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UNITED STATES
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, 2011

Commission file number      0-50584
 
LD Holdings Inc
(formerly Leisure Direct, Inc.)
(Name of Small Business Issuer in Its Charter)
   
Nevada
98-0335555
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
 
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 June 30, 2011 was approximately $410,026.
 
As of April 16, 2012, the Issuer had 21,025,061 common shares, $.001 par value, outstanding and 974,156 preferred shares, $.001 par value, outstanding.
 
 
2

 

 
PART I
 
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 adopted 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 made it difficult to raise funds privately from anyone but 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, will 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.
  
In our first full year of operations, 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 this Business Plan, the company has developed a 4-Step Process.
 
 
3

 
 
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:

 
1*
  There will be a need for Marketing, Sales and other Business Services to prepare the businesses for sale.
     
 
2*
  There will be a need for buyers for these businesses.
     
 
3*
   There will be a need for entrepreneur managers to manage these businesses.
     
 
4*
   There will be a need for the financing of these businesses.

LD Holdings, Inc., as a Financial and Management Holding Company, will take advantage of this opportunity with its two operating divisions under the parent holding company.  These divisions are the Financial Services Division (LD Financial, Inc.) and the Operating Division that will manage the portfolio companies in which LD Holdings, Inc. will have varying percentages of ownership.

The Financial Services Division (LD Financial, Inc.) will concentrate on businesses with sales between $2 million and $20 million and EBIT between $500,000 and $3 million.  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 relatives.

The Financial Services Division provides 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* Financial Services will maintain 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.
 
 
4

 
 
3* Financial Services 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* Financial Services 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.

On September 7, 2010, Boomer's Diner, Inc., a Michigan corporation and wholly owned subsidiary of LD Holdings, Inc. (LDHL), signed a Letter of Intent to acquire the assets and lease the facilities of a former Johnny Rockets Restaurant in Monroe, Michigan and opened for business 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 new 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.

This sets the 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.
 
 
5

 
 
PART II
 
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, 2011. The reported bid quotations reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions.

Quarter Ended
 
High Bid
   
Low Bid
 
December 31, 2011
  $ .03     $ .02  
September 30, 2011
  $ .04     $ .02  
June 30, 2011
  $ .02     $ .02  
March 31, 2011
  $ .04     $ .02  
 
(b) Shareholders
 
On April 16, 2012, 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 2011 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 2011.
 
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.
 
 
6

 
 
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, 2011 and 2010 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

   
2011
   
2010
 
Total assets
 
$
44,100
   
$
42,019
 
Current Liabilities
   
(3,886,509
)
   
(3,380,005
)
Long-term debt
   
-
     
-
 
Working capital
   
(3,879,653
)
   
(3,337,986
)
Shareholders' equity (deficit)
   
(3,842,409
)
   
(3,337,986
)

 
STATEMENT OF OPERATIONS

   
For the years ended
 
   
December 31,
 
   
2011
   
2010
 
Total revenues
 
$
320,185
   
$
148,413
 
Operating (loss)
   
(480,205
)
 
$
(295,175
)
Net (loss)
   
(554,673
)
   
(341,725
)
Net loss per common share
   
(.03
)
   
(.02
)
Number of shares used in Computing per share data
   
20,101,705
     
17,504,924
 

 
7

 
 
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
 
Results of Operations
 
For the years ended December 31, 2011 and 2010 LD Holdings had revenues of $320,185 and $148,413, respectfully.  LD Holdings had a working capital shortage throughout 2011 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 $166,531 and $95,744 in 2011 and 2010, respectively.  The 2011 and 2010 revenue was generated from two family diners and from consulting services for a related entity, owned and operated by Management.

During 2011 LD Holdings incurred general and administrative expenses of $646,736 compared to $390,919 in 2010.  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 2011 was $554,673 compared to $341,725 in 2010.  The majority of the 2011 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 2011 and 2010.  The Company did not recognize a deferred tax asset for tax loss carry forwards as the Company can not determine when, if ever, it will be able to use the tax loss carry forwards.
 
Liquidity and Capital Resources
 
The Company had cash of $1,765 as of December 31, 2011.  
 
LD Holdings had a working capital deficit of $3,879,653 at December 31, 2011.  Although more than half of the debts that produce the deficit are owed to shareholders.
 
