ldholdings.htm
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 31, 2012
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Commission file number 0-50584
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LD Holdings Inc
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(formerly Leisure Direct, Inc.)
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(Name of Small Business Issuer in Its Charter)
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Nevada
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98-0335555
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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1070 Commerce Drive, Building II, Suite 303, Perrysburg, OH 43551
(Address of Principal Executive Offices) (Zip Code)
(419) 873-1111
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None.
Securities registered under Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of Class)
Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. Yes X No ___
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X|
Indicate by checkmark whether the registrant is a ____ large accelerated filer, ____an accelerated filer, ____a non accelerated filer, or X a smaller reporting company in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes____ No X
State the aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the price at which the common equity was sold, or the average bid and ask prices of such common equity, as of a specified date within the past 60 days.
The aggregate market value of our common shares held by non-affiliates of the registrant on December 31, 2012 was approximately $410,026.
As of April 15, 2013, the Issuer had 24,945,351 common shares, $.001 par value, outstanding and 974,156 preferred shares, $.001 par value, outstanding.
Item 1. Description of Business
Forward-Looking Statements
This document contains forward-looking statements, including statements regarding the Company's strategy, plans for growth and anticipated sources of capital and revenue. The Company's actual results may differ dramatically from those anticipated in these forward-looking statements. The differences may result from one or more of the risk factors described below or from events that we have not foreseen.
Risk Factors
- LD Holdings has very limited financial resources. In order to implement our business plan we will have to raise capital. If we are unsuccessful in raising capital, our business will not grow.
- Because of its limited operating history, LD Holdings has little historical financial data on which to base its plans for future operations. Management will have to budget capital investment and expenses based, in large part, on its expectation of future revenues. If those expectations are not met, LD Holdings may exhaust its capital resources before it achieves operational stability.
Corporate Strategy
LD Holdings, Inc., (Symbol LDHL), has developed a business model that seeks to capitalize on the massive transfer of generational assets as the “Baby-Boomer” generation transitions from the ownership of small businesses into retirement. The Baby-Boomer generation is represented by almost 78 million individuals born between 1946 and 1964. Over the next 20 years as these Baby-Boomers are retiring, there are going to be businesses worth trillions of dollars that need to be sold by this Boomer generation.
Historically, the sellers typically wanted to provide minimal or no financing to the buyer. These types of transactions were too large for most individuals to finance, too risky for banks based upon the company’s individual merits (as opposed to the buyer’s personal balance sheet) and too small to interest most institutional investors (hedge funds and private equity groups) to consider. The lack of liquidity makes it difficult to raise funds privately from anyone but friends and relatives.
The company seeks to take a seemingly negative funding situation and turn it into a positive one. Many of these Baby Boomer businesses being sold, whether the sellers want to or not, will be forced to provide a major portion, or all, of the financing in order to sell their businesses or will be forced to sell them below their true market value in order to get the business sold.
The company plans to focus its efforts on becoming a “known buyer” of small companies that meet its acquisition criteria, which it intends to widely distribute to business sellers directly and to others on its websites. The 5-Year Plan is to accumulate at least 45 of these small companies and to slowly meld them into cohesive business units. Using $8.33 million of revenues as an average in years 1 through 3, and $10 million of revenues as an average in years 4 and 5, would result in consolidated total revenues of $420 Million by the end of year 5.
The company’s objective, through aggressive use of the Internet, is to put an outside investor base in place that shares the company’s vision and objectives while the search for acquisitions is being conducted. The company will stress on its affiliated websites and in its investor information that it is looking for long-term investors who are willing to hold their positions for a year or more.
The company plans to acquire at least 3 companies with $25 million sales and EBIT of $2.5 million. At 15 x EBIT, this would place a market capitalization of $37 million on the company. In order to accomplish its objectives, and as explained in the next section, the company has developed a 4-Step Process in which to accomplish its plans.
Current Business Operations
LD Holdings, Inc., (Symbol LDHL), is a Financial and Management Holding Company that has identified a significant business opportunity that will fill a void in the small business world. That void is the sale and transfer of businesses from one generation (the Baby Boomer) to the next.
With over 25 million small businesses in the USA and 15 trillion dollars of businesses to be sold over the next 15-20 years, there will be many opportunities for wealth generation. The following services will be needed:
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1*
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There will be a need for Marketing, Sales and other Business Services to prepare the businesses for sale.
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2*
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There will be a need for buyers for these businesses.
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3*
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There will be a need for entrepreneur managers to manage these businesses.
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4*
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There will be a need for the financing of these businesses.
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LD Holdings, Inc., as a Financial and Management Holding Company, will take advantage of this opportunity and manage the portfolio companies in which LD Holdings, Inc. will have varying percentages of ownership.
LD Holdings, Inc. will concentrate on businesses with sales between $2 million and $20 million and EBIT between $500,000 and $3 million. This is where the real void exists. Owners of these businesses have a difficult time getting full value because the financing of these companies is too large for most individuals to finance, too risky for banks based upon the company's individual merits (as opposed to the buyer's personal balance sheet) and too small to interest most institutional investors (hedge funds and private equity groups) to consider. A lack of liquidity makes it difficult to raise funds privately from anyone but friends and relatives.
LD Holdings, Inc. will provide the following services:
1* The Marketing, Sales and Other Business Services represent specifically target services to position client companies for both sales and profit growth in preparation for their eventual sale. The lead service involves the client company outsourcing some portion of the sales function to us as an Independent Sales Organization (ISO). This enhances the value of the company because it is no longer dependent upon the selling management's relationship with the company's customers. We provide this service under a variety of formats and compensation arrangements. Typically, these are long-term joint-venture marketing efforts that result in recurring revenue streams to the company. The auxiliary consulting services provided include helping the client company to finance its growth and to prepare it for sale under the most advantageous terms possible to the client. In many cases, we will participate in the incremental value created.
2* LD Holdings, Inc. maintains an ongoing data base of businesses for sale. This allows the company to look for synergistic opportunities to combine one or more acquisition candidates at some future date. This database also provides the company with a historical perspective of different industries and distribution channels along with any type of geographical variation in the valuation of businesses.
