliates consisted of principal in the amount of
$2,328,659 and accrued interest of $130,876.
As of September 30, 2006, the Company owed $522,085 to a third party
who financed the Company's purchase of properties in Pershing County, Nevada.
The properties were purchased in August 2005, and the amount owed as of December
31, 2005 was $572,709. The Company is required to make monthly payments of
principal and interest, with total principal payments of $50,624 and interest
payments of $41,157 having been made by the Company during the nine months
ending September 30, 2006.
Liquidity and Capital Resources
To date, the Company has funded the cost of the acquisition of new
properties primarily from net revenues received from sales of properties in
inventory and from funds borrowed from affiliates. The Company has not incurred
any debt in order to finance its operations, with the exception of amounts due
to affiliates and mortgages taken out for 19 sections of land acquired in
Pershing County, Nevada in 2005. These mortgages bear interest at 10% per annum
and mature September 1, 2015. The Company anticipates selling these properties
by December 31, 2007 and repaying these mortgages in full.
While the Company believes that it can achieve its current objectives
without raising additional capital, additional capital would allow the Company
to benefit from economies of scale in the real estate market and to shorten the
lead-time required to acquire new properties. Toward that end, the Company has
engaged consultants to advise it with respect to raising capital in the public
and/or the private marketplaces in the short and medium term. The Company
believes, however, that based upon current plans, it will able to fund its
current operations from existing cash flows from operations for the next 12
months without raising any additional capital. To the extent that our cash flow
from operations is insufficient to fund our future activities, we may need to
14
raise additional funds through equity or debt financing. There can be no
assurance that such financings can be obtained on favorable terms, if at all.
Since the Company had revenues in fiscal year 2005 and for the first
nine months of 2006, the Company plans to continue its current model, namely, an
emphasis on carefully selecting investment opportunities while at the same time
broadening its resale base. The Company has no plans to make any significant
changes in the number of its employees, although we do anticipate possibly
increasing the number of acquisition specialists as we expand into new states.
The Company has no material commitments for capital expenditures as the
Company lets marketplace conditions serve as its guide in terms of acquisition
exposure. There are no significant elements of income or loss that arise from
other than the Company's continuing operations.
Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as defined in Item
303 of Regulation S-B.
Item 3. Description of Property
The Company's principal office is located in Van Nuys, California. The
Company shares this address, with its approximately 21,000 square feet of office
space at no charge with its affiliate Family Products, LLC ("FPLLC"). The
Company estimates that it uses approximately 300 square feet of office space at
this facility, with the estimated monthly rent value being approximately $207,
which the Company does not deem as material. Doug Gravink and Gary Hewitt,
Directors and CEO and President respectively of the Company jointly own FPLLC.
FPLLC leases this space from 7030 Hayvenhurst, LLC ("7030"), under a five-year
lease, which expires in 2008. 7030 is owned by H.G.I. Investments, LLC ("HGI").
HGI is affiliated with the Company through common ownership. Doug Gravink and
Gary Hewitt own a 41% interest in HGI.
The Company also operates a satellite office in American Fork, Utah, a
processing and acquisition facility in Alameda, California, and a sales office
in Phoenix, Arizona. Space at the sales office is jointly leased with Mentoring
of America, LLC ("Mentoring"), an affiliated company through common ownership.
Mentoring is jointly owned by Doug Gravink and Gary Hewitt, Directors and CEO
and President respectively of the Company. The lease term is thirty-two months
and expires in 2008. The Company pays a pro rata share of the lease payments
based upon the percentage of space it occupies. Mentoring, at its discretion,
can instruct the Company not to remit cash payment for the monthly rent and
instead apply the monthly rent fee to any outstanding inter-company balance
between the companies. During fiscal year 2005, the Company recorded monthly
rent fees totaling $12,570, which included June 2005 through December 2005. Rent
expense totaled $16,663 for the nine months ended September 30, 2006. The
Company does not pay rent at either the American Fork or Alameda offices. The
American Fork space is shared with Mentoring, with estimated usage of
approximately 200 square feet and an estimated cost, if the Company were
required to pay rent, of approximately $360/month, which amount the Company
believes immaterial. The Alameda office space is provided by John Beck, with an
estimated usage of approximately 200 square feet and an estimated cost, if the
Company were required to pay rent, of approximately $200/month, which amount the
Company believes immaterial. The Company recently entered into a lease for its
own space in Alameda, commencing January 1, 2007. The term of this lease is
twenty-five months with an annual base rent of $27,542 for the first twelve
months, and $28,389 therafter.
Investments in real estate or interests in real estate. The Company
does not hold any investments in real estate or interests in real estate. The
Company acquires real property for immediate resale only, and not for investment
purposes. The Company purchases the properties for cash and does not operate or
15
mortgage any of the properties with the sole exception of land in Pershing
County, Nevada. This property is the only property in inventory for which the
book value amounts to ten percent (10%) or more of the total assets of the
Company and its consolidated subsidiary for the last fiscal year. The details of
the mortgage on this property are set forth in Note 10 to the Notes to Unaudited
Financial Statements for Landbank Group, Inc. and Subsidiary. Acquired
properties are recorded at cost and treated as inventory until sold. Properties
appear in inventory as lots or bulk tracts depending upon the stage of
development. Set forth below are the inventories (rounded to the nearest dollar)
as of December 31, 2005, and September 30, 2006:
--------------------------------------------------------------------------------
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 09/30/06 Individual Lots $2,243,043
--------------------------------------------------------------------------------
(unaudited) Bulk Tracts 1,202,597
----------
--------------------------------------------------------------------------------
$3,445,640
==========
--------------------------------------------------------------------------------
Following is a summary of our inventories by geographic region and value as of
September 30, 2006:
Actively Being Prepared
State Marketed for Marketing Total
-------------------- ------------ ------------ -------------- ------------
Colorado $ 349,200 $- $349,200
Florida 46,800 - 46,800
Mexico - 298,348 298,348
Michigan 14,481 - 14,481
Nevada - 851,880 851,880
New Mexico 73,125 - 73,125
New York - 52,369 52,369
Oklahoma 37,946 2,522 40,468
Pennsylvania 595,885 - 595,885
Texas 1,087,084 36,000 1,123,084
------------ -------------- ------------
$2,204,521 $1,241,119 $3,445,640
============ ============== ============
Investment in real estate mortgages. The Company does not invest in
real estate mortgages.
Securities of or interests in persons primarily engaged in real estate
activities. The Company does not have any investments in securities or interests
in persons primarily engaged in real estate activities.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information relating to the beneficial
ownership of the Company's common stock by those persons beneficia1ly holding
more than 5% of the Company's common stock, by the Company's directors and
executive officers, and by all of the Company's directors and executive officers
as a group as of September 30, 2006.
(3)
(1) (2) Amount and Nature of (4)
Title of Class Name and Address of Beneficial Owner Beneficial Ownership (1) Percent of Class (2)
Doug Gravink
1. Common 7030 Hayvenhurst Ave.
Van Nuys, CA 91406 2,733,334 27.8%
Gary Hewitt
2. Common 7030 Hayvenhurst Ave.
Van Nuys, CA 91406 2,733,334 27.8%
John Beck (3)
3. Common 7030 Hayvenhurst Ave.
Van Nuys, CA 91406 2,733,334 27.8%
John Genesi
16
4. Common 7030 Hayvenhurst Ave.
Van Nuys, CA 91406 -0- -0-
Ray Gaytan
5. Common 11400 Olympic Blvd.
Los Angeles, CA 90064 4,680 <0.001%
Stephen Weber (4)
6. Common 5808 Varna Ave. 200,000 2.0%
Van Nuys, CA 91401
7. Common Directors and Executive Officers as 8,404,682 85.4%
a Group (6 persons)
(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 September 30, 2006.
(3) Held as JTWRS with his wife.
(4) 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.
(5) On November 2, 2006, the Company granted options to each of
its independent directors to acquire Company common stock
pursuant to the Company's 2006 Stock Incentive Plan (the
"Plan"). The grant of these options is intended to be in lieu
of any salary or other compensation for their services on the
Board. The options will vest 20% per year over five (5) years,
commencing December 31, 2006. The total amount of shares which
may be issued under these awards is 1,200,000. On December 28,
2006, the Company granted options under the Plan to its CEO
and President. These options will vest only upon the
achievement of certain performance goals. The total amount of
shares issuable is 200,000.
Item 5. Directors, Executive Officers, Promoters and Control Persons
Landbank has a five person Board of Directors, two of whom are
independent of the Company. In addition, the Company has formed an Audit
Committee, effective July 12, 2006, comprised of Ray Gaytan and Steve Weber, the
two independent directors of the Company. Mr. Gaytan serves as the audit
committee financial expert for the Committee.
--------------------------------------------------------------------------------
Name Age Position Held and Tenure
--------------------------------------------------------------------------------
Doug Gravink 50 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 63 Director since January 2006
--------------------------------------------------------------------------------
Ray Gaytan 53 Independent Director since January
--------------------------------------------------------------------------------
2006
--------------------------------------------------------------------------------
Stephen Weber 58 Independent Director since January
--------------------------------------------------------------------------------
2006
--------------------------------------------------------------------------------
17
Biographical Information.
Doug Gravink, Chief Executive Officer. Mr. Gravink has been Chief Executive
Officer and a director of the Company since January 2006. Concurrently with his
role as CEO of the Company, Mr. Gravink serves as the co-managing member of a
multimedia marketing company, Family Products, LLC ("FPLLC"), a position he has
held for the last five (5) years. From 1993 to 1997, Mr. Gravink served as
President of Positive Response Media, Inc.