 
8

 
 
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 2011, 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 2011.
 
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, 2011 and December 31, 2010:
 
 
9

 
 
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 (s 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.


 
10

 
 
PART III
 
Item 10. Directors and Executive Officers of the Registrant
 
The persons listed below are the current directors and officers of the Company:

           
Director
 
Name
 
Age
 
Position
 
Since
 
John R. Ayling
    68  
CEO and Director (Chairman of the Board)
    2003  
 
John R. Ayling -CEO and Chairman of the Board/Chief Accounting Officer. John R. Ayling, 68, 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 2011 by Section 16(a) of the Exchange Act.
 
Item 11. Executive Compensation
 
In both 2011 and 2010, 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 2009, 2010 and 2011.  Mr. Ayling’s compensation was not paid but booked as an expense for the years 2009, 2010 and 2011 and also as a payable.  There was no other officer whose salary and bonus for services rendered during the year ended December 31, 2011 exceeded $100,000.

 
Compensation
           
 
Year
 
Mgmt Fee
   
Stock Grant
 
John Ayling
2011
  $ 120,000       0  
John Ayling
2010
  $ 120,000       0  
John Ayling
2009
  $ 120,000       0  
 
 
11

 


 
 
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, 2011 and 2010.
 
Option Grants in the Last Fiscal Year

   
Percent
   
Potential realizable
 
   
of total
   
value at assumed
 
 
Number of
options
   
annual rates of
 
 
securities
granted to
   
appreciation of
 
 
underlying
employees
Exercise
 
Expiration for
 
 
option
in fiscal
Price
 
option term
 
Name
granted
year
($/share)  Date
    5 %     10 %
John Ayling
                     
 
Aggregated Fiscal Year-End Option Values

   
Number of securities underlying
   
Value of unexercised in-the-money
 
   
unexercised options at fiscal
   
options at fiscal year-end ($)
 
Name
 
year-end (#) (All exercisable)
   
(All exercisable)
 
John Ayling
    0       0  

 
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, 2011.

   
Amount and
             
   
Nature of
             
Name and Address
 
Beneficial
   
Percentage
   
Percentage
 
of Beneficial Owner(1)
 
Ownership(2)
   
of Common
   
Of Preferred
 
John R. Ayling
    2,161,847 (3)     15.5 %     -  
      974,156       -       100.0
All Officers and Directors As a Group
    2,161,847 (3)     15.5 %     -  
DABE Inc
    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.
 
 
12

 
 
During 2011 and 2010, 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 $24,000 to the Company for professional services rendered for the audit of our 2011 and 2010 financial statements and review of the financial statements included in our 10-Q filings for the first three quarters of 2011 and 2010.

Audit-Related Fees
 
Rosenberg Rich Baker Berman & Co. billed $0 to the Company in 2011 and 2010 for assurance and related services that are reasonably related to the performance of the 2011 audit or review of the quarterly financial statements.
 
Tax Fees
 
Rosenberg Rich Baker Berman & Co. billed $0 to the Company in 2011 and 2010 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 2011 and 2010 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.
 
13

 
 
PART IV
 
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 16, 2012
/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 16, 2012
 
 
By:   /S/ John R. Ayling
 
Name:  John R. Ayling
 
Title: Chairman and CEO/Chief Accounting Officer
 
 
14

 
 
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 16, 2012
 John R. Ayling
   
 
 
15

 
 
 
Report of Independent Registered Public Accounting Firm
 
Consolidated Balance Sheets
 
Consolidated Statements of Operations
 
Consolidated Statements of Changes in Stockholders' Equity
 
Consolidated Statements of Cash Flows
 
Notes to the Consolidated Financial Statements
 

 
16

 


 

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, 2011 and 2010 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, 2011.  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, 2011 and 2010 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, 2011 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, 2011.  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 16, 2012
 
 
17

 
 