3* LD Holdings, Inc. maintains a database of individuals with specific backgrounds and expertise that will be available for both acquisition evaluation, and strategizing the post-acquisition business model for each potential acquisition candidate, once the financial aspects of the transaction are determined. Particular attention will be given to developing relationships with those entrepreneurs and managers that want to perform in a results-driven environment, which has the associated incentives in place to create personal wealth for them and an above average return for the company's stockholders. What distinguishes these individuals is that they are self-motivated, looking for a rewarding opportunity and are willing to put in whatever time is needed.
4* LD Holdings, Inc. maintains an ongoing data base of investors that share the company's vision and objectives. The company is looking for long-term investors who are willing to hold their positions for a year or more for superior rates of return. Investors that want to participate in ground floor investment opportunities that the company's Business Model represents have a special wealth building vehicle available to them. The company's stock is thinly traded with a relatively small float. This will allow the company to look for synergistic opportunities to combine one or more acquisition candidates.
Boomer's Diner, Inc., a Michigan corporation and wholly owned subsidiary of LD Holdings, Inc. (LDHL), opened for business in Monroe, Michigan in October, 2010. On August 28, 2011, the company closed its Monroe, Michigan diner, and on October 17, 2011, the company opened a Boomers Diner in Toledo, Ohio. The location is ideally suited for our Diner Model as an end cap of a commercial shopping center, with plenty of parking and on a main thorough fare. As part of the Boomer's Diner Business Plan, the diner is modeled after a "local" diner which has proven successful over the last six years, located near the Company's Headquarters in Perrysburg, Ohio.
This subsidiary's business plan compliments the business plan of LDHL, which is to help facilitate the transfer of "Baby Boomer" businesses in the $2-$20 million annual sales range to younger generations. Collaboration of business resources, lead generation and other business services will expand and leverage the footprint of LDHL.
The diners provide a stage for the company to get its tentacles into the local community and have its loyal customer base as a source for finding businesses that are for sale, entrepreneur manager candidates and investors. It is anticipated that some of these customers will also become shareholders in the parent company. The plan is to open or collaborate to have 10 -12 locations operating over a three state area (Ohio, Michigan, Indiana) over the next 24 - 36 months.
Personnel
LD Holding's principal, John R. Ayling, Chairman, Chief Executive Officer and Chief Accounting Officer, spent a material amount of time working on behalf of the Company during the year. The company expects to hire from time to time, independent consultants and contractors during the stages of implementing our business plan. As the Company grows, it will develop a group of full time employees that will be supplemented with temporary labor.
Item 2. Description of Property
The Company's executive offices are currently located at 1070 Commerce Drive, Building II, Suite 303, Perrysburg, Ohio 43551. The Company shares a portion of an office complex located at this address with Capital First Corporation, a shareholder of the Company. The Company currently pays rent of $2,500 under a sublease agreement with Capital First for this location.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Small Business Issuer Purchases of Equity Securities
(a) Market Information
The Company's common stock has been quoted on the OTC Bulletin Board under the symbol "LDHL" since November, 2008. Prior to that date, the Company's common stock was quoted on the OTC Bulletin Board under the symbol "LDTI". Set forth below are the high and low bid prices for the fiscal quarters, 2012. The reported bid quotations reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions.
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Quarter Ended
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High Bid
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Low Bid
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December 31, 2012
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$
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.80
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$
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.52
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September 30, 2012
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$
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1.50
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$
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.15
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June 30, 2012
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$
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.50
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$
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.03
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March 31, 2012
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$
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.03
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$
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.03
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(b) Shareholders
On April 15, 2013, there were 165 holders of record of the Company's common stock.
(c) Dividends
The Company has not paid cash dividends since inception. The Company intends to retain all of its earnings, if any, for use in its business and does not anticipate paying any cash dividends in the foreseeable future. The payment of any future dividends will be at the discretion of the board of directors and will depend upon a number of factors, including future earnings, the success of the company's business activities, capital requirements, the general financial condition and future prospects of the company, general business conditions and such other factors as the board of directors may deem relevant.
(d) Recent Sales of Unregistered Securities
The Company did not sell any securities during the 4th quarter of 2012 that were not registered under the Securities Act.
(e) Repurchase of Equity Securities
The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Act during the 4th quarter of 2012.
Item 6. Except for historical information, the Company's reports to the Securities and Exchange Commission on Form 10-K and 10-Q and periodic press releases, as well as other public documents and statements, contain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward -looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the statements. These risks and uncertainties include general economic and business conditions, development and market acceptance of the Company's products, current dependence on the willingness of investors to continue to fund operations of the Company and other risks and uncertainties identified in the Company's reports to the Securities and Exchange Commission, periodic press releases, or other public documents or statements.
Readers are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to republish or revise forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events.
The selected financial information presented below under the captions "Statement of Operations" and "Balance Sheet" for the years ended December 31, 2012 and 2011 is derived from the financial statements of the Company and should be read in conjunction with the financial statements and notes thereto.
The financial data are those of LD Holdings, Inc. All intercompany accounts and transactions have been eliminated in consolidation.
BALANCE SHEET
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2012
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2011
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Total assets
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$
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54,411
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$
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44,100
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Current Liabilities
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(4,215,705
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)
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(3,886,509
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)
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Long-term debt
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-
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-
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Working capital
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(4,190,150
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)
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(3,879,653
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)
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Shareholders' equity (deficit)
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(4,161,294
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)
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(3,842,409
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)
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STATEMENT OF OPERATIONS
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For the years ended
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December 31,
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2012
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2011
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Total revenues
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$
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189,553
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$
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320,185
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Operating (loss)
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(547,012
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)
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$
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(480,205
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)
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Net (loss)
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(596,818
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)
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(554,673
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)
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Net loss per common share
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(.03
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)
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(.03
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Number of shares used in Computing per share data
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23,707,341
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20,101,705
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
For the years ended December 31, 2012 and 2011 LD Holdings had revenues of $189,553 and $320,185, respectfully. LD Holdings had a working capital shortage throughout 2012 and did not emphasize current operations. Management has elected to devote all of its time seeking financing partners to further implement its Business Plan.