Gary Hewitt, President. Gary Hewitt has been President, Secretary, and a
director of the Company since January 2006. Concurrently with his role as
President of the Company, Mr. Hewitt serves as the co- managing partner with
Doug Gravink of FPLLC, a position he has held for the last five (5) years.
John Genesi, Chief Financial Officer John Genesi has served as the Company's
Chief Financial Officer since July 2006. Prior to joining the Company, Mr.
Genesi served as CFO and a director of Technical Services and Logistics Inc. In
1997, Mr. Genesi joined DAS Devices, Inc. as its corporate controller, where he
implemented and managed DAS Devices' accounting/finance controls and procedures.
John Beck, Director. John Beck has served as a director of the Company since
January 2006. Mr. Beck is the author or co-author of numerous books and articles
on real estate and real estate related investing. For the past 15 years, Mr.
Beck has conducted and continues to conduct real estate investment seminars, and
has appeared as a resident expert on foreclosures on numerous radio and
television shows. In addition to a law degree, John Beck holds MBAs in both
Taxation and Real Estate.
Ray Gaytan, Independent Director. Ray Gaytan has served as a director of the
Company since January 2006. Since 1990, Mr. Gaytan has headed his own accounting
firm, Gaytan, Baumblatt & Leevan, LLP. Mr. Gaytan is a certified public
accountant.
Stephen Weber, Independent Director. Mr. Weber has served as director of the
Company since January 2006. Mr. Weber formed and currently serves as President
of Sutton and Associates a commercial real estate company, and Investment
Capital Researchers, a company that invests in first trust deeds in the
residential market. Prior to forming these companies, Mr. Weber was President of
Positive Response Television, Inc., a direct marketing and media company that he
founded in 1989, and President and Chief Financial Officer of Valencia
International Entertainment, a television production company
Gary Hewitt and Doug Gravink are parties to a consent decree negotiated
with the Federal Trade Commission ("FTC"), pursuant to which they and a number
of other companies agreed not to sell a specific type of abdominal muscle
stimulator in the United States following a ruling by the FTC that such devices
required Federal Drug Administration ("FDA") approval and that any such devices
not FDA approved are banned. The consent decree is completely unrelated to the
Company's business.
18
Item 6. Executive Compensation.
All of the Company's existing officers joined the Company in January
2006 or later. The Company currently pays no salary or other compensation to its
Chief Executive Officer or President. John Genesi, the Company's Chief Financial
Officer since July 2006, is paid an annual base salary for 2006 of $110,000. For
the fiscal year ending December 31, 2006, the Company does not expect that any
officer, employee or consultant of the Company will receive total annual
compensation (salary, bonus, and/or compensation in the form of equity) in
excess of $100,000. As of the end of the Company's most recent fiscal year, the
Company had never granted options or stock appreciation rights ("SARs") to its
directors or officers and had no long-term incentive plan ("LTIP"), bonus or
deferred compensation or retirement plan. Therefore, columns (f), (g), and (h)
do not appear in the Summary Compensation Table set forth below. On November 2,
2006, the Board adopted a Stock Incentive Plan. The Company's two (2)
independent directors were granted options under this Plan on November 2, 2006.
These options will not begin vesting until December 31, 2006. On December 28,
2006, the Company's CEO and President were also granted options under the Plan.
These options will only vest upon the achievement of certain performance goals.
The table below summarizes the compensation of the Company's officers
for the last fiscal year, all of whom are no longer with the Company:
Summary Compensation Table
-----------------------------------------------------------------------------------------
Annual Compensation
----------------------------------
Other Annual All Other
Name and Principal Salary Bonus Compensation Compensation
Position Year ($) ($) ($) ($)
-----------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (i)
-----------------------------------------------------------------------------------------
M. Thomas Makmann (1) 2005 -$0- (2)
Former President, and
Chief Executive Officer
-----------------------------------------------------------------------------------------
Gregory Pelletier (1) 2005 $67,000
------------
Former Chief Operating
Officer and
Secretary
-----------------------------------------------------------------------------------------
Doug Donsbach (1) 2005 $67,000
Chief Technical Officer
and Vice President,
Engineering
-----------------------------------------------------------------------------------------
Roger Kirkland (1) 2005 $81,000
Vice President, Sales
-----------------------------------------------------------------------------------------
(1) Served as the Company's officers through January 26, 2006.
(2) Does not include $140,000 received by Mr. Makmann from the Company
in connection with the divestiture of the Company's prior operating
subsidiary, iSNG.
Item 7. Certain Relationships and Related Transactions.
The Company has entered into royalty agreements with several
direct-marketing companies, namely, John Beck's Amazing Profits, LLC ("JBAP"),
John Alexander LLC ("JA"), and Jeff Paul LLC ("JP"). JBAP, JA and JP are
affiliates of the Company and are owned by Family Products, LLC ("FPLLC"). FPLLC
is in turn owned and controlled by two of the Company's principal stockholders,
Gary Hewitt and Doug Gravink, who are officers and directors of the Company.
These marketing companies provide customer leads for Landbank's property sales,
19
in return for a royalty of 35% of gross profit less acquisition costs on the
sale of any property that was result of a lead provided by such marketing
company. Aggregate royalties paid by Landbank, LLC to these marketing companies
in 2005 amounted to $380,761. John Beck, a director of the Company, was the
creator of the marketing concept for JBAP and continues to provide services to
JBAP, including the development of materials sold to participants and the
creation and conduct of seminars. Mr. Beck also serves as the "figurehead" for
this company. As partial consideration for his services, Mr. Beck receives a
profit participation of 50% of the royalty payments received by JBAP pursuant to
the royalty agreement with the Company, and is also reimbursed for certain
home-office expenses.
All of the Company's existing officers joined the Company in January
2006 or later. The Company currently pays no salary or other compensation to its
Chief Executive Officer or President. John Genesi, the Company's Chief Financial
Officer since July 2006, is paid an annual base salary for 2006 of $110,000. For
the fiscal year ending December 31, 2006, the Company does not expect that any
officer, employee or consultant of the Company will receive total annual
compensation (salary, bonus, and/or compensation in the form of equity) in
excess of $100,000. As of the end of the Company's most recent fiscal year, the
Company had never granted options or stock appreciation rights ("SARs") to its
directors or officers and had no long-term incentive plan ("LTIP"), bonus or
deferred compensation or retirement plan. Therefore, columns (f), (g), and (h)
do not appear in the Summary Compensation Table set forth below. On November 2,
2006, the Board adopted a Stock Incentive Plan. The Company's two (2)
independent directors were granted options under this Plan on November 2, 2006.
These options will not begin vesting until December 31, 2006. On December 28,
2006, the Company's CEO and President were also granted options under the Plan.
These options will only vest upon the achievement of certain performance goals.
The wife of John Beck, a director of the Company, currently serves as
co-manager of Landbank, LLC, the Company's operating subsidiary. Mrs. Beck does
not receive a salary or other compensation from Landbank, LLC or the Company.
The Company employs Mr. and Mrs. Beck's three adult children as acquisition
specialists. Each receives standard salary and commission paid to other members
of the acquisition team.
Ray Gaytan, a director of the Company, has through his accounting firm
of a Gaytan, Baumblatt & Leevan, LLP, provided accounting services in the past
to the Company, Landbank, LLC and the FPLLC group of companies. In 2005, the
Company and Landbank, LLC paid to Gaytan, Baumblatt & Leevan, LLP an aggregate
of $10,650 for accounting services rendered. Mr. Gaytan may continue to provide
accounting services to the Company and Landbank, LLC in the future. Mr. Gaytan
does not serve as the Company's independent auditor.
The Company has assumed an agreement entered into between Landbank, LLC
and Investment Capital Researchers, Inc. on August 1, 2005, as amended, pursuant
to which Investment Capital Researchers agreed to provide certain advisory and
finder services to Landbank, LLC and Company in connection with fundraising
opportunities. Consideration under this agreement payable to Investment Capital
Researchers is payable in shares of common stock of the Company. To date,
200,000 shares have been issued under this agreement. Stephen Weber, a director
of the Company, is the president of Investment Capital Researchers.
The Company has funded its operations in part through loans from
affiliates. Each of the affiliated companies is owned, or controlled, by Doug
Gravink and Gary Hewitt, both of whom are directors, and principal stockholders
of Landbank Group, Inc. The amounts owed under these loans are unsecured, have
no stated rates of interest, and have no maturity dates. Interest expense has
been imputed on amounts due to related companies using a per annum rate of eight
percent (8%). The following is a summary of amounts owed to affiliated companies
as of December 19, 2006:
Borrowed Borrowed
In In Accrued
Affiliate Lender FY 2005 FY 2006 Net Owed Interest
---------------- ------- ------- -------- --------
Mentoring of America, LLC $ 176,381 ($121,148) $ 55,233 $ 5,268
HG, Inc. 467,405 1,075,000 1,542,405 68,369
HG Marketing, Inc. 482,606 (100,000) 382,606 60,025
Family Products, LLC (174,000) 174,000 -- 2,393
John Beck's Amazing Profits 330,015 (24,576) 305,439 (5,179)
---------- ---------- ---------- --------
$1,282,407 $1,003,276 $2,285,683 $130,876
20
On January 26, 2006, in connection with the acquisition of Landbank,
LLC, the Company effected the transfer of an aggregate of 8,200,002 shares of
unregistered common stock (as adjusted for the subsequent 10:1 reverse split)
from existing stockholders and officers of the Company (the transferring
stockholders), to Messrs. Gravink, Hewitt, and Beck in exchange for their
membership interests in Landbank, LLC. Simultaneously with this transaction, as
consideration for the transfer of their shares and delivery of a release of
claims, the Company agreed to spin-off all of the outstanding shares of ISNG,
the prior operating subsidiary of the Company, to the transferring stockholders,
plus a cash payment of $140,000, The transferring stockholders formed a new
entity, QED Storage, to hold the shares in ISNG. The spin-off of ISNG to the
transferring shareholders was effected pursuant to a share purchase agreement
entered into between the Company and QED Storage.
