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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: March 31, 2011
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-50584
LD Holdings, Inc.
(Exact name of registrant as specified in its charter)
Nevada 98-0335555
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(State of Incorporation) (IRS Employer Identification No.)
1070 Commerce Drive
Building II, Suite 303
Perrysburg, OH 43551
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (419) 873-1111
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 the past 90 days. Yes [X] No [ ]
As of May 23 2011 19,525,061 shares of Common Stock were issued and outstanding
and 974,156 preferred shares outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
1
Part 1. Financial Information
LD Holdings, Inc.
Consolidated Balance Sheets
March 31, December 31,
2011 2010
-------------- ---------------
Assets
Current Assets
Cash $ 23,701 $ 22,820
Inventory 6,559 6,411
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Total Current Assets 30,260
29,231
Equipment, net of accumulated depreciation 12,427 12,788
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Total Assets $ 42,687 $ 42,019
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Liabilities and Stockholder's Impairment
Current Liabilities
Accounts payable and accrued expenses 1,448,865 1,408,298
Accrued interest payable 176,434 174,480
Accrued interest payable - related parties 368,813 352,150
Promissory notes payable 178,940 178,940
Promissory notes payable - related parties 1,332,308 1,266,137
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Total Current Liabilities 3,505,360 3,380,005
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Stockholders' Impairment
Common stock, par value $0.001;
900,000,000 shares authorized
19,525,061 (2011) and 18,275,061
(2010) shares issued and
outstanding, respectively 19,525 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 4,069,435 4,051,935
Accumulated deficit (7,561,375) (7,417,938)
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Total Stockholders' Impairment (3,462,673) (3,337,986)
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Total Liabilities and Stockholders' Impairment $ 42,687 $ 42,019
============== ===============
The attached notes are an integral part
of these consolidated financial statements.
2
LD Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
2011 2010
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Net Sales - Related Party $ - $ 15,000
Net Sales 107,572 -
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Total Net Sales 107,572 15,000
Cost of Goods Sold 51,336 -
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Gross Profit 56,236 15,000
Selling, General & Administrative Expenses 181,056 67,549
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Operating Loss (124,820) (52,549)
Other Income (Expense)
Interest Expense (18,617) (18,400)
Gain on Debt Settlement - 29,290
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Total Other Income (Expense) (18,617) (10,890)
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Net Loss $ (143,437) $ (41,659)
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Loss Per Share, basic and diluted $ (.01) $ (.00)
============== ===============
Weighted Average Common Shares Outstanding 19,497,283 16,575,061
============== ===============
The attached notes are an integral part
of these consolidated financial statements.
3
LD Holdings, Inc.
Consolidated Statements of Cash Flows
Three Months Ended
March 31,
2011 2010
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Cash Flows From Operating Activities:
Net Loss $ (143,437) $ (41,659)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Depreciation 361 -
Shares issued for services 18,750 -
Gain from settlement - (29,290)
Changes in Operating Assets and Liabilities
Inventory (148) -
Accounts payable and accrued expenses 40,567 32,663
Accrued interest payable - related party
notes 16,663 16,442
Accrued interest payable 1,954 1,958
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Net Cash Used in Operating Activities (65,292) (19,886)
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Cash Flows From Financing Activities:
Proceeds from notes payable-related party 66,171 19,886
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Net Cash Provided by Financing Activities 66,171 19,886
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Net Increase in Cash 881 -
Cash at Beginning of Year 22,820 -
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Cash at End of Year $ 23,701 $ -
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Supplemental Disclosure of Cash Flow
Information:
Cash paid during the year for:
Interest - -
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Income taxes - -
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The attached notes are an integral part
of these consolidated financial statements.
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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. The diners cater to the baby boomer generation
with a family orientation. Additionally, the Company performs business
development consulting for a related entity.
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Article 8 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
For further information, refer to the financial statements and footnotes thereto
included in the Company's annual report for Form 10-K for the year ended
December 31, 2010. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 2011
are not necessarily indicative of the results that may be expected for the year
ended December 31, 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
$143,437 during the three months ended March 31, 2011. Also, as of March 31,
2011, the Company had $23,701 in cash, and current liabilities exceeded its
current assets by $3,475,100.
Management's plans include raising additional funding from debt and equity
transactions that will be used for acquisitions 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. Stockholders' Equity
During the first quarter ended March 31, 2011, the Company issued 1,250,000
shares of common stock at market value of $18,750 as consideration of current
and accrued rent.
4. 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
quarter ended March 31, 2011 and 2010 was $7,500 each quarter.