LD Holdings gross margin was $102,732 and $166,531 in 2012 and 2011, respectively. The 2012 and 2011 revenue was generated from two family diners.
During 2012 LD Holdings incurred general and administrative expenses of $649,744 compared to $646,736 in 2011. The primary drivers were impairment expense, salaries and wages, rent, management fees, professional fees and consulting expenses for the change in general and administrative expenses.
The Company's net loss for 2012 was $596,818 compared to $554,673 in 2011. The majority of the 2012 net loss stems from management fees, consulting fees, accounting and auditing fees and interest expense. Funding of the company came from loans from LD Holdings' principal shareholder.
The Company had a loss for tax purposes in 2012 and 2011. The Company did not recognize a deferred tax asset for tax loss carry forwards as the Company cannot determine when, if ever, it will be able to use the tax loss carry forwards.
Liquidity and Capital Resources
The Company had cash of $3,521 as of December 31, 2012.
LD Holdings had a working capital deficit of $4,190,150 at December 31, 2012. Although more than half of the debts that produce the deficit are owed to shareholders.
LD Holdings will require additional capital to remedy its working capital deficit, as well as to implement its business plan. We are currently seeking sources of capital, either from the sale of our securities or incurring of debt. Without additional capital, LD Holdings will have to curtail its operations, and it will not be able to implement its business plan. LD Holdings does not have any arrangements with investment banking firms or institutional lenders, but is relying on the experience of its Chairman to establish relationships with sources of capital. In the event that additional funding is not procured, possible outcomes to LD Holdings lack of liquidity include voluntary or involuntary bankruptcy filing, or voluntary liquidation of the company.
Application of Critical Accounting Policies
In preparing our financial statements we are required to formulate working policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for 2012, there was one estimate made which was (a) subject to a high degree of uncertainty and (b) material to our results. This estimate was our determination, detailed in the Footnotes to the Financial Statements on Income Taxes, that we should record a valuation allowance for the full value of the deferred tax asset created by our net operating loss carry forward. The primary reason for the determination was our lack of certainty as to whether LDHL will carry on profitable operations in the future.
We made no material changes to our critical accounting policies in connection with the preparation of financial statements for 2012.
Impact of Accounting Pronouncements
There were no recent accounting pronouncements that have had or are likely to have a material effect on the Company's financial position or results of operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Company, together with notes and the Report of Independent Certified Public Accountants, are set forth immediately following Item 14 of this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There have been no changes or disagreements with the Registered Independent Auditors during the year.
Item 9A. Controls and Procedures
John Ayling, the Chief Executive Officer/Chief Accounting Officer of the Company has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the fiscal year covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer/Chief Accounting Officer of the Company has concluded that the Company's disclosure controls and procedures as of the end of the fiscal year covered by this Annual Report on Form 10-K are not effective to provide reasonable assurance the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that the information required to be disclosed in the reports is accumulated and communicated to allow timely decisions regarding required disclosure.
We identified a material weakness as defined in Public Accounting Oversight Board Standard No. 2 in our internal control over financial reporting. Management identified the following material weaknesses in our internal controls as of December 31, 2012 and December 31, 2011:
A material weakness in the Company's internal controls exists in that there is limited segregation of duties with respect to the Company's preparation and review of the Company's financial statements. This material weakness is a result of the Company's limited number of personnel. This material weakness may affect management's ability to effectively review and analyze elements of the financial statement closing process and prepare financial statements in accordance with U.S. GAAP.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.
CHANGES IN INTERNAL CONTROLS
The Chief Executive Officer/Chief Accounting Officer of the Company has evaluated any change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year covered by this Annual Report on Form 10-K. There was no change in the Company's internal control over financial reporting identified in that evaluation that occurred during the fiscal year covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting, other than what has been reported above.
RISK FACTOR RELATED TO CONTROLS AND PROCEDURES
The Company has limited segregation of duties with respect to the Company's preparation and review of the Company's financial statements due to the limited number of employees, which is a material weakness in internal controls, and if the Company fails to maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in the Company's financial reporting which could harm the trading price of the Company's stock.
Effective internal controls are necessary for the Company to provide reliable financial reports and prevent fraud. Inferior internal controls could cause investors to lose confidence in the Company's reported financial information, which could have a negative financial effect on the trading price of the company. The Company's Chief Executive Officer/Chief Accounting Officer believes the Company's administrative employees are capable of following its disclosure controls and procedures effectively.
The Company has found it necessary to limit its administrative staffing in order to conserve cash, until the Company's level of business activity increases. As a result, there is very limited segregation of duties. The Company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist. Despite the limited number of administrative employees and limited segregation of duties, the Company believes that its administrative employees are capable of following its disclosure controls and procedures effectively.
There have been no significant changes in the Company's internal controls or in other factors that could significantly affect those controls subsequent to the date on which Mr. Ayling performed his evaluation.
Item 10. Directors and Executive Officers of the Registrant
The persons listed below are the current directors and officers of the Company:
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Director
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Name
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Age
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Position
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Since
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John R. Ayling
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69
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CEO/CAO and Director Chairman of the Board
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2003
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John R. Ayling -CEO and Chairman of the Board/Chief Accounting Officer. John R. Ayling, 69, has been CEO of the Company since October of 2003. Since 1989 to present, he has served as President of Capital First Management, Inc., a Perrysburg, Ohio money management firm. From 1983 to 1988, he served as a Vice President at Otherwise Securities. From 1969 to 1982, he managed accounts for individuals and institutions with Bell & Beckwith, a Toledo, Ohio financial investment broker. Mr. Ayling is a NASD or FINRA registered representative and holds Series 7, 24 and 63 licenses. From 1966 to 1968, he served as a Captain with the U.S. Army, and served in Vietnam as a company commander with the 23rd Infantry, American Division. Mr. Ayling has helped launch several start-up operations and financed several business enterprises and provided management support and development for all phases of management, with an emphasis on business integration and financial controls.
AUDIT COMMITTEE
The Board of Directors has not appointed an Audit Committee of the Board. The Board of Directors has determined that John R. Ayling is qualified to serve as an "audit committee financial expert", as defined in the Regulations of the Securities and Exchange Commission, by reason of his work and educational experience. Mr. Ayling is not an "independent director", as defined in the Regulations of the Securities and Exchange Commission.