Item 8. Description of Securities
Common Stock
The Company is authorized to issue 100,000,000 shares of Common Stock.
As of September 30, 2006, there are 9,835,331 shares of common stock issued and
outstanding and held of record by 18 stockholders. Each record holder of Common
Stock is entitled to one vote for each share held on all matters properly
submitted to the stockholders for their vote. Cumulative voting for the election
of directors is not permitted by the Articles of Incorporation. Holders of
common stock have no preemptive rights or rights to convert their common stock
into any other securities. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are fully
paid and non-assessable.
Ten percent (10%) of the unissued shares of the Company have been
reserved for issuance to consultants. An additional 3,000,000 shares have been
reserved under the Company's 2006 Stock Incentive Plan. Holders of common stock
are entitled to such dividends as may be declared from time to time by the Board
of Directors out of legally available funds. In the event of liquidation,
dissolution or winding up of the affairs of the Company, holders of common stock
are entitled to receive, pro rata, the net assets of the Company available to
stockholders.
Charter Documents
Provisions of our charter and bylaws may have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of us. These provisions are expected to
discourage coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of the Company to first negotiate
with us. These provisions could limit the price investors might be willing to
pay in the future for our common stock and could have the effect of delaying or
preventing a change in control. We believe that the benefits of increased
protection of our ability to negotiate with the proponent of an unfriendly or
unsolicited acquisition proposal outweigh the disadvantages of discouraging
these proposals since, among other things inter alia, negotiation will result in
an improvement of their terms. These provisions could limit the price that
investors might be willing to pay in the future for shares of our common stock.
These provisions include:
-- procedures for advance notification of stockholder nominations and
proposals, and
-- the ability of the board of directors to alter our bylaws without
stockholder approval.
Delaware Law
We are also subject to Section 203 of the Delaware General Corporation
Law which, subject to certain exceptions, prohibits a publicly held Delaware
corporation from engaging in any business combination with any interested
21
stockholder for a period of three years following the date the person became an
interested stockholder, unless:
--prior to the date of the transaction, the board of directors approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder;
--holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds. Furthermore, in the event of liquidation, dissolution
or winding up of the affairs of the Company, holders of Common Stock are
entitled to receive, pro rata, the net assets of the Company available to
stockholders. Holders of outstanding shares of Common Stock have no preemptive,
conversion or redemptive rights.
--upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock outstanding at the time the transaction commenced
excluding for purposes of determining the number of shares outstanding (a)
shares owned by persons who are directors and also officers and (b) shares held
by employee stock plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or
--on or following the date of the transaction the business combination
is approved by the board of directors and authorized at an annual or special
meeting of stockholders, by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the interested stockholder.
Generally, a "business combination" includes a merger, asset or stock
sale, or other transaction resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns or, within three years prior to the
determination of interested stockholder status, did own 15% or more of a
corporation's outstanding voting securities. We expect the existence of this
provision to have an anti-takeover effect with respect to transactions that our
board of directors does not approve in advance. We also anticipate that Section
203 may also discourage attempts that might result in a premium over the market
price for the shares of common stock held by stockholders. A Delaware
corporation may opt out of Section 203 with an express provision in its original
certificate of incorporation or an express provision in its certification of
incorporation or bylaws resulting from amendments approved by the holders of at
least a majority of the corporation's outstanding voting shares. We have not
opted out of Section 203.
Preferred Stock
The Company presently is not authorized to issue any Preferred Stock.
Transfer Agent and Registrar
The Company's transfer agent for its Common Stock is:
Routh Stock Transfer
5700 West Plano Pkwy., Suite 1000, Plano, TX 75093.
Telephone number: (972) 381-2782.
22
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
Market Information
The Company's shares are presently listed for trading with the trading
symbol "LBAN" in the "Other" Over-the-Counter or "Grey Market" wherein trades
are reported by a broker-dealer to its Self-Regulatory Organization ("SRO")
which distributes the trade data to market data vendors and financial websites.
Since bids and offers are not collected in a central location, market
transparency and best execution are more problematic. The Company is in the
process of seeking reinstatement to the Pink Sheets. Pursuant to SEC Rule
15c2-11, a Form 211 has been filed by a Market Maker to actively publish quotes
in the Company's stock.
Based on information obtained from Bloomberg, L.P., the offer and bid
quotations for the common stock for the quarter ended December 31, 2004, each
quarter of the fiscal year ended December 31, 2005 and the quarters ended March
31, 2006 and June 30, 2006 are set forth in the table below:
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
(1) Quotation information is not available prior to 12/09/04.
(2) Quotes obtained under the symbol "LBKG"
(3) Quotes obtained under the symbol "LBAN"
(4) All prices reflect a 1-to-10 reverse stock split effected on June
30, 2006.
Currently, there are no broker-dealers making an active market in the Company's
common stock. As of December 6, 2006, the last trade was executed at $0.12.
Since July 1, 2006, the stock has traded in the "Other OTC" or "Grey Market".
Accordingly, there are no closing bid and ask prices for the common stock
subsequent to June 30, 2006.
Holders
As of September 30, 2006, there were 18 registered holders of record of
the Company's Common Stock.
23
Dividends
The Company has not paid any cash dividends to date, and it has no
intention of paying any cash dividends on its common stock in the foreseeable
future. The declaration and payment of dividends is subject to the discretion of
the Company's Board of Directors and to certain limitations imposed under the
California Statutes. The timing, amount and form of dividends, if any, will
depend upon, among other things, the Company's results of operation, financial
condition, cash requirements, and other factors deemed relevant by the Board of
Directors.
Item 2. Legal Proceedings
There are neither any current, past, pending or threatened legal
proceedings nor administrative actions by the Company nor is the Company aware
of any such actions or proceedings against it that could have a materially
adverse affect on the Company's business, operations or financial condition.
Item 3. Changes in and Disagreements with Accountants.
None
Item 4. Recent Sales of Unregistered Securities.
During the past three years, the Company has issued and sold the following
securities:
(a) On November 15, 2004, as consideration for the acquisition of all shares of
iSNG, 5,000,000 shares of common stock were issued it a private placement to the
sole former stockholder of iSNG and two new members of management, in reliance
on Section 4(2) of the '33 Act.
(b) On March 31, 2005, a total of 3,200,000 additional shares were issued to
members of management, and 7,000 shares to employees, in a private placement in
reliance on Section 4(2) of the '33 Act, as compensation for services performed.
(c) In March/June, 2005, The Company issued an aggregate of 1,919,143 shares to
a total of fifteen investors, at $0.025 per share, in reliance on Section 4(2)
of the '33 Act.
(d) On December 22, 2005, the Company issued 500,000 shares in connection with
the exercise of an outstanding warrant issued for $50,000, in reliance on
Section 4(2) of the '33 Act.
(e) On June 30, 2006, the Company issued a total of 624,444 shares to certain of
its advisors, under Section 4(2) of the '33 Act, as compensation for services
performed, as follows: (i) 400,000 to Ray Dirks and Aziz Munir, as partial
consideration for advising the Company with respect to structuring future
fundraising activities; (ii) 24,444 to Aurelius Consulting Group, for investor
relations services rendered, pursuant to the terms of our contract with them;
and (iii) 200,000 to Investment Capital Researchers, Inc., for advisory services
provided in connection with the identification and introduction of the Company
to Landbank, LLC.
(f) From July 2006 through September 2006, 628,734 shares were issued as a
result of rounding in connection with the 10:1 reverse split effected by the
Company on June 30, 2006.
Except for the shares described in paragraph (f), all of the foregoing share
issuances were issuances of restricted securities (as such term is defined under
Rule 144 under the '33 Act), and the share certificates representing such shares
bear on their face the appropriate securities legend. All recipients had
adequate access, through their relationships with the Company, to information
about the Company. All share amounts above are stated to reflect the 10:1
reverse split of the Company's common stock effected June 30, 2006.
24
Item 5. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation provides that the Company
may indemnify its directors, officers, employees and agents to the fullest
extent permitted by the Delaware General Corporation Law. The bylaws of the
Company provide that the Company shall indemnify its directors and officers, and
shall have the power to indemnify its employees and agents, in each case to the
fullest extent permitted by the General Corporation Law of Delaware. Section 145
of the General Corporation Law of the State of Delaware authorizes a Delaware
corporation to indemnify officers, directors, employees and agents of the
corporation, in connection with actual or threatened actions, suits or
proceedings, provided that such officer, director, employee or agent acted in
good faith and in a manner such officer, director, employee or agent reasonably
believed to be in or not opposed to the corporation's best interests, and, for
criminal proceedings, had no reasonable cause to believe his or her conduct was
unlawful. This authority is sufficiently broad to permit indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the '33 Act, as amended.
The Company's bylaws also release the Company's directors from personal
monetary liability to the corporation and to its stockholders for any breach of
fiduciary duty as a director to the fullest extent permitted by the General
Corporation Law of Delaware.
Additionally, the Company maintains insurance on behalf of any person
who is a director or officer against any loss arising from any claim asserted
against such person and expense incurred by such person in any capacity, subject
to certain exclusions.
The Company has also entered into agreements to indemnify its directors
and officers, in addition to the indemnification provided for in the Company's
Certificate of Incorporation and bylaws. These agreements, among other things,
indemnify the Company's directors and officers for certain expenses, including
attorney's fees, judgments, fines and settlement amounts incurred by any such
person in any action or proceeding, including any action by or in the right of
the Company, arising out of such person's services as a director or officer of
the Company, any subsidiary of the Company or any other company or enterprise to
which the person provides services at the request of the Company.