LD Holdings, Inc.
Consolidated Balance Sheets

Assets
   
December 31,
 
   
2011
   
2010
 
                 
Current Assets
               
  Cash
 
$
1,765
   
$
22,820
 
  Inventory
   
5,091
     
6,411
 
    Total Current Assets
   
6,856
     
29,231
 
Equipment, net of accumulated depreciation
   
37,244
     
12,788
 
Total Assets
 
$
44,100
   
$
42,019
 
                 
Liabilities and Stockholder's Impairment
                 
Current Liabilities
               
  Accounts payable and accrued expenses
  $
1,601,195
   
1,408,298
 
  Accrued interest payable
   
182,295
     
174,480
 
  Accrued interest payable - related parties
   
419,622
     
352,150
 
  Promissory notes payable
   
178,940
     
178,940
 
  Promissory notes payable - related parties
   
1,504,457
     
1,266,137
 
Total Current Liabilities
   
3,886,509
     
3,380,005
 
                 
Stockholders' Impairment
               
Common stock, par value $0.001; 900,000,000 shares authorized 21,025,061 (2011) and 18,275,061 (2010)  shares issued and outstanding, respectively
   
21,025
     
18,275
 
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
   
4,099,435
     
4,051,935
 
Accumulated deficit
   
(7,972,611
)
   
(7,417,938
)
                 
Total Stockholders' Impairment
   
(3,842,409
)
   
(3,337,986
)
                 
Total Liabilities and Stockholders' Impairment
 
$
44,100
   
$
42,019
 
 
The attached notes are an integral part of these consolidated financial statements.
 
 
18

 
 
LD Holdings, Inc.
Consolidated Statements of Operations

   
Year Ended December 31,
 
   
2011
   
2010
 
                 
Net Sales – Consulting, Capital First Management, Inc
 
$
 
-
 
$
45,000
 
Net Sales
   
320,185
   
$
103,413
 
  Total Net Sales
   
320,185
     
148,413
 
                 
Cost of Goods Sold
   
153,654
     
52,669
 
                 
     Gross Profit
   
166,531
     
95,744
 
                 
Selling, General & Administrative Expenses
   
646,736
     
390,919
 
                 
     Operating Loss
   
(480,205
)
   
(295,175
)
                 
Other Income (Expense)
               
     Interest Expense
   
(74,468
)
   
(75,837
)
     Gain from Settlement
   
-
     
29,287
 
                 
        Total Other Income (Expense)
   
(74,468
)
   
(46,550)
 
                 
Net Loss
 
$
(554,673
)
 
$
(341,725)
 
                 
Loss per share, basic and diluted
 
$
(.03
)
 
$
(.02
)
                 
Weighted Average Common Shares Outstanding
   
20,101,705
     
17,504,924
 
 
The attached notes are an integral part of these consolidated financial statements.
 
 
19

 
 
LD Holdings, Inc.
Consolidated Statement of Changes in Stockholders' Impairment
Years Ended December 31, 2011 and 2010

                           
Additional
         
Total
 
   
Common Stock
   
Preferred Stock
   
Paid in
   
Retained
   
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
(Deficit)
   
Impairment
 
Balance,
                                         
January 1,
                                         
2010
   
16,575,061
   
$
16,575
     
974,156
   
$
9,742
   
$
4,051,935
   
$
(7,076,213
)
 
$
(3,011,361)
 
                                                         
Shares issued
                                                       
for services
   
1,700,000
     
1,700
     
-
     
-
     
13,400
             
15,100 
 
                                                         
Net loss, 2010
   
-
     
-
     
-
     
-
     
-
     
(341,725
)
   
(341,725
)
                                                         
Balance,
                                                       
December 31,
                                                       
2010
   
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 
                                                         
     
21,025,061
   
$
21,025
     
974,156
   
$
9,742
   
$
4,099,435
     
(7,972,611
)
 
$
(3,842,409
)
 
The attached notes are an integral part of these consolidated financial statements.
 
 
20

 
 
LD Holdings, Inc.
Consolidated Statements of Cash Flows

   
Year Ended December 31,
 
   
2011
   
2010
 
Cash Flows From Operating Activities:
           
Net Loss
 
$
(554,673
)
 
$
(341,725
)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
               
   Depreciation
   
4,568
     
474
 
   Shares issued for services
   
50,250
     
15,100
 
   Gain from settlement
   
-
     
(29,287)
 
Changes in Operating Assets and Liabilities
               
   Inventory
   
1,320
     
(6,411)
 
   Accounts payable and accrued expenses
   
192,897
     
161,014
 
   Accrued interest payable - related party notes
   
67,472
     
66,652
 
   Accrued interest payable
   
7,815
     
7,816
 
                 
      Net Cash Used in Operating Activities
   
(230,351
)
   