CODE OF ETHICS
The Company has not adopted a written code of ethics applicable to executive officers. The Board of Directors has determined that a code of ethics is not needed at this time until its management staff is grown.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
None of the directors, officers, or beneficial owners of more than 10% of our common stock failed to file on a timely basis reports required during 2012 by Section 16(a) of the Exchange Act.
Item 11. Executive Compensation
In both 2012 and 2011, no officer or director received any cash compensation from the Company.
This table itemizes the compensation owed to John Ayling, who served as Chief Executive Officer/Chief Accounting Officer during 2010, 2011 and 2012. Mr. Ayling’s compensation was not paid but booked as an expense for the years 2010, 2011 and 2012 and also as a payable. There was no other officer whose salary and bonus for services rendered during the year ended December 31, 2012 exceeded $100,000.
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Compensation
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Year
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Mgmt Fee
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Stock Grant
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John Ayling
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2012
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$
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120,000
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0
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John Ayling
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2011
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$
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120,000
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0
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John Ayling
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2010
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$
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120,000
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0
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The following tables set forth certain information regarding the stock options acquired by the Company's Chief Executive Officer during the years ended December 31, 2012 and 2011.
Option Grants in the Last Fiscal Year
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Percent
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Potential realizable
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of total
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value at assumed
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Number of
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options
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annual rates of
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Securities
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granted to
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appreciation of
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Underlying
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employees
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Exercise
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Expiration for
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Option
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in fiscal
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Price
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option term
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Name
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Granted
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year
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($/share) Date
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5
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%
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10
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%
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John Ayling
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Aggregated Fiscal Year-End Option Values
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Number of securities underlying
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Value of unexercised in-the-money
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unexercised options at fiscal
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options at fiscal year-end ($)
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Name
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year-end (#) (All exercisable)
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(All exercisable)
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John Ayling
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0
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0
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Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table shows the beneficial shareholdings of the Company's officers and directors and the holders of 5% or more of the Company's outstanding voting securities as of December 31, 2012.
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Amount and
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Nature of
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Name and Address
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Beneficial
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Percentage
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Percentage
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of Beneficial Owner (1)
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Ownership (2)
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of Common
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Of Preferred
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John R. Ayling
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2,161,847
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(3)
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15.5
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%
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-
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974,156
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-
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100.0
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%
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All Officers and Directors As a Group
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2,161,847
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(3)
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15.5
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%
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-
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DABE Inc
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|
|
1,028,410
|
(3)
|
|
|
7.4
|
%
|
|
|
-
|
|
|
Capital First Corporation, LLC
|
|
|
974,156
|
|
|
|
-
|
|
|
|
100.0
|
%
|
|
Olympic Pools, Inc.
|
|
|
1,133,437
|
|
|
|
8.1
|
%
|
|
|
-
|
|
(1) The address of Mr. Ayling is c/o LD Holdings, Inc., 1070 Commerce Drive, Building II, Suite 303, Perrysburg, OH 43551
(2) All shares are owned of record unless otherwise indicated.
(3) The shares beneficially owned by Mr. Ayling include 974,156 preferred shares owned by Capital First Corporation, LLC, and 1,133,437 shares owned by Olympic Pools, Inc., and 1,028,410 shares owned by DABE, Inc. all of which are owned and managed by Mr. Ayling.
Item 13. Certain Relationships and Related Transactions
Olympic Pools, Inc. (OPI) is a shareholder of the Company. OPI is wholly owned by John Ayling, President and Chairman of the Company. The Company is indebted to OPI for loans made to the Company.
During 2012 and 2011, the Company had demand notes outstanding to DABE, Inc., with interest accruing at a rate of 10% per annum, computed on a 360-day basis. Any and all of these notes are guaranteed by a security interest in all present and hereafter acquired inventory, receivables, equipment, general intangibles, chattel paper, documents and contract rights of the Company as collateral. Mr. Ayling is the sole shareholder of DABE, Inc.
Item 14 Principal Accountant Fees and Services
Audit Fees
Rosenberg Rich Baker Berman & Co. billed $24,500 and $24,500 to the Company for professional services rendered for the audit of our 2012 and 2011 financial statements and review of the financial statements included in our 10-Q filings for the first three quarters of 2012 and 2011.
Audit-Related Fees
Rosenberg Rich Baker Berman & Co. billed $0 to the Company in 2012 and 2011 for assurance and related services that are reasonably related to the performance of the 2012 audit or review of the quarterly financial statements.
Tax Fees
Rosenberg Rich Baker Berman & Co. billed $0 to the Company in 2012 and 2011 for professional services rendered for tax compliance, tax advice and tax planning.
All Other Fees
Rosenberg Rich Baker Berman & Co. billed $0 to the Company in 2012 and 2011 for services not described above.
It is the policy of the Company's Board of Directors that all services other than audit, review or attest services, must be pre-approved by the Board of Directors. All of the services described above were approved by the Board of Directors.
Item 15. Exhibit List and Reports
(a) Financial Statements
(b) Exhibits
| |
|
|
|
Incorporated By
|
|
|
|
|
|
Exhibit
|
|
|
|
Reference from
|
|
|
No. in
|
|
|
Number
|
|
Description
|
|
Document
|
|
|
Document
|
|
| |
3.1
|
|
Certificate of Incorporation
|
|
|
A
|
|
|
|
3.1
|
|
| |
3.2
|
|
Bylaws
|
|
|
A
|
|
|
|
3.2
|
|
| |
4.1
|
|
Form of Common Stock Certificate
|
|
|
A
|
|
|
|
4.1
|
|
| |
31
|
|
Rule 13a-14(a) Certification
|
|
|
|
|
|
|
|
|
| |
32
|
|
Rule 13a-14(b) Certification
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
101 INS
|
|
XBRL Instance Document*
|
|
|
|
|
|
|
|
|
| |
101 SCH
|
|
XBRL Schema Document*
|
|
|
|
|
|
|
|
|
| |
101 CAL
|
|
XBRL Calculation Linkbase Document*
|
|
|
|
|
|
|
|
|
| |
101 LAB
|
|
XBRL Labels Linkbase Document*
|
|
|
|
|
|
|
|
|
| |
101 PRE
|
|
XBRL Presentation Linkbase Document*
|
|
|
|
|
|
|
|
|
| |
101 DEF
|
|
XBRL Definition Linkbase Document*
|
|
|
|
|
|
|
|
|
The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
A. Registrant's Registration Statement on Form SB-2 (Registration Statement No. 333-53186).
(c) Reports on Form 8-K. None.
|
Date: April 15, 2013
|
/s/ John R. Ayling
|
| |
John R. Ayling, Chief
|
| |
Executive Officer/Chief Accounting Officer
|
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
LD HOLDINGS, INC.