25
PART F/S
The following financial statements are submitted pursuant to the
information required by Item 310 of Regulation S-B
FINANCIAL STATEMENTS
Description
Unaudited Consolidated Financial Statements for the Three and Nine-Month
Periods Ending September 30, 2006 and 2005...................................F-2
Audited Financial Statements for the Year Ended December 31, 2005...........F-19
F-1
LANDBANK GROUP, INC. AND SUBSIDIARY
Unaudited Consolidated Financial Statements and Accompanying Notes
For the Three and Nine Month Periods Ended September 30, 2006 and 2005
F-2
LANDBANK GROUP, INC. AND SUBSIDIARY
Table of Contents
Page
Consolidated financial statements (unaudited):
Consolidated balance sheet (unaudited) F-4
Consolidated statements of operations (unaudited) F-5
Consolidated statements of cash flows (unaudited) F-6
Notes to consolidated financial statements (unaudited) F-7-18
F-3
Landbank Group, Inc. and Subsidiary
Unaudited Consolidated Balance Sheet
As of September 30, 2006
ASSETS
Current assets
Cash & cash equivalents $ 219,569
Inventory - land parcels 3,445,640
Other receivable 51,781
Prepaid expenses 266,030
-----------
Total assets $ 3,983,020
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 57,018
Due to related parties 2,459,535
Accrued expenses 161,246
Shares to be issued 36,000
Loan payable - current portion 38,231
Deferred income 1,078,222
-----------
Total current liabilities 3,830,252
-----------
Loan payable - non-current portion 483,854
-----------
Shareholders' deficit:
Common stock, 100,000,000 shares authorized; $0.0001
par value; 9,835,331 issued and outstanding 984
Additional paid in capital 373,683
Accumulated deficit (705,753)
-----------
Total shareholders' deficit (331,086)
-----------
Total liabilities and shareholders' deficit $ 3,983,020
===========
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
F-4
Landbank Group, Inc. and Subsidiary
Unaudited Consolidated Statements of Operations
For the Three and Nine Month Periods Ended September 30, 2006 and 2005
For the Three Month Periods For the Nine Month Periods
Ended September 30, Ended September 30,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net sales $ 1,106,897 $ 272,379 $ 3,333,980 $ 516,689
Cost of sales
Direct selling expenses 594,305 180,811 1,924,357 357,250
Royalty to related party 179,492 32,049 485,426 55,804
----------- ----------- ----------- -----------
Total cost of sales 773,797 212,860 2,409,783 413,054
----------- ----------- ----------- -----------
Gross profit 333,100 59,519 924,197 103,635
----------- ----------- ----------- -----------
Operating expenses
Related party rent 5,554 5,355 16,663 7,134
Related party professional fees 25,366 -- 104,650 --
Consulting fees -- -- 374,667 --
General and administrative expenses 351,918 6,364 944,744 67,535
----------- ----------- ----------- -----------
Total operating expenses 382,838 11,719 1,440,724 74,669
----------- ----------- ----------- -----------
Income (loss) from operations (49,738) 47,800 (516,527) 28,966
----------- ----------- ----------- -----------
Other expenses
Merger-related costs -- -- (140,000) --
Interest expenses - bank (13,204) (4,885) (41,157) (4,885)
Interest expenses - related party (41,454) (11,066) (90,442) (17,536)
----------- ----------- ----------- -----------
Total other expenses (54,658) (15,951) (271,599) (22,421)
----------- ----------- ----------- -----------
Income (loss) before income taxes (104,396) 31,849 (788,126) 6,545
Net income (loss) $ (104,396) $ 31,849 $ (788,126) $ 6,545
=========== =========== =========== ===========
Basic and diluted weighted average number
of common stock outstanding 9,833,903 8,200,000 9,557,959 8,200,000
=========== =========== =========== ===========
Basic and diluted net income (loss) per share $ (0.01) $ 0.00 $ (0.08) $ 0.00
=========== =========== =========== ===========
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
F-5
Landbank Group, Inc. and Subsidiary
Unaudited Consolidated Statements of Cash Flows
For the Nine Month Periods Ended September 30, 2006 and 2005
2006 2005
----------- -----------
Cash flows from operating activities:
Net income (loss) $ (788,126) $ 6,545
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Shares issued for services 374,667 --
Shares to be issued for services 36,000 --
Changes in current assets and liabilities:
(Increase) decrease in current assets
Inventory (1,009,162) (2,175,565)
Other receivable (51,781) --
Prepaid expenses 58,597 (91,552)
Increase (decrease) in current liabilities
Accounts payable 24,831 6,385
Accrued expenses 138,341 3,851
Reserve for returns (26,148) 6,600
Deferred income (255,145) 405,395
----------- -----------
Total adjustments (709,800) (1,844,886)
----------- -----------
Net cash used in operating activities (1,497,926) (1,838,341)
----------- -----------
Cash flows from financial activities:
Due from related parties 170,447 --
Proceeds from related parties 966,247 1,265,965
Proceeds (Repayment) of loan payable (50,624) 581,410
----------- -----------
Net cash provided by financial activities 1,086,070 1,847,375
----------- -----------
Net change in cash and cash equivalents (411,856) 9,034
Cash and cash equivalents - beginning balance 631,425 --
----------- -----------
Cash and cash equivalents - ending balance $ 219,569 $ 9,034
=========== ===========
Supplemental disclosure of cash flows information:
Taxes paid $ -- $ --
=========== ===========
Interest paid $ 41,157 $ 4,885
=========== ===========
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
F-6
LANDBANK GROUP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of business and significant accounting policies:
-------------------------------------------------------
Nature of business:
-------------------
Landbank Group, Inc., formerly known as iStorage Network, Inc.
("iStorage"), formerly known as Camryn Information Services, Inc, was
incorporated under the laws of the State of Delaware on May 13, 1997.
On January 26, 2006, iStorage issued 8,200,000 shares of restricted stock
(post-split) in exchange for all of the assets and liabilities of Landbank,
LLC, a company organized in the State of California in December 2004, and
$140,000 in cash. Landbank, LLC and iStorage have the same fiscal year end.
iStorage changed its name to Landbank Group, Inc. The former members of
Landbank, LLC became approximately 90% owners of the Company.
The exchange of shares with Landbank, LLC was accounted for as a reverse
acquisition under the purchase method of accounting since the stockholders
of Landbank, LLC obtained control of the consolidated entity (collectively,
"the Company"). Accordingly, the merger of the two companies was recorded
as a recapitalization of Landbank, LLC, where as Landbank, LLC was treated
as the continuing entity. The historical results for the three and nine
month periods ended September 30, 2006 include Landbank, LLC, and Landbank
Group, Inc. (from the acquisition date) while the historical results for
the three and nine month periods ended September 30, 2005 include only
Landbank, LLC. The financial statements of the legal acquirer (the Company)
are not significant; therefore, no pro forma financial information is being
submitted.
The Company makes bulk acquisitions of parcels of land, and resells the
land as individual parcels. The Company seeks to acquire a majority of its
land "in-bulk" through the real property tax lien foreclosure process,
either at local government tax sales, directly from local government
entities having acquired property at tax sales, or directly from owners of
tax-defaulted parcels prior to tax sale.
The types of real estate acquired and sold by the Company include
undeveloped acreage, houses, and lots. These parcels are marketed
nationwide. The Company considers various criteria in connection with land
acquisitions, including, but not limited to, location, availability of
utilities, proximity to water, geographic desirability, proximity of major
or significant population centers, and a host of other criteria. The
Company is currently focusing on acquiring land in the following geographic
regions in the U.S.: West, Southwest and East Coast. To date, the Company
has acquired properties in Colorado, Florida, Nevada, Oklahoma, New York,
Pennsylvania, Texas, and in the State of Chihuahua, Mexico.
F-7
The Company resells the land as individual parcels through multiple
distribution channels, including Internet sales and leads developed by the
Company, its affiliates, or third party vendors. The Company also uses the
Internet to market its properties.
The Company shares its office space with its affiliates.
The Company's principal office is located in Van Nuys, California. The
property is leased from a real estate company related to the Company by
common ownership under a five-year lease that expires in 2008.
The Company also has a satellite office in American Fork, Utah, a
processing and acquisition office in Alameda, California, and a sales
office in Phoenix, Arizona. Office space at both the American Fork and
Phoenix locations are shared with its affiliates. The Alameda office space
is provided by one of the directors of the Company.
Summary of significant accounting policies
The following summary of significant accounting policies used in the
preparation of these consolidated financial statements is in accordance
with generally accepted accounting principles.
Principles of Consolidation
The consolidated financial statements consist of the accounts of Landbank
Group, Inc. ("Parent") and its wholly owned subsidiary Landbank, LLC, a
California Limited Liability Company (collectively "The Company"). All
material inter-company transactions have been eliminated in consolidation.
Cash and cash equivalents
For purposes of the statement of cash flows, cash equivalents include all
highly liquid debt instruments with original maturities of ninety days or
less which are not securing any corporate obligations.
Concentration
The Company maintains its cash in bank deposit accounts, which, at times,
may exceed federally insured limits. The Company has not experienced any
losses in such accounts.
Inventory
Inventory consists of raw land, most of which is acquired in sections, and
then subdivided into individual lots for resale. Inventory is recorded at
the lower of weighted average cost (on a section-by-section basis) or
market.
F-8
Income taxes
Income taxes are accounted for in accordance with FASB-109 - Accounting for
Income Taxes. Deferred taxes represent the expected future tax consequences
when the reported amounts of assets and liabilities are recovered or paid.