(126,367
)
                 
Cash Flows From Investing Activities
               
   Purchase of equipment and leasehold improvements
   
(29,024)
     
(13,262)
 
                 
     Net Cash Used in Investing Activities
   
(29,024)
     
(13,262)
 
                 
Cash Flows From Financing Activities:
               
   Proceeds from notes payable-related party
   
238,320
     
162,449
 
                 
      Net Cash Provided by Financing Activities
   
238,320
     
162,449
 
                 
Net Increase/(Decrease)  in Cash
   
(21,055)
     
22,820
 
                 
Cash at Beginning of Year
   
22,820
     
-
 
                 
Cash at End of Year
 
$
1,765
   
$
22,820
 
                 
 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.
 
 
21

 
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Organization
 
LD Holdings, Inc. (the Company), formerly Leisure Direct, Inc., was formed on January 1, 2000. The Company’s corporate offices are located in Perrysburg, Ohio.  In October 2010 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 cost (first-in, first out) or market.  At December 31, 2011 and 2010, inventories consisted of food and beverage associated with its restaurant valued at $5,091 and $6,411, 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, 2011 and 2010.

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, 2011 and 2010, were $330 and $2,646, 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, 2011 and 2010.
 
 
22

 
 
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, 2011 and 2010.   
 
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 $554,673 and $341,725 during the years ended December 31, 2011 and 2010, respectively.  Also, as of December 31, 2011, the Company had $1,765 in cash, and current liabilities exceeded current assets by $3,879,653.  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 note.
 
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.
 
 
23

 
 
3.  PROPERTY AND EQUIPMENT
 
     
12/31/2011
     
12/31/10
 
                 
Equipment & Fixtures
 
13,878
    $
5,237
 
                 
Leasehold Improvements
   
19,309
     
-
 
                 
Computer Equipment
   
9,099
     
8.025
 
                 
Less accumulated amortization and depreciation
   
(5,042
   
(474
                 
   
$
37,244
   
$
   12,788
 
 
 
 Depreciation and amortization expense for the years ended December 31, 2011 and 2010 were $4,568 and $474, respectively.
 
 
24

 
4.  RELATED PARTY TRASACTIONS

Notes payable at December 31, 2011 and 2010 consist of the following:

   
2011
   
2010
 
             
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 DABEt, 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.
   
841,879
     
603,559
 
                 
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
 
                 
   
$
1,504,457
   
$
1,266,137
 
 
 
25

 
 
5.  PROMISSORY NOTES PAYABLE                                                                

Notes payable at December 31, 2011 and 2010 consist of the following:

 
   
2011
     
2010
 
                 
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. 
   
52,043 
     
52,043 
 
                 
   
$
178,940
   
$
178,940
 
 
6.  STOCKHOLDERS' IMPAIRMENT

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.

 
26

 

7.  INCOME TAXES
 
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,
   
2011
 
2010
             
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,
 
   
2011
   
2010
 
                 
Deferred tax asset, non-current
 
$
3,021,971
   
$
2,837,371
 
Total valuation allowance recognized for deferred taxes
   
(3,021,971
)    
(2,837,371
)
                 
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
 
                 
     Total
 
$
7,513,370
   
$
7,513,370
 

 
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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, 2011 and 2010 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 $43,634 and $14,415  for the years  ended December 31, 2011 and 2010, 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:

2012
  $ 27,150  
2013
    31,350  
2014
    2,700  
Total
  $ 61,200  

Rent expense for the years ended December 31, 2011 and 2010 was $114,100 and $45,500, respectively.

9.  LITIGATION
 
In 2006, a note holder commenced action against the Company for outstanding obligations owed by the Company.  In 2009, a consent judgment was awarded to lender against the Company for the sum of $200,000.  This amount was included in accrued interest and notes payable as of December 31, 2011 and 2010, with no additional interest to be charged.  A settlement was reached for less than the amount that was accrued for interest and in 2010, the Company recorded gain from debt settlement in the amount of $29,287.
 
10. SUBSEQUENT EVENTS

On February 28, 2012, LD Holdings, Inc. (LDHL), sold 800,000 restricted shares of the Company’s common stock in a private transaction for $24,000 ($ .03 a share).
 
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