(Registrant)
|
Dated: April 15, 2013
|
|
| |
By: /s/ John R. Ayling
|
| |
Name: John R. Ayling
|
| |
Title: Chairman and CEO/Chief Accounting Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
|
Name
|
Title
|
Date
|
|
/s/ John R. Ayling
|
Chairman & CEO, Director/Chief Accounting Officer
|
April 15, 2013
|
|
John R. Ayling
|
|
|
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders' Impairment
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of LD Holdings, Inc.
We have audited the accompanying consolidated balance sheets of LD Holdings, Inc. as of December 31, 2012 and 2011 and the related consolidated statements of operations, changes in stockholder's impairment and cash flows for each of the two years in the two-year period ended December 31, 2012. These consolidated financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards established by 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of LD Holdings, Inc. as of December 31, 2012 and 2011 and the results of its operations, changes in shareholder's impairment and cash flows for each of the two years in the two-year period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that LD Holdings, Inc. will continue as a going concern. As more fully described in the notes to the consolidated financial statements, the Company has suffered recurring losses from operations and has a working capital deficiency as of December 31, 2012. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in the notes. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Rosenberg Rich Baker Berman & Company
Somerset, New Jersey
April 15, 2013
|
LD Holdings, Inc.
|
|
|
Consolidated Balance Sheets
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
December 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Assets
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
$ |
3,521 |
|
|
$ |
1,765 |
|
|
Prepaid expenses
|
|
|
16,000 |
|
|
|
- |
|
|
Inventory
|
|
|
6,034 |
|
|
|
5,091 |
|
|
Total Current Assets
|
|
|
25,555 |
|
|
|
6,856 |
|
|
Equipment, net of accumulated depreciation
|
|
|
28,856 |
|
|
|
37,244 |
|
|
Total Assets
|
|
$ |
54,411 |
|
|
$ |
44,100 |
|
| |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholder's Impairment
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$ |
1,712,071 |
|
|
$ |
1,601,195 |
|
|
Accrued interest payable
|
|
|
145,388 |
|
|
|
182,295 |
|
|
Accrued interest payable - related parties
|
|
|
485,224 |
|
|
|
419,622 |
|
|
Promissory notes payable
|
|
|
147,897 |
|
|
|
178,940 |
|
|
Promissory notes payable - related parties
|
|
|
1,725,125 |
|
|
|
1,504,457 |
|
| |
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
4,215,705 |
|
|
|
3,886,509 |
|
| |
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Stockholders' Impairment
|
|
|
|
|
|
|
|
|
Common stock, par value $0.001; 900,000,000 shares authorized 24,945,351 (2012) and 21,025,061 (2011) shares issued and outstanding, respectively
|
|
|
24,945 |
|
|
|
21,025 |
|
Preferred stock, par value $0.001; 10,000,000 shares authorized 974,156 shares issued and outstanding
|
|
|
9,742 |
|
|
|
9,742 |
|
|
Additional paid in capital
|
|
|
4,373,448 |
|
|
|
4,099,435 |
|
|
Accumulated deficit
|
|
|
(8,569,429 |
) |
|
|
(7,972,611 |
) |
| |
|
|
|
|
|
|
|
|
|
Total Stockholders' Impairment
|
|
|
(4,161,294 |
) |
|
|
(3,842,409 |
) |
| |
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Impairment
|
|
$ |
54,411 |
|
|
$ |
44,100 |
|
The attached notes are an integral part of these consolidated financial statements.
|
LD Holdings, Inc.
|
|
|
Consolidated Statements of Operations
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
Year ended December 31,
|
|
| |
|
2012
|
|
|
2011
|
|
| |
|
|
|
|
|
|
|
Net Sales -
|
|
|
|
|
|
|
|
Net Sales
|
|
|
189,553 |
|
|
|
320,185 |
|
| |
|
|
|
|
|
|
|
|
|
Cost of Sales
|
|
|
86,821 |
|
|
|
153,654 |
|
| |
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
102,732 |
|
|
|
166,531 |
|
| |
|
|
|
|
|
|
|
|
|
Selling, General &
|
|
|
|
|
|
|
|
|
|
Administrative Expenses
|
|
|
649,744 |
|
|
|
646,736 |
|
|
Operating Loss
|
|
|
(547,012 |
) |
|
|
(480,205 |
) |
| |
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(72,006 |
) |
|
|
(74,468 |
) |
|
Gain from settlement
|
|
|
22,200 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Total Other Income (Expense)
|
|
|
(49,806 |
) |
|
|
(74,468 |
) |
| |
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$ |
(596,818 |
) |
|
$ |
(554,673 |
) |
|
Loss per share, basic and diluted
|
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
| |
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding
|
|
|
23,707,341 |
|
|
|
20,101,705 |
|
The attached notes are an integral part of these consolidated financial statements.
|
LD Holdings, Inc.