They arise from differences between the financial reporting and tax bases
of assets and liabilities and are adjusted for changes in tax laws and tax
rates when those changes are enacted. The provision for income taxes
represents the total of income taxes paid, or payable, for the current
year, plus the change in deferred taxes during the year.
Use of estimates
The process of preparing consolidated financial statements in conformity
with generally accepted accounting principles requires the use of estimates
and assumptions regarding certain types of assets, liabilities, revenues,
and expenses. Such estimates primarily relate to unsettled transactions and
events as of the date of the financial statements. Accordingly, upon
settlement, actual results may differ from estimated amounts.
Recognition of revenue and expenses
The Company follows FASB 66 - Accounting for Sales of Real Estate.
Substantially all of the Company's land sales are all-cash transactions.
The Company also had a small, insignificant number of financing
transactions through September 30, 2006. Because the Company's policy for
the all-cash transactions is to allow the buyer 60 days to rescind his real
estate purchase, and because the Company does not issue the deed of trust
on a financing sale until the note is paid in full, the deposit method of
accounting is used. Under the deposit method, revenues and their related
expenses, including inventory, are not recognized until the end of the
buyer's 60-day rescission period, for the all-cash sales, and at the time
the note is paid in full for the financing transaction (also see note 4).
Issuance of shares for service
The Company accounts for the issuance of equity instruments to acquire
goods and services based on the fair value of the goods and services or the
fair value of the equity instrument at the time of issuance, whichever is
more reliably measurable. Segment reporting
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosure about Segments of an Enterprise and Related Information"
requires use of the "management approach" model for segment reporting. The
management approach model is based on the way a company's management
F-9
organizes segments within the company for making operating decisions and
assessing performance. Reportable segments are based on products and
services, geography, legal structure, management structure, or any other
manner in which management disaggregates a company. SFAS 131 has no effect
on the Company's financial statements as substantially all of the Company's
operations are conducted in one industry segment.
Recent pronouncements
In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities". SFAS No. 155, permits fair value
remeasurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation, clarifies which
interest-only strips and principal-only strips are not subject to the
requirements of SFAS No. 133, establishes a requirement to evaluate
interest in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments that
contain an embedded derivative requiring bifurcation, clarifies that
concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another
derivative financial instrument. This statement is effective for all
financial instruments acquired or issued after the beginning of the
Company's first fiscal year that begins after September 15, 2006. SFAS No.
155 is not expected to have a material effect on the consolidated financial
position or results of operations of the Company.
In March 2006 FASB issued SFAS 156 `Accounting for Servicing of Financial
Assets' this Statement amends FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. This Statement:
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.
F-10
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.
This Statement is effective as of the beginning of the Company's first
fiscal year that begins after September 15, 2006. Management believes that
this statement will not have a significant impact on the consolidated
financial statements.
In September 2006, FASB issued SFAS 157 `Fair Value Measurements'. This
Statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles ("GAAP"), and expands
disclosures about fair value measurements. This Statement applies under
other accounting pronouncements that require or permit fair value
measurements, the Board having previously concluded in those accounting
pronouncements that fair value is the relevant measurement attribute.
Accordingly, this Statement does not require any new fair value
measurements. However, for some entities, the application of this Statement
will change current practice. This Statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. The management is currently
evaluating the effect of this pronouncement on the consolidated financial
statements.
In September 2006, FASB issued SFAS 158 `Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans--an amendment of FASB
Statements No. 87, 88, 106, and 132(R)' This Statement improves financial
reporting by requiring an employer to recognize the over funded or under
funded status of a defined benefit postretirement plan (other than a
multiemployer plan) as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity
or changes in unrestricted net assets of a not-for-profit organization.
This Statement also improves financial reporting by requiring an employer
F-11
to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. An employer with
publicly traded equity securities is required to initially recognize the
funded status of a defined benefit postretirement plan and to provide the
required disclosures as of the end of the fiscal year ending after December
15, 2006. An employer without publicly traded equity securities is required
to recognize the funded status of a defined benefit postretirement plan and
to provide the required disclosures as of the end of the fiscal year ending
after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes
to financial statements for a fiscal year ending after December 15, 2006,
but before June 16, 2007, unless it has applied the recognition provisions
of this Statement in preparing those financial statements:
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.
The requirement to measure plan assets and benefit obligations as of the
date of the employer's fiscal year-end statement of financial position is
effective for fiscal years ending after December 15, 2008. The management
is currently evaluating the effect of this pronouncement on the
consolidated financial statements.
2. Acquisition of LandBank, LLC
On January 26, 2006, Landbank Group, Inc. acquired all of the membership
interests in Landbank, LLC in exchange for the transfer, by certain members
of the previous management, of an aggregate of 8,200,000 shares of Landbank
Group, Inc.'s stock (post-split), in exchange for which such members of
previous management received Landbank Group, Inc.'s former wholly-owned
subsidiary, iStorage Networks Group, Inc., and $140,000 in cash.
3. Due to related parties
The Company has amounts due to various related parties that are directors
and companies related through common ownership. These amounts are
unsecured, have no stated rates of interest, and have no maturity dates.
Interest expense has been imputed on amounts due to related companies using
a per annum rate of eight percent (8%). As of September 30, 2006, the
Company had $2,459,535 due to related parties. Interest expense to related
parties for the three and nine month periods ended September 30, 2006 was
$41,454 and $90,442, respectively. Interest expense to related parties for
the three and nine month periods ended September 30, 2005 was $11,066 and
$17,536, respectively.
F-12
4. Sales and expenses deferred under the deposit method
For the nine month periods ended September 30, 2006 and 2005, sales and
expense deferrals were as follows:
2006 2005
----------- -----------
Deferred income $ 1,078,222 $ 405,395
Inventory
(Cost of sales) (512,666) (205,373)
Prepaid expenses
(Selling expenses) (256,235) (91,010)
----------- -----------
Gross profit $ 309,321 $ 109,012
=========== ===========
Selling expenses include 35% of gross profit as royalty paid to John Beck's
Amazing Profits, LLC (also see note 7), 5% sales commission, credit card
merchant fees, trust deed transfer costs of $50 per transaction, and
property assessment fees.
5. Loans Payable
In August 2005, the Company purchased certain sections of land in Pershing
County, Nevada subject to loans from Western Title Company. Each of the 19
sections of land secures their respective loan. The loans bear interest at
10% per annum and mature September 1, 2015, unless the corresponding real
estate is sold sooner, in which case, the loan must be repaid.
During the nine month period ended September 30, 2006, the Company made
total principal payments of $50,624, which included $24,259 to repay one
loan in full upon sale of the securing property.
The scheduled principal payments on these notes are as follows:
Years ended
September 30,
----------------------------------
2007 $ 38,231
2008 42,235
2009 46,657
2010 51,543
2011 56,940
Thereafter 286,479
---------
522,085
Current portion 38,231
---------
Long-term portion $ 483,854
=========
F-13
6. Stockholders' Deficit
Common Stock Issued
During the nine month period ended September 30, 2006, the Company issued
624,445 shares for service valued at fair value of the shares at the time
of issuance.
Common Stock to be Issued
Pursuant to the terms of its agreement with Aurelius Consulting Group, Inc.
(also see note 9), the Company is to issue shares worth $12,000 per month
to Aurelius as compensation for services provided. During the three month
period ended September 30, 2006, the Company recorded $36,000 as shares to
be issued for services provided. Common stock to be issued has been
reflected as a liability in the accompanying consolidated financial
statements.
Stock Split
On March 3, 2006, the Company obtained written consent from stockholders
holding a majority of the Company's outstanding shares of voting securities
to authorize a reverse split of the Company's outstanding common stock.
Pursuant to the terms of the written consent, the Company completed a 1 for
10 reverse split of its common stock, with special treatment for certain
Company shareholders to preserve round lot shareholders. The following is a
summary illustrating the effect of the reverse stock split:
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
All fractional shares are rounded up and the authorized shares were reduced
to 100,000,000. The financial statements have been retroactively restated
for the effects of the above stock splits.
7. Related-party transactions
The Company pays a royalty to related companies equal to 35% of gross
profit received by the Company on each all-cash sale generated by leads
provided by that related company. Gross profit is defined as land sale
revenue reduced by inventory cost, sales commissions, credit card merchant
fees, and deed of trust transfer costs. The related companies are
indirectly owned and controlled by two of the Company's principal
stockholders, who are also officers and directors of the Company. A third
director of the Company receives a profit participation of 50% of the
royalty payments received by one of the related companies, pursuant to its
royalty agreement with the Company, for his services to that related
company. During the three and nine month periods ended September 30, 2006,
the Company recorded royalty expense to related parties of $179,492 and
$485,426, respectively. During the three and nine month periods ended
September 30, 2005, the Company recorded royalty expense to related parties
F-14
of $32,049 and $55,804, respectively. The Company had prepaid royalty
expense to related parties of $144,847 as of September 30, 2006 (also see
note 4).
The Company has an agreement with Investment Capital Researchers, Inc.
("ICR"), a Company owned by a member of the Company's Board of Directors.