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 inclusive of minimum monthly combined area maintenance
charges. Rent expense was $15,000 and $0 for the quarter ended March 31, 2011
and 2010, respectively.
The Company under a separate asset acknowledgement the tenant and landlord agree
that certain restaurant equipment used in the day to day operations of the
tenant are the property of the Landlord. Until such time that the Landlord is
able to obtain clear and unencumbered title to said equipment the tenant will
lease the equipment for $1,250 per month. Rent expense charged to operations was
$3,555 in 2011 and $0 in 2010.
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5. 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 the
lender for the sum of $200,000. This amount is included in accrued interest and
notes payable as of March 31, 2011 and December 31, 2010, with no additional
interest to be charged. In 2010, the Company recorded gain from debt settlement
in the amount of $29,287.
Management's Discussion and Analysis
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When used in this Form 10-Q and in future filings by LD Holdings, Inc.
(hereinafter "LD Holdings") with the Securities and Exchange Commission, the
words or phrases "will likely result," "management expects," "LD Holdings
expects," "will continue," "is anticipated" or similar expressions are intended
to identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Readers are cautioned not to place
undue reliance on any such forward-looking statements, each of which speaks only
as of the date made. These statements are subject to risks and uncertainties,
some of which are described below. Actual results may differ materially from
historical earnings and those presently anticipated or projected. LD Holdings
has no obligation to publicly release the results of any revisions that may be
made to any forward-looking statements to reflect anticipated events or
circumstances occurring after the date of such statements.
Introduction
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 be
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 Inc. may
exhaust its capital resources before it achieves operational
stability.
Corporate Strategy
LD Holdings, Inc., (OTCBB: 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.
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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 worth
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 (LDFinancial, 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. 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. The lack of liquidity make
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.
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.
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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. 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.
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.
The company opened for business in October, 2010, and is the first restaurant in
the Boomer's Diner Business Plan which 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 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.
Three Months Ended March 31, 2011 and 2010
For the three months ended March 31, 2011 and 2010 LD Holdings had revenues of
$107,572 and $15,000, respectfully. LD Holdings had a working capital shortage
and did not emphasize current operations. Management has elected to devote all
of it's time seeking financing partners to further implement its Business Plan.
For the three months ended March 31, 2011 and 2010 LD Holdings incurred selling,
general and administrative expenses of $181,056 and $67,549, respectively, of
which $30,000 and $30,000 represents the fee for the services of John R. Ayling,
Chairman and CEO. The fees have been accrued until the operations of the company
permit payment, or the Chairman and CEO determines to take his fee in the form
of stock. The total operating expenses resulted in an operating loss for the
three months ended March 31, 2011 and 2010 of $124,820 and $52,549,
respectively. Funding of these expenses was from short term loans from principal
shareholders.
For the three months ended March 31, 2011 and 2010 LD Holdings incurred interest
expense of $18,617 and $18,400, respectively. Interest expense was accrued, and
will be paid when the operations of the company permit payment.
Liquidity and Capital Requirements
LD Holdings had a net operating working deficit, at March 31, 2011, of
$3,475,100. The working capital requirements of LD Holdings have been funded
primarily with loans from shareholders.
LD Holdings is seeking additional financing to continue to develop its business
plan and to begin its implementation. Management believes this amount will be
substantial.
Quantitative and Qualitative Disclosures about market risk.
Not Applicable.
Evaluation of Disclosure Controls and Procedures
An evaluation of the effectiveness of the Company's disclosure controls and
procedures as of March 31, 2011 was made under the supervision of John R.
Ayling, the chief executive officer. Based on that evaluation, Mr. Ayling
concluded that the Company's disclosure controls and procedures are not
effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. During the most recently
completed fiscal quarter, there has been no significant change in the Company's
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the company's internal control over
financial reporting.
Subsequent Events
On April 14, 2011, Boomers Diner, Inc. was issued Articles of Incorporation as
an Ohio corporation and is in process of opening a Boomers Diner in Toledo,
Ohio. The Diner should be open in the 2nd or 3rd quarter of 2011.
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Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Unregistered sales of equity securities and use of proceeds.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On January 3, 2011 the Company issued 1,250,000 shares in exchange for current
and future rent at Boomer's Diner, Inc.
Item 6. Exhibits
31.1 Rule 13a-14(a) Certification
32 Rule 13a-14(b) Certification
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LD Holdings, Inc.
Date: May 23, 2011 /s/ John R. Ayling
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John R. Ayling, Chief Executive Officer
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