|
|
|
Consolidated Statement of Changes in Stockholders' Impairment
|
|
|
Years Ended December 31, 2012 and 2011
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
| |
|
Common Stock
|
|
|
Preferred Stock
|
|
|
Paid in
|
|
|
Retained
|
|
|
Stockholders'
|
|
| |
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
(Deficit)
|
|
|
Impairment
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2011
|
|
|
18,275,061 |
|
|
$ |
18,275 |
|
|
|
974,156 |
|
|
$ |
9,742 |
|
|
$ |
4,051,935 |
|
|
$ |
(7,417,938 |
) |
|
$ |
(3,337,986 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for service
|
|
|
2,750,000 |
|
|
|
2,750 |
|
|
|
|
|
|
|
|
|
|
|
47,500 |
|
|
|
|
|
|
|
50,250 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(554,673 |
) |
|
|
(554,673 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
|
21,025,061 |
|
|
$ |
21,025 |
|
|
|
974,156 |
|
|
$ |
9,742 |
|
|
$ |
4,099,435 |
|
|
$ |
(7,972,611 |
) |
|
$ |
(3,842,409 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold
|
|
|
800,000 |
|
|
|
800 |
|
|
|
|
|
|
|
|
|
|
|
23,200 |
|
|
|
|
|
|
|
24,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to convert liabilities
|
|
|
2,770,290 |
|
|
|
2,770 |
|
|
|
|
|
|
|
|
|
|
|
94,663 |
|
|
|
|
|
|
|
97,433 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
350,000 |
|
|
|
350 |
|
|
|
|
|
|
|
|
|
|
|
156,150 |
|
|
|
|
|
|
|
156,500 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(596,818 |
) |
|
|
(596,818 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2012
|
|
|
24,945,351 |
|
|
$ |
24,945 |
|
|
|
974,156 |
|
|
$ |
9,742 |
|
|
$ |
4,373,448 |
|
|
$ |
(8,569,429 |
) |
|
$ |
(4,161,294 |
) |
The attached notes are an integral part of these consolidated financial statements.
|
LD Holdings, Inc.
|
|
|
Consolidated Statements of Cash Flows
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
Year ended December 31,
|
|
| |
|
2012
|
|
|
2011
|
|
| |
|
|
|
|
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
Net Loss
|
|
$ |
(596,818 |
) |
|
$ |
(554,673 |
) |
|
Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities
|
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
10,517 |
|
|
|
4,568 |
|
|
Gain from Settlement
|
|
|
(22,200 |
) |
|
|
- |
|
|
Shares issued for services
|
|
|
140,500 |
|
|
|
50,250 |
|
| |
|
|
|
|
|
|
|
|
|
Changes in Operating Assets and Liabilities
|
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
(943 |
) |
|
|
1,320 |
|
|
Accounts payable and accrued expenses
|
|
|
157,076 |
|
|
|
192,897 |
|
|
Accrued interest payable
|
|
|
5,483 |
|
|
|
7,815 |
|
|
Accrued interest payable - related parties
|
|
|
65,602 |
|
|
|
67,472 |
|
|
Net Cash Used by Operating Activities
|
|
|
(240,783 |
) |
|
|
(230,351 |
) |
| |
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(2,129 |
) |
|
|
(29,024 |
) |
| |
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities
|
|
|
(2,129 |
) |
|
|
(29,024 |
) |
| |
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
Proceeds from related party notes payable
|
|
|
220,668 |
|
|
|
238,320 |
|
|
Proceeds from common stock issuance
|
|
|
24,000 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
244,668 |
|
|
|
238,320 |
|
| |
|
|
|
|
|
|
|
|
|
Net (Decrease) in Cash and Equivalents
|
|
|
1,756 |
|
|
|
(21,055 |
) |
| |
|
|
|
|
|
|
|
|
|
Cash and Equivalents at Beginning of Year
|
|
|
1,765 |
|
|
|
22,820 |
|
|
Cash and Equivalents at End of Year
|
|
$ |
3,521 |
|
|
$ |
1,765 |
|
| |
|
|
|
|
|
|
|
|
|
Non Cash Financing and Investing Activities
|
|
|
|
|
|
|
|
|
|
Conversion of debt and accrued interest to common stock
|
|
$ |
73,433 |
|
|
$ |
- |
|
|
Conversion of accounts payable for common stock
|
|
$ |
46,200 |
|
|
$ |
- |
|
|
Issuance of common stock for services
|
|
$ |
156,500 |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
- |
|
|
$ |
- |
|
|
Income taxes
|
|
$ |
- |
|
|
$ |
- |
|
The attached notes are an integral part of these consolidated financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
LD Holdings, Inc. (the Company), formerly Leisure Direct, Inc., was formed on January 1, 2000 under the name of ePoolSpas.com, Inc. The formation was effected by the issuance of 1,750,000 shares of the Company's common stock for the intangible assets of the former operating companies, Olympic Pools, Inc. and Preferred Concrete Placement, Inc. The Company is located in Perrysburg, Ohio.
In October 2010, as part of a broader plan, the Company opened the first of a series of diners it plans to open in the Midwest. It closed its diner in Monroe, Michigan at the end of August, 2011 and opened a new diner in Toledo, Ohio in October, 2011. The diners cater to the baby boomer generation with a family orientation.
Basis of Presentation
The accompanying financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC").
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The fair values of accounts payable and other short-term obligations approximate their carrying values because of the short-term maturity of these financial instruments.
Cash and Cash Equivalents
For the purpose of the statements of cash flows, cash equivalents include time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.
Inventories
Inventories are valued at the lower of cost (first-in, first out) or market. At December 31, 2012 and 2011, inventories consisted of food and beverage associated with its restaurant valued at $6,034 and $5,091, respectively.
Property and Equipment
Amortizable and depreciable assets are reported at original cost less accumulated depreciation or amortization. Amortization and depreciation is provided for in amounts sufficient to relate the cost of such assets to operations over their service lives by the straight-line method. Leasehold improvements are amortized over the life of the lease. For federal income tax purposes, amortization and depreciation is computed using the accelerated cost recovery system and the modified accelerated cost recovery system. The cost of assets sold or retired and the accumulated amortization or depreciation are removed from the accounts in the year of disposal and any gain or loss is included in operations. Maintenance, repairs, and minor improvements are charged to operations as incurred while betterments which substantially extend service lives are capitalized.
Impairment of Long-lived Assets
The Company evaluates its long-lived assets for impairment when events or changes in the circumstances indicate, in management’s judgment, that the carrying value of such assets may not be recoverable. The determination of whether an impairment has occurred is based on management’s estimate of undiscounted future cash flows attributable to the assets as compared to the carrying value of the assets. If an impairment has occurred, the Company determines the amount of the impairment by estimating the fair value of the assets and recording a loss for the amount that the carrying value exceeds the estimated fair value. No impairment losses were recognized during the years ended December 31, 2012 and 2011.