Pursuant to the agreement, ICR received 200,000 shares (post-split) of the
Company's common stock on June 30, 2006 and may receive an additional
200,000 shares of the Company's common stock (post-split) upon the
achievement of specified milestones. Under the terms of the agreement, the
issued shares can only be sold or transferred over a four-year period at
the rate of 100,000 on each anniversary of the closing date of a secondary
offering. All shares issued pursuant to this agreement will be restricted
securities. The 200,000 shares issued on June 30, 2006 were valued at
$120,000 based on fair value of the shares at the time of issuance. The
Company expensed the entire $120,000 as non-cash consulting fees during the
six month period ended June 30, 2006,
The Company shares its principal office in Van Nuys and its offices in both
American Fork and Alameda with related parties. The Company does not pay
rent at these facilities, but, if it were required to pay rent on these
facilities, the Company estimates the monthly rent value being
approximately $767, which the Company deems as not material. The related
parties are companies owned and controlled by two of the Company's
principal stockholders, who are officers and directors of the Company. The
Company's office in Phoenix, Arizona is subleased from a related company
owned by two of the Company's directors. Under the terms of the sublease
arrangement, the Company pays a pro rata share of the rent paid by the
related company, based upon the portion of the space occupied by the
Company. During the three and nine month periods ended September 30, 2006,
the Company recorded related party rent expense totaling $5,554 and
$16,663, respectively. During the three and nine month periods ended
September 30, 2005, the Company recorded related party rent expense
totaling $5,355 and $7,134, respectively.
A director of the Company has, through his accounting firm, provided
accounting service to the Company. The Company has recorded related party
accounting expense totaling $25,366 and $104,650, respectively, during the
three and nine month periods ended September 30, 2006. The Company incurred
no related party accounting expense during the same periods in fiscal year
2005.
The Company currently pays no salary or other compensation to its Chief
Executive Officer or President. The Company's Chief Financial Officer is
paid an annual base salary of $110,000 for 2006.
F-15
8. Concentration of Credit Risk
The Company maintains certain cash balances with a commercial bank. The
Company's cash balance of $219,569 as of September 30, 2006 was
approximately $119,569 above insured limits.
9. Commitments
Joint Marketing Agreement with Aurelius Consulting Group, Inc.
On May 26, 2006, the Company entered into a Joint Marketing Agreement (the
"Agreement") with Aurelius Consulting Group, Inc. /Red Chip Companies
("ACG/RC") to assist in marketing the Company to the investment community.
ACG/RC, per the terms of the Agreement, will among other public relations
and investor relations activities, distribute both a research report and a
newsletter to the investment community.
In return for the above mentioned services, the Company will pay ACG/RC a
total of $150,000 in cash and restricted shares of the Company's common
stock. The cash portion will total $44,000, with $20,000 down and $24,000
in eight monthly installments of $3,000 each. The remaining $106,000 is to
be paid in stock, with $10,000 to be paid immediately and the remainder in
eight monthly installments of $12,000 each.
As of September 30, 2006, the Company had paid ACG/RC $35,000 in cash and
had issued 24,445 shares (post-split) of stock valued at $14,667 based on
fair value of the shares at the time of issuance. The Company expensed the
entire $14,667 as professional fees during the six month period ended June
30, 2006.
During the three month period ended September 30, 2006, the Company
recorded $36,000 as shares to be issued for services provided.
Consulting Agreement with Independent Third Parties.
On August 22, 2005, Landbank, LLC hired two (2) independent consultants
("the consultants") to locate a publicly-traded company and negotiate a
business combination with Landbank, LLC. In addition, the consultants were
hired to assist the Company with future fundraising activities. Under the
terms of the original agreement, the Company was to pay the consultants
$180,000 cash, payable in nine (9) monthly installments of $20,000 each,
commencing on September 1, 2005. On May 10, 2006, the parties amended the
original agreement to include compensation for any funds directly raised by
the consultants. Under terms of the amended agreement, the consultants are
to receive 800,000 shares of the Company's common stock (post-split), par
value $0.0001, with 400,000 shares to be issued on June 30, 2006 and the
remaining 400,000 shares issued upon the achievement of specified
milestones.
Under the terms of the agreement, the issued shares can only be sold or
transferred over a four-year period at the rate of 200,000 on each
F-16
anniversary of the closing date of a secondary offering. All shares issued
pursuant to this agreement will be restricted securities.
On June 30, 2006, the Company issued 400,000 shares (post-split) of its
common stock to the consultants, valuing these shares at $240,000 based on
fair value of the shares at the time of issuance. The Company expensed the
entire $240,000 as professional fees during the six months ended June 30,
2006.
During the nine months ended September 30, 2006 and 2005, the Company paid
the consultants $127,000 and $30,000, respectively.
Agreement with Piping Partners Holdings, Inc.
On January 25, 2006, the Company entered into an agreement with Piping
Partners Holdings, LLC ("PPH") to assist the Company in seeking quotation
of the Company's shares on the Over the Counter Bulletin Board ("OTCBB").
Per terms of this agreement with PPH, the Company agrees to pay PPH a
success fee, which includes any and all application and filing fees and
expenses, of $235,000, which is to be paid upon active quotation, with
PPH's assistance, of the Company's shares on the OTCBB, less any advance
amounts, and a $10,000 advance for legal services engaged by PPH, and
approved by the Company, in connection with the Exchange Act Reports.
As of September 30, 2006, the Company had paid PPH the above mentioned
$10,000 advance for legal services incurred by PPH.
10. Form 211 filed with the National Association of Securities Dealers
On September 25, 2006, the Company, through a third party Market Maker,
filed Form 211 with the National Association of Securities Dealers ("the
NASD") seeking active quotation of the Company's common stock on the Pink
Sheets. As of the date of this report, the Company's application with the
NASD is still pending.
F-17
11. Subsequent Events
Form 10SB filed with the Securities and Exchange Commission
On November 13, 2006, the Company filed Form 10SB with the Securities and
Exchange Commission ("the SEC") to become a reporting company under the
Securities Exchange Act of 1934. As of the date of this report, the Company
had not received a response from the SEC regarding its 10SB filing.
Following the effectiveness of the Form 10SB, the Company will be required
to file annual and quarterly financial statements with the SEC.
Approval of 2006 Stock Incentive Plan
On November 2, 2006, the Board of Directors adopted, by written consent,
the 2006 Stock Incentive Plan ("the Plan"). On November 9, 2006, the
adoption of the Plan was approved and ratified by written consent signed by
the holders of a majority of the Company's stock. Per the terms of the
Plan, the Company is authorized to reserve 3,000,000 shares of the
Company's authorized and unissued shares of common stock for issuance
pursuant to the Plan.
On November 9, 2006, the Company granted options to each of its two
independent directors to acquire 1,200,000 shares (600,000 shares per
director) of the Company's common stock pursuant to the Plan. The grant of
these options is intended to be in lieu of any salary or other compensation
for their services on the Board. The options will vest annually over a five
year period, with the first 20%, or 240,000 shares (120,000 shares per
director) vesting on December 31, 2006. The exercise price of these options
is $0.0001 per share.
F-18
LANDBANK, LLC
AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 2005
F-19
LANDBANK, LLC
DECEMBER 31, 2005
CONTENTS
Page
Report of Independent Registered Public Accounting Firm F-21
Financial statements:
Balance sheet F-22
Statement of operations F-23
Statement of members' equity F-24
Statement of cash flows F-25
Notes to financial statements F-26-38
F-20
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members
LandBank, LLC.
We have audited the accompanying balance sheet of LandBank, LLC as of December
31, 2005, and the related statements of operations, members' equity, and cash
flows for the year ended December 31, 2005. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit of these statements in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of LandBank, LLC as of December
31, 2005, and the results of its operations and cash flows for the year ended
December 31, 2005 in conformity with accounting principles generally accepted in
the United States of America.
KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS
Los Angeles, California
September 7, 2006
F-21
LANDBANK, LLC
BALANCE SHEET
DECEMBER 31, 2005
----------
ASSETS
Current assets
Cash & cash equivalents $ 631,425
Inventory - land parcels 2,436,478
Prepaid expenses 324,627
Due from related parties 170,447
----------
Total assets $3,562,977
==========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities
Accounts payable $ 32,187
Due to related parties 1,493,288
Accrued expenses 22,905
Reserve for returns 26,148
Loan payable, current portion 59,739
Deferred income 1,333,367
----------
Total current liabilities 2,967,634
----------
Loan payable to bank - non-current portion 512,970
----------
Members' equity 82,373
----------
Liability and members' equity $3,562,977
==========
SEE NOTES TO FINANCIAL STATEMENTS
F-22
LANDBANK, LLC
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
Net sales $ 1,264,313
Cost of sales, including royalty
to a related party of $177,897 933,968
-----------
Gross profit 330,345
-----------
Operating expenses
Rent - related party 12,570
Operating expenses 169,850
-----------
Total operating expenses 182,420
-----------
Income from operations 147,925
-----------
Other expenses
Interest expenses - bank (19,118)
Interest expenses - related party (40,434)
-----------
Total other expenses (59,552)
-----------
Income before income taxes 88,373
Provision for income taxes 6,000
-----------
Net income 82,373
===========
SEE NOTES TO FINANCIAL STATEMENTS
F-23
LANDBANK, LLC
STATEMENT OF MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2005
Gary Doug John
Hewitt Gravink Beck Total
------- ------- ------- -------
Balance at December 31, 2004 $ 0 $ 0 $ 0 $ 0
------- ------- ------- -------
Allocated net income 27,458 27,458 27,457 82,373
------- ------- ------- -------
Balance at December 31, 2005 $27,458 $27,458 $27,457 $82,373
======= ======= ======= =======
SEE NOTES TO FINANCIAL STATEMENTS
F-24
LANDBANK, LLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2005
Cash flows from operating activities:
Net income $ 82,373
Adjustments to reconcile net income
to net cash provided by operating
activities:
Deferred income 1,333,367
Change in assets and liabilities:
Increase in assets:
Inventory (2,436,478)
Prepaid expenses (324,627)
Increase liabilities:
Accounts payable 32,187
Accrued expenses 22,905
Reserve for returns 26,148
-----------
Total adjustments (1,346,498)
-----------
Net cash used by operating activities (1,264,125)
-----------
Cash flows from financial activities:
Due from affiliates (170,447)
Proceeds from affiliates
1,493,288
Proceeds from loan payable to bank 572,709
-----------
Net cash provided by financial
activities 1,895,550
-----------
Net change in cash and cash equivalents 631,425
Cash and cash equivalents - beginning --
-----------
Cash and cash equivalents - ending $ 631,425
===========
Supplemental disclosure of cash flows
Information:
Taxes paid $ --
===========
Interest paid $ 19,118
===========
SEE NOTES TO FINANCIAL STATEMENTS
F-25
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
1. Nature of business and significant accounting policies:
-------------------------------------------------------
Nature of business:
-------------------
The Company was organized in the State of California in December 1, 2004 as
LandBank, LLC. The Company did not have any operations in 2004. No assets
or liabilities existed as of December 31, 2004.