Revenue Recognition
Revenue is recognized at the time the service is rendered. Revenue is recognized as income when the goods and service has been sold and rendered.
Advertising Expense
The Company expenses advertising costs as incurred. Advertising expenses for the years ended December 31, 2012 and 2011, were $5,486 and $330 respectively.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company adopted authoritative guidance relating to the accounting for uncertainty in income taxes. The impact of an uncertain income tax provision on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain tax position will not be recognized if it has a less than 50% likelihood of being sustained. There are no unrecognized tax benefits included in the Company’s balance sheet at December 31, 2012 and 2011.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Stock-Based Compensation
The Company’s Board of Directors adopted the Employee/Consultant Stock Compensation Plan (the “Plan”). The Plan was established to further the growth of the Company by allowing the Company to compensate employees, consultants and other persons who provide bona-fide services to the Company through the award of Common Stock.
We recognize expense for our share-based compensation based on the fair value of the awards at the time they are granted. We estimate the value of stock option awards on the date of grant using the Black-Scholes-Merton option-pricing model (the”Black-Scholes model”). The determination of the fair value of share-based payment awards on the date of grant is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, expected term, risk-free interest rate, expected dividends and expected forfeiture rates. The forfeiture rate is estimated using historical option cancellation information, adjusted for anticipated changes in expected exercise and employment termination behavior. Our outstanding awards do not contain market or performance conditions therefore we have elected to recognize share-based employee compensation expense on a straight-line basis over the requisite service period.
Net Loss Per Share
FASB Accounting Standards Codification (“ASC”) 260-10 (Prior authoritative literature: FASB Statement 128, “Earnings Per Share”) requires the presentation of basic earnings per share ("basic EPS") and diluted earnings per share ("diluted EPS").
Basic net loss per share attributable to common stockholders is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, including common stock equivalents, such as conversions, exercise or contingent exercise of securities. There were no common stock equivalents outstanding at December 31, 2012 and 2011.
2. GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a loss of $596,818 and $554,673 during the years ended December 31, 2012 and 2011, respectively. Also, as of December 31, 2012, the Company had $3,521 in cash, and current liabilities exceeded current assets by $4,190,150. These factors all raise substantial doubt about the ability of the Company to continue as a going concern. Due to these conditions, the auditors have issued a going concern opinion.
Management's plans include raising additional funding from debt and equity transactions that will be used to acquire point of sale outlets that should in turn increase sales. Also, the implementation of strong cost management practices and an increased focus on business development should result in the elimination of the operating losses suffered and improvement of cash flows; however, any results of the Company's plans cannot be assumed. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
3. PROPERTY AND EQUIPMENT
| |
|
|
12/31/2012
|
|
|
|
12/31/11
|
|
| |
|
|
|
|
|
|
|
|
|
Equipment & Fixtures
|
|
$
|
15,473
|
|
|
$
|
13,878
|
|
| |
|
|
|
|
|
|
|
|
|
Leasehold Improvements
|
|
|
19,309
|
|
|
|
19,309
|
|
| |
|
|
|
|
|
|
|
|
|
Computer Equipment
|
|
|
9,634
|
|
|
|
9,099
|
|
| |
|
|
|
|
|
|
|
|
|
Less accumulated amortization and depreciation
|
|
|
(15,560
|
)
|
|
|
(5,042
|
)
|
| |
|
|
|
|
|
|
|
|
| |
|
$
|
28,856
|
|
|
$
|
37,244
|
|
Depreciation and amortization expense for the years ended December 31, 2012 and 2011 were $10,518 and $4,568, respectively.
4. RELATED PARTY TRANSACTIONS
Notes payable at December 31, 2012 and 2011 consist of the following:
| |
|
2012
|
|
|
2011
|
|
| |
|
|
|
|
|
|
|
Notes payable – DABE, Inc. – with interest accruing at 10% per annum and due on demand. The notes are guaranteed by a security interest in inventory, receivables, intangibles, chattel paper and contract rights. John Ayling, the CEO Leisure Direct, Inc. is the sole shareholder of DABE, Inc.
|
|
$
|
343,652
|
|
|
$
|
343,652
|
|
| |
|
|
|
|
|
|
|
|
|
Note payable – Capital First Management, Inc. – secured, and due on demand. The notes are guaranteed by a security interest in inventory, receivables, intangibles, chattel paper and contract rights. John Ayling, the CEO Leisure Direct, Inc. is the sole shareholder of Capital First Management, Inc.
|
|
|
1,062,547
|
|
|
|
841,879
|
|
| |
|
|
|
|
|
|
|
|
|
Notes payable – former president. The former president has advanced $290,000 with various notes bearing interest at 12%.
|
|
|
290,000
|
|
|
|
290,000
|
|
| |
|
|
|
|
|
|
|
|
|
Notes payable – OPI, PCPI; OMC and LD LLC – non-interest bearing and due on demand. John Ayling, the CEO of Leisure Direct, Inc., is the sole member of OPI & PCPI.
|
|
|
28,926
|
|
|
|
28,926
|
|
| |
|
|
|
|
|
|
|
|
| |
|
$
|
1,725,125
|
|
|
$
|
1,504,457
|
|
5. PROMISSORY NOTES PAYABLE
Notes payable at December 31, 2012 and 2011 consist of the following:
| |
|
|
2012
|
|
|
|
2011
|
|
| |
|
|
|
|
|
|
|
|
|
Notes payable - $100,000 bearing interest at 30% due March 9, 2006. The loan is currently in default.
|
|
|
100,000
|
|
|
|
100,000
|
|
| |
|
|
|
|
|
|
|
|
|
Notes payable – unsecured bearing interest at 6%. Payment was due March 24, 2008 in full plus unpaid interest. The note is currently in default.
|
|
|
15,000
|
|
|
|
15,000
|
|
| |
|
|
|
|
|
|
|
|
|
Notes payable – Bank – line of credit of $25,000 bearing interest at prime plus 6 ½%. The loan is currently in default.
|
|
|
11,897
|
|
|
|
11,897
|
|
| |
|
|
|
|
|
|
|
|
|
Notes payable – Individuals at 10% - 12%. Notes are currently in default.
|
|
|
21,000
|
|
|
|
52,043
|
|
| |
|
|
|
|
|
|
|
|
| |
|
$
|
147,897
|
|
|
$
|
178,940
|
|
6. STOCKHOLDERS' IMPAIRMENT
On February 28, 2012, LD Holdings, Inc. (LDHL) sold 800,000 restricted shares of the Company’s common stock in a private transaction for $24,000 ($0.03 a share). The stock was sold to two individual long-term investors.