The Company makes bulk acquisitions of parcels of land, and resells the
land as individual parcels. The Company seeks to acquire a majority of its
land "in-bulk" through the real property tax lien foreclosure process,
either at local government tax sales, directly from local government
entities having acquired property at tax sales, or directly from owners of
tax-defaulted parcels prior to tax sale.
The types of real estate acquired and sold by the Company include
undeveloped acreage, houses, and lots. These parcels are marketed
nationwide. The Company considers various criteria in connection with land
acquisitions, including, but not limited to, location, availability of
utilities, proximity to water, geographic desirability, proximity of major
or significant population centers, and a host of other criteria. The
Company is currently focusing on acquiring land in the following geographic
regions in the U.S.: West, Southwest and East Coast. To date, the Company
has acquired properties in Colorado, Florida, Nevada, Oklahoma, New York,
Pennsylvania, Texas, and in the State of Chihuahua, Mexico.
The Company resells the land as individual parcels through multiple
distribution channels, including Internet sales and leads developed by the
Company, its affiliates or third party vendors. The Company has acquisition
teams researching and buying acreage, lots, and houses in a number of
states across the country and in Mexico. Through its marketing affiliates,
the Company has access to a substantial distribution network of potential
customers. The Company matches the criteria of the properties it has
acquired to that of customers in this distribution database, enabling it to
tailor its marketing efforts. Currently, this distribution database
contains approximately 750, 000 active leads. The Company also uses the
Internet to market its properties.
F-26
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
1. Nature of business and significant accounting policies (cont):
--------------------------------------------------------------
The Company shares its office space with several of its affiliates.
The Company's principal office is located in Van Nuys, California. The
property is leased from a real estate company related to the Company by
common ownership under a five-year lease that expires in 2008.
The Company also has a satellite office in American Fork, Utah, a
processing and acquisition office in Alameda, California, and a sales
office in Phoenix, Arizona. Office spaces at the American Fork location and
the Phoenix location are also shared with its affiliates. The Alameda
office space is provided by one of the directors of the Company.
Summary of significant accounting policies
The following summary of significant accounting policies used in the
preparation of these financial statements is in accordance with generally
accepted accounting principles.
Inventory
---------
Inventory consists of raw land, most of which is acquired in sections and
then subdivided into individual lots for resale and are recorded at the
lower of weighted average cost (on a section-by-section basis) or market.
Income taxes
------------
The Company is a limited liability company ("LLC") that has elected to be
taxed as a partnership. Partnership federal and state taxable income or
loss is reportable by the members. The LLC is not responsible for state
income tax in excess of an $800 minimum.
F-27
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
1. Nature of business and significant accounting policies (cont):
--------------------------------------------------------------
Use of estimates
----------------
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and
assumptions regarding certain types of assets, liabilities, revenues, and
expenses. Such estimates primarily relate to unsettled transactions and
events as of the date of the financial statements. Accordingly, upon
settlement, actual results may differ from estimated amounts.
Fair value of financial instruments
-----------------------------------
Statement of financial accounting standard No. 107, Disclosures about fair
value of financial instruments, requires that the Company disclose
estimated fair values of financial instruments. The carrying amounts
reported in the statements of financial position for current assets and
current liabilities qualifying as financial instruments are a reasonable
estimate of fair value.
Recognition of revenue and expenses
-----------------------------------
The Company follows FASB 66, Accounting for Sales of Real Estate.
Substantially all of the Company's land sales are all-cash transactions.
The Company also had a small, insignificant number of financing
transactions. Because the Company's policy for the all-cash transactions is
to allow the buyer 60 days to rescind his real estate purchase and because
the Company does not issue the deed of trust on a financing sale until the
note is paid in full, the deposit method of accounting is used. Under the
deposit method, revenues and their related expenses, including inventory,
are not recognized until the end of the buyers 60-day rescission period,
for the all-cash sales, and at the time the note is paid in full for the
financing transaction (Also see note 4).
Revenue is recorded net of discounts, allowances, and returns.
F-28
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
1. Nature of business and significant accounting policies (cont):
--------------------------------------------------------------
Segment reporting
-----------------
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosure About Segments of an Enterprise and Related Information"
requires use of the "management approach" model for segment reporting. The
management approach model is based on the way a company's management
organizes segments within the company for making operating decisions and
assessing performance. Reportable segments are based on products and
services, geography, legal structure, management structure, or any other
manner in which management disaggregates a company. SFAS 131 has no effect
on the Company's financial statements as substantially all of the Company's
operations are conducted in one industry segment.
Recent pronouncements
---------------------
In December 2004, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 123 (Revised), Share-Based Payment. This standard
revises SFAS No. 123, APB Opinion No. 25 and related accounting
interpretations, and eliminates the use of the intrinsic value method for
employee stock-based compensation. SFAS No. 123(R) requires compensation
costs related to share based payment transactions to be recognized in the
financial statements over the period that an employee provides service in
exchange for the award. Currently, the Company uses the intrinsic value
method of APB Opinion No. 25 to value share-based options granted to
employees and board members. This standard requires the expensing of all
share-based compensation, including options, using the fair value based
method. The effective date of this standard for the Company will be January
1, 2006. Management is currently assessing the impact that this new
standard will have on the Company's financial statements.
F-29
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
1. Nature of business and significant accounting policies (cont):
--------------------------------------------------------------
In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the
Amortization Period for Leasehold Improvements ("EITF 05-6"). EITF 05-6
provides guidance on determining the amortization period for leasehold
improvements acquired in a business combination or acquired subsequent to
lease inception. The guidance in EITF 05-6 will be applied prospectively
and is effective for periods beginning after June 29, 2005. EITF 05-6 is
not expected to have a material effect on its financial position or results
of operations.
In May 2005, the FASB issued SFAS No. 154, entitled Accounting Changes and
Error Corrections--a replacement of APB Opinion No. 20 and FASB Statement
No. 3. This Statement replaces APB Opinion No. 20, Accounting Changes, and
FASB Statement No. 3, Reporting Accounting Changes in Interim Financial
Statements, and changes the requirements for the accounting for and
reporting of a change in accounting principle. This Statement applies to
all voluntary changes in accounting principle. It also applies to changes
required by an accounting pronouncement in the unusual instance that the
pronouncement does not include specific transition provisions. Opinion 20
previously required that most voluntary changes in accounting principle be
recognized by including in net income of the period of the change the
cumulative effect of changing to the new accounting principle. This
Statement requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable
to determine either the period-specific effects or the cumulative effect of
the change. This Statement defines retrospective application as the
application of a different accounting principle to prior accounting periods
as if that principle had always been used or as the adjustment of
previously issued financial statements to reflect a change in the reporting
entity. This Statement also redefines restatement as the revising of
previously issued financial statements to reflect the correction of an
error. The adoption of SFAS 154 did not impact the financial statements.
F-30
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
1. Nature of business and significant accounting policies (cont):
--------------------------------------------------------------
In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAF No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities". SFAS No. 155, permits fair value
remeasurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation, clarifies which
interest-only strips and principal-only strips are not subject to the
requirements of SFAS No. 133, establishes a requirement to evaluate
interest in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments that
contain an embedded derivative requiring bifurcation, clarifies that
concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another
derivative financial instrument. This statement is effective for all
financial instruments acquired or issued after the beginning of the
Company's first fiscal year that begins after September 15, 2006. The
Company has not evaluated the impact of this pronouncement its financial
statements.
In March 2006 FASB issued SFAS 156 `Accounting for Servicing of Financial
Assets' this Statement amends FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. This Statement:
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.
F-31
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
1. Nature of business and significant accounting policies (cont):
--------------------------------------------------------------
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.
This Statement is effective as of the beginning of the Company's first
fiscal year that begins after September 15, 2006. Management believes that
this statement will not have a significant impact on the financial
statements.
2. Cash and cash equivalents
Equivalents
-----------
For purposes of the statement of cash flows, cash equivalents include all
highly liquid debt instruments with original maturities of ninety days or
less which are not securing any corporate obligations.
Concentration
-------------
The Company maintains its cash in bank deposit accounts, which, at times,
may exceed federally insured limits. The Company has not experienced any
losses in such accounts.
F-32
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
3. Due from/to affiliates
The Company has amounts due from/to various affiliates that are related to
the Company through common ownership. These amounts are unsecured, have no
stated rates of interest and have no maturity dates. As of December 31,
2005, due from affiliates amounted to $170,447 and due to affiliates
amounted to $1,493,288. Interest has been imputed using a per annum rate of
8%. Interest expense was $40,434 for the year ended December 31, 2005.