On April 17, 2012, LD Holdings signed a Management and Business Development Consulting Agreement with Financial Wellness LLC. Financial Wellness will assist the company in the development and implementation of its business plan. Per the agreement, the consultant will be compensated through the issuance of 1 million stock options with an exercise price of $0.10 with a possible 15 million additional options contingent on the 1 million being exercised. The options were originally to expire June 30, 2012 and were extended to August 31, 2012. The Agreement with Financial Wellness LLC expired on August 31, 2012 along with any current and subsequent options.
On April 18, 2012, LD Holdings, Inc. converted $73,433 of debt and accrued interest from a former officer of LD Holdings into 2,670,290 shares of common stock of LD Holdings, Inc.
On August 15, 2012, LD Holdings signed three (3) consulting agreements and two (2)debt to equity conversion agreements for a total consideration of 200,000 shares (valued at $0.24 per share) of the Company’s common stock. The consulting agreements are for one (1) year and include services for software development, website development, newsletter design, restaurant marketing system and other educational materials. The debt to equity conversion agreements are for the extinguishment of approximately $46,000 of debt.
On October 3, 2012, LD Holdings, Inc. signed two one year consulting agreements and issued 250,000 shares of common stock to be held as a prorated retainer. On October 31, 2012 LD Holdings, Inc. exercised its right to terminate both agreements and is seeking to recover the retainer shares. LD Holdings, Inc. recorded an expense in the amount of $132,500 which was the fair market value of the shares on the date of issuance.
On January 3, 2011 the Company issued 1,250,000 shares, valued at the last closing price prior to issuance, in exchange for current and future rent and management services for Boomer’s Diner, Inc.
On July 29, 2011 the Company issued 1,500,000 shares, valued at the last closing price prior to issuance, in exchange for legal, web design and management services.
The differences between income tax provisions in the financial statements and the tax expense (benefit) computed at the U.S. Federal Statutory rate are as follows:
| |
|
Year Ended December 31,
|
| |
|
2012
|
|
2011
|
| |
|
|
|
|
|
|
|
Tax provision at the U. S. Federal Statutory rate
|
|
|
34
|
%
|
|
|
34
|
%
|
|
Valuation allowance
|
|
|
(34
|
)%
|
|
|
(34
|
)%
|
| |
|
|
|
|
|
|
|
|
|
Effective tax rates
|
|
|
-
|
%
|
|
|
-
|
%
|
The Company's provision for income taxes differs from applying the statutory U.S. federal income tax rate to income before income taxes. The primary differences result from recognition of net operating loss carry forwards and from deducting goodwill impairment/amortization expense for financial statement purposes but not for federal income tax purposes.
Those amounts have been presented in the Company's financial statements as follows:
| |
|
December 31,
|
|
| |
|
2012
|
|
|
2011
|
|
| |
|
|
|
|
|
|
|
|
|
Deferred tax asset, non-current
|
|
$
|
3,191,075
|
|
|
$
|
3,021,971
|
|
|
Total valuation allowance recognized for deferred taxes
|
|
|
(3,191,075
|
)
|
|
|
(3,021,971
|
)
|
| |
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The valuation allowance was established to reduce the net deferred tax asset to the amount that will more likely than not be realized. This reduction is necessary due to uncertainty of the Company's ability to utilize the net operating loss and tax credit carry forwards before they expire.
The Company has available net operating loss carry forwards which may be used to reduce Federal and State taxable income and tax liabilities in future years as follows:
| |
|
Federal
|
|
|
State
|
|
|
Available Through
|
|
|
|
|
|
|
|
2021
|
|
|
262,952
|
|
|
|
262,952
|
|
|
2022
|
|
|
121,232
|
|
|
|
121,232
|
|
|
2023
|
|
|
127,017
|
|
|
|
127,017
|
|
|
2024
|
|
|
3,020,391
|
|
|
|
3,020,391
|
|
|
2025
|
|
|
1,014,436
|
|
|
|
1,014,436
|
|
|
2026
|
|
|
1,064,000
|
|
|
|
1,064,000
|
|
|
2027
|
|
|
406,645
|
|
|
|
406,645
|
|
|
2028
|
|
|
274,414
|
|
|
|
274,414
|
|
|
2029
|
|
|
388,876
|
|
|
|
388,876
|
|
|
2030
|
|
|
341,725
|
|
|
|
341,725
|
|
|
2031
|
|
|
491,682
|
|
|
|
491,682
|
|
|
2032
|
|
|
464,318
|
|
|
|
464,318
|
|
| |
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,977,688
|
|
|
$
|
7,977,688
|
|
8. COMMITMENTS AND CONTINGENCIES
The Company leases its office space from a related party, through common management and ownership, on a month-to-month basis. Rent expense for the years ended December 31, 2012 and 2011 was $30,000 each year.
The Company entered into a sublease agreement with an unrelated Limited Liability Company effective October 18, 2010. The agreement was for a term of three months and month to month thereafter on the rent commencement date at a rate of $5,000 per month exclusive of minimum monthly combined area maintenance charges. Rent expense was $0 and $43,634 for the years ended December 31, 2012 and 2011, respectively. This amount has been accrued on the books of the company. The lease and commitment terminated August 31, 2011.
The Company entered into a lease agreement with an unrelated entity in February 2011 with an effective date in April 2011. The agreement was for a term of three years.
Future minimum rental payments under leases are as follows:
|
2013
|
|
|
31,350
|
|
|
2014
|
|
|
2,700
|
|
|
Total
|
|
$
|
34,050
|
|
Rent expense for the years ended December 31, 2012 and 2011 was $57,150 and $114,100 respectively.
26