4. Sales and expenses deferred under the deposit method
Sales and expense deferrals were as follows:
For the year ended
December 31, 2005
------------------
Deferred income $1,333,367
Inventory
(Cost of sales) (607,245)
Prepaid expense
(Selling expenses) (324,627)
------------------
Gross profit $ 401,495
==================
Selling expenses include (a) 35% royalty paid to John Beck Amazing Profit,
LLC (Also see note 6.)(b) A 5% sales commission on all-cash sales, (c)
credit card merchant fees and (d) trust deed transfer costs of $50 a
transaction.
5. Loans payable
During 2005, the Company purchased certain sections of land in Pershing
County, Nevada subject to loans from Western Title Company. Each of the 19
sections of land secures their respective loans. The loans bear interest at
10% per annum and mature September 1, 2015, unless the corresponding real
estate is sold sooner, in which case, the loan must be repaid.
F-33
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
5. Loans payable (cont)
The maturities on these notes are as follows:
Years ending
December 31,
----------------------------------
2006 $ 59,739
2007 39,195
2008 43,299
2009 47,833
2010 52,842
Thereafter 329,801
---------
572,709
Current portion 59,546
---------
Long-term portion $ 512,970
=========
6. Related-party transactions
The Company pays a royalty to John Beck Amazing Profit, LLC equal to 35% of
gross profit on each all-cash sale. Gross profit is defined as land sale
revenue reduced for inventory cost, sales commissions, credit card merchant
fees and deed of trust transfer costs. John Beck Amazing Profit, LLC is
related to the Company through common ownership. $177,879 of royalty
expenses was recorded for the year ended December 31, 2005. $202,882 of
royalty expenses was recorded as prepaid expenses under the deposit method
as of December 31, 2005. (Also see note 3.)
The Company paid rent to a related party through common ownership on a
month-to-month basis at about $1,800 per month. Total rent to the related
party amounted to $12,570 for the year ended December 31, 2005.
F-34
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
7. Concentration of credit risk
The Company maintains certain cash balances with a commercial bank. A
balance of approximately $531,400 was in excess of insured limits at
December 31, 2005.
8. Commitment
Consulting Agreement with Independent Third Parties
---------------------------------------------------
On August 22, 2005, the Company hired two independent consultants
("consultants") to locate a publicly-traded company and negotiate a
business combination with that company. In addition, the consultants were
hired to assist the Company in capital raising. Under the terms of the
agreement, the consultants are to be paid $180,000 for their consulting
services, payable in nine (9) monthly installments of $20,000 each,
commencing on September 1, 2005. The agreement was amended on May 10, 2006.
(See Note 9)
9. Subsequent events
Acquisition of the Company
--------------------------
On January 26, 2006, Istorage Networks, Inc. ("Istorage") issued 8,200,000
shares of restricted stock (post-split) in exchange for all of the
membership interets of the Company and $140,000 in cash. Istorage changed
its name to Landbank Group, Inc. ("LGI"). The former members of Landbank,
LLC became approximately 90% owners of LGI.
The exchange of shares with LGI will be accounted for as a reverse
acquisition under the purchase method of accounting since the stockholders
of the Company obtained control of the consolidated entity. Accordingly,
the merger of the two companies will be recorded as a recapitalization of
the Company, where as the Company will be treated as the continuing entity.
The historical financial statements to be presented would be those of the
Company. The financial statements of the legal acquirer are not
significant; therefore, no pro forma financial information is submitted.
F-35
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
9. Subsequent events (cont.)
LGI is a pink-sheet traded company with approximately 9,200,000 shares
(post-split) outstanding as of December 31, 2005.
Stock split
-----------
On March 3, 2006, LGI obtained written consent from stockholders holding a
majority of LGI's outstanding shares of voting securities to authorize a
reverse split of LGI's outstanding common stock. Pursuant to the terms of
the written consent, LGI completed a 1 for 10 reverse split of its common
stock, with special treatment for certain Company shareholders to preserve
round lot shareholders, prior to the opening of the market on June 30,
2006. The following is a summary illustrating the effect of the reverse
stock split:
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
Joint Marketing Agreement with Aurelius Consulting Group, Inc.
--------------------------------------------------------------
On May 26, 2006, Istorage entered into a Joint Marketing Agreement (the
"Agreement") with Aurelius Consulting Group, Inc./Red Chip Companies
("ACG/RC) to assist in marketing LGI to the investment community for a term
of 8 months. ACG/RC, per the terms of the Agreement, will distribute both a
research report and a newsletter to the investment community.
In return for the above-mentioned services, LGI will pay ACG/RC a total of
$150,000 in cash and stock. The cash portion will total $44,000, with
$20,000 down and eight (8) monthly installments of $3,000 each. The
remaining $106,000 is to be paid in rule 144 stock with $10,000 paid
immediately and the remainder in eight (8) monthly installments of $12,000
each. As of the date of this report, LGI had issued 24,445 shares
(post-split) of stock.
F-36
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
9. Subsequent events (cont.)
Agreement with Investment Capital Researchers, Inc.
---------------------------------------------------
On June 27, 2006, LGI amended its original agreement, dated August 1, 2005,
with Investment Capital Researchers, Inc. ("ICR"). The amendment revises
the compensation to be paid to ICR for its services relating to fundraising
on behalf of LGI. Pursuant to the amended agreement, ICR is to receive
200,000 shares (post-split) of LGI's common stock, par value $0.0001, on
June 30, 2006 and an additional 200,000 shares of LGI's common stock
(post-split), par value $0.0001, upon the achievement of certain
milestones. Under the terms of the amended agreement, the issued shares can
only be sold or transferred, over a four-year period, at the rate of
100,000 shares on each anniversary of the closing date of the secondary
offering.
As of the date of this report, LGI issued 200,000 shares (post-split) of
its common stock to ICR
ICR is owned by Steven Weber, a member of LGI's Board of Directors.
Consulting Agreement with Independent Third Parties
---------------------------------------------------
On August 22, 2005, LGI hired two independent consultants ("consultants")
to locate a publicly-traded shell company and negotiate its merger with
Landbank, LLC. In addition, the consultants were hired to assist the
Company with its capital raising. Under the terms of the original
agreement, the consultants are to be paid $180,000 for their consulting
services, payable in nine (9) monthly installments of $20,000 each,
commencing on September 1, 2005. In a May 10th 2006 amendment to the
consulting agreement, LGI agreed to compensate the consultants for any
funds they raised by issuing eight hundred thousand (800,000) shares of its
common stock (post-split), par value $0.0001. 400,000 shares are to be
issued on June 30, 2006, with the remaining 400,000 shares issued upon the
achievement of certain milestones.
F-37
SEE NOTES TO FINANCIAL STATEMENTS
LANDBANK, LLC
NOTES TO FINANCIAL STATEMENTS
9. Subsequent events (cont.)
Under the terms of the amended agreement, the issued shares can only be
sold or transferred, over a four-year period, at the rate of 200,000 shares
on each anniversary of the closing date of the secondary offering.
As of the date of this report, LGI issued 400,000 shares (post-split) of
its common stock to the consultants.
Agreement with Piping Partners Holdings, Inc.
---------------------------------------------
On January 25, 2006, LGI entered into an agreement with Piping Partners
Holdings, LLC ("PPH") use its best efforts to ensure that LGI obtains,
within eight (8) months following completion of the independent audit of
LGI's financial statements, quotation of LGI's shares on the
Over-the-counter Bulletin Board ("OTCBB").
Per terms of this agreement with PPH, LGI agrees to pay PPH a success fee,
which includes any and all application and filing fees and expenses, of two
hundred thirty-five thousand dollars ($235,000), which is to be paid upon
active quotation, with PPH's assistance, of LGI's shares on the OTCBB, less
any advance amounts, and an advance of ten thousand dollar ($10,000)
retainer for legal services engaged by PPH, and approved by LGI, in
connection with the exchange Act Reports.
As of the date of this report, LGI had not paid any funds, or any other
consideration, to PPH.
F-38
PART III
Item 1. Index to Exhibits
The exhibits listed and described below in Item 2 are filed herein as part
of this Registration Statement.
Item 2. Description of Exhibits
Exhibit No. Description
2 Plan of Acquisition, Reorganization, Arrangement,
Liquidation, or Succession
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 (i) Charter
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 Articles of Incorporation to
change name to iStorage Networks, Inc. dated November 8,
2004
3.4 Certificate of Amendment to the Articles of Incorporation to
change name to Landbank Group, Inc. dated January 27, 2006
3.5 Certificate of Amendment to the Articles of Incorporation
dated June 29, 2006 dealing with the reverse split of the
Company's common stock and resultant recapitalization
3 (ii) Amended and Restated By-Laws of the Company
4 None Instruments defining the rights of security holders
26
9 None Voting Trust Agreements
10 Material Contracts
10.1 Royalty Agreement between Landbank, LLC and John Beck
Amazing Profits, LLC dated June 1, 2005
10.2 Royalty Agreement between Landbank, LLC and John Alexander,
LLC dated November 1, 2005
10.3 Royalty Agreement between Landbank, LLC and Jeff Paul, LLC
dated June 1, 2005
10.4 Agreement with ICR dated August 1, 2005 as amended June 27,
2006
10.5 Assignment and Assumption of Agreement with ICR between
Landbank, LLC and Landbank Group, Inc.
10.6 Pro Forma Stock Option Agreement pursuant to 2006 Stock
Incentive Plan adopted November 2, 2006
10.7 Pro Forma Stock Option Exercise Agreement pursuant to 2006
Stock Incentive Plan adopted November 2, 2006
21 Subsidiary of the Registrant
Footnote:
---------
All exhibits previously filed on 10SB-12G/A filed January 4, 2007.
27
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Landbank Group, Inc.
Dated: December 28, 2006 By: /s/ Gary Hewitt
---------------------------
Gary Hewitt
President
28