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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-KSB/A
 
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 1-9900
 
 ARIZONA LAND INCOME CORPORATION
 (Exact name of small business issuer in its charter)
 
 Arizona
    
    86-0602478(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 2999 North 44th Street, Suite 100
Phoenix, Arizona 85018
(Address of principal executive offices) (Zip Code)
 Issuers telephone number, including area code: (602) 952-6800
 
 Securities registered under Section 12(b) of the Exchange Act:
 Title of each class
    
    Name of each exchange on which registeredClass A Common Stock, no par value
    
    American Stock Exchange
 Securities registered under Section 12(g) of the Exchange Act:
 None
(Title of Class)
 
 o
 þ o
 þ
 o þ
     1,851,025
    
    shares of Class A Common Stock outstanding on March 7, 2008100
    
    shares of Class B Common Stock outstanding on March 7, 2008
 DOCUMENTS INCORPORATED BY REFERENCE
  o þ




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Explanatory Note:




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##### 



TABLE OF CONTENTS
 PagePART I
    
    
    
    
    1ITEM 1.
    
    DESCRIPTION OF BUSINESS
    
    
    1ITEM 2.
    
    DESCRIPTION OF PROPERTY
    
    
    6ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    6ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    6PART II
    
    
    
    
    7ITEM 5.
    
    MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    7ITEM 6.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    7ITEM 7.
    
    FINANCIAL STATEMENTS
    
    
    9ITEM 8.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    20ITEM 8A
    
    CONTROLS AND PROCEDURES
    
    
    21ITEM 8B
    
    OTHER INFORMATION
    
    
    21PART III
    
    
    
    
    22ITEM 9.
    
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
    
    
    22ITEM 10.
    
    EXECUTIVE COMPENSATION
    
    
    23ITEM 11.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    24ITEM 12.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    25ITEM 13.
    
    EXHIBITS
    
    
    27ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    29302 Certification of Chief Executive Officer302 Certification of Chief Financial OfficerSection 906 Certification




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PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS.
 Background
     
    
    An acknowledgment that the cash held by us immediately prior to
closing the proposed transaction would be paid out to our shareholders
in the form of a dividend
    
    An understanding that the proposed new management or advisor would
purchase for cash or with acceptable assets new shares of our common
stock: (i) at a premium to the then book value per share, as
determined in accordance with generally accepted accounting principles
and not reflecting a discounted value of the note receivable held by
us; (ii) in an amount such that the total premium to our book value
would be at least $500,000; and (iii) for total proceeds of not less
than $1 million
 1




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
    
    The proposed new management or advisor would have demonstrated
experience in the real estate or REIT industry in general and/or
experience managing the asset class described in the proposed business
plan
    
    The proposed new management or advisor would be able to demonstrate to
the satisfaction of the Special Committee the capability to provide or
raise the capital necessary to finance the proposed business plan and
    
    Any consideration paid directly to our shareholders to acquire any of their shares would be paid in cash.
     
    
    The Shidler Group proposed to purchase $5.0 million of our shares at
the 90-day average trading price, which the Board determined was a
reasonable premium to book value per share.
    
    The Shidler Group proposed to cause an affiliated entity to contribute
a portfolio of owned properties to the Company in a transaction
structure that The Shidler Group affiliates had implemented in prior
transactions with other parties.
    
    The Shidler Group proposal permitted us to make regular dividends and
to make any special dividend payments to our shareholders necessary to
meet federal income tax requirements.
    
    The Shidler Group demonstrated to the Board that it had sufficient
resources to consummate the initial transactions between it and the
Company and that it had established contacts and relationships with
capital market sources such that it was likely to be able to execute
the business plan it proposed post-transaction.
    2




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3




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Shareholder Approval of Transactions.
 
    
    A proposal to approve the Master Agreement;
    
    A proposal to approve, as part of the Transactions, (i) the sale for
$6.35 million in cash of 1,180,000 shares of our common stock and/or
common units of the Operating Partnership to designees of Pacific
Office Contributor, (ii) the granting of options to purchase up to
500,000 shares at $7.50 per share of our common stock to designees of
Pacific Office Contributor, and (iii) the issuance by the Operating
Partnership of its common units and convertible preferred units, which
may be redeemed in the future for our common stock, upon the
contribution to the Operating Partnership of ownership interests in up
to eight wholly-owned and one 7.5% owned commercial office properties
by Pacific Office Contributor;
    
    A proposal to approve, as a part of the Transactions, the advisory
agreement between the Company, the Operating Partnership and Pacific
Office Management, Inc.;
    
    A proposal to approve the reincorporation of the Company as a Maryland
corporation by merging into a newly-formed wholly-owned subsidiary
Maryland corporation (the Reincorporation) resulting in, among other
things, a change in the Companys name to Pacific Office Properties
Trust, Inc.; and
    
    A proposal to approve, as a part of the Reincorporation, the adoption of a Charter and Bylaws for the Company.
 Qualification as a Real Estate Investment Trust
  4




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Management Arrangements
   Note Regarding Forward-Looking Statements
    5




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Factors Affecting Future Results
  
 ITEM 2. DESCRIPTION OF PROPERTY.
   
 ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  6




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PART II
 
 ITEM 5.
    
    MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
    DIVIDENDS/DISTRIBUTIONSDECLARED PERSHARE OFCLASS ACOMMONCALENDAR QUARTER
    
    HIGH
    
    LOW
    
    STOCK (1)2006First Quarter
    
    $
    4.90
    
    
    $
    3.20
    
    
    $
    0.10Second Quarter
    
    
    4.90
    
    
    
    3.45
    
    
    
    0.10Third Quarter
    
    
    4.15
    
    
    
    3.40
    
    
    
    0.10Fourth Quarter
    
    
    18.86
    
    
    
    3.76
    
    
    
    1.002007First Quarter
    
    
    15.31
    
    
    
    7.00
    
    
    
    0.00Second Quarter
    
    
    9.37
    
    
    
    5.94
    
    
    
    0.00Third Quarter
    
    
    10.00
    
    
    
    5.15
    
    
    
    0.00Fourth Quarter
    
    
    7.33
    
    
    
    3.97
    
    
    
    0.05
 
 (1)
    
    See Note 6 to the financial statements included in Item 7.  
 ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 You should read the following discussion together with the financial statements and the
related notes included elsewhere in this Annual Report on Form 10-KSB . This discussion contains
forward-looking statements that are based on managements current expectations, estimates and
projections about the Companys business and operations. The Companys actual results may differ
materially from those currently anticipated and expressed in such forward-looking statements as a
result of a number of factors, including those discussed in this Report on Form 10-KSB .
 7




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Results of Operations
 Year Ended December 31, 2007 and 2006
    Liquidity and Capital Resources
  Off Balance Sheet Arrangements
  Dividends
   8




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ITEM 7. FINANCIAL STATEMENTS.
 INDEX
 PageReport of Independent Registered Public Accounting Firm
    
    
    10Financial StatementsBalance Sheet at December 31, 2007
    
    
    11Statements of Operations  For the Years Ended December 31, 2007 and 2006
    
    
    12Statements of Stockholders Equity  For the Years Ended December 31, 2007 and 2006
    
    
    13Statements of Cash Flows  For the Years Ended December 31, 2007 and 2006
    
    
    14Notes to Financial Statements
    
    
    15
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       10




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ARIZONA LAND INCOME CORPORATION
 
 BALANCE SHEET
DECEMBER 31, 2007
 ASSETS:Cash and cash equivalents
    
    $
    2,229,538InvestmentsAvailable for sale securities
    
    
    1,591,033Land held for sale
    
    
    55,890Total investments
    
    
    1,646,923TOTAL ASSETS
    
    $
    3,876,461LIABILITIES AND STOCKHOLDERS EQUITY:Accounts payable and other liabilities
    
    $
    540,982Dividends payable
    
    
    92,551Total liabilities
    
    
    633,533STOCKHOLDERS EQUITY:Class A common stock, $.10 stated value, 10,000,000 shares authorized, 1,851,025 shares issued and outstanding
    
    
    185,103Class B common stock, $.10 stated value, 10,000 shares authorized, 100 shares issued and outstanding
    
    
    10Additional paid-in capital
    
    
    21,670,997Unrealized loss on marketable securities  net
    
    
    (212,472
    )Distributions in excess of earnings
    
    
    (18,400,710
    )Total stockholders equity
    
    
    3,242,928TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,876,461
  11




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ARIZONA LAND INCOME CORPORATION
 
 STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 2007
    
    
    2006INCOME:Interest income on mortgages
    
    $
    51,367
    
    
    $
    349,954Income on trading securities
    
    
    149,698
    
    
    
    94,754Income on available for sale securities
    
    
    35,815
    
    
    
    Total income
    
    
    236,880
    
    
    
    444,708EXPENSES:Property taxes
    
    
    
    
    
    
    32Professional services
    
    
    282,720
    
    
    
    120,795General and administration
    
    
    104,433
    
    
    
    61,627Directors fees
    
    
    33,600
    
    
    
    34,800Reserve for loss
    
    
    
    
    
    
    105,506Total expenses
    
    
    420,753
    
    
    
    322,760INCOME (LOSS) BEFORE GAIN ON SALE OF PROPERTIES AND INCOME TAX EXPENSE
    
    
    (183,873
    )
    
    
    121,948GAIN ON SALE OF PROPERTIES, net
    
    
    
    
    
    
    3,567,735INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (183,873
    )
    
    
    3,689,683INCOME TAXES
    
    
    500,167
    
    
    
    8,224NET INCOME (LOSS)
    
    $
    (684,040
    )
    
    $
    3,681,459NET INCOME (LOSS) PER SHARE:
    
    $
    (0.37
    )
    
    $
    1.99WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
    
    
    1,851,125
    
    
    
    1,851,125
  12




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ARIZONA LAND INCOME CORPORATION
 
 STATEMENTS OF STOCKHOLDERS EQUITY FOR THE
YEARS ENDED DECEMBER 31, 2007 AND 2006
 Additional
    
    
    Distributions in
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    Excess of
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBALANCE, December 31, 2005
    
    
    1,851,125
    
    
    $
    185,113
    
    
    $
    21,670,997
    
    
    $
    (18,899,244
    )
    
    $
    
    
    
    $
    2,956,866Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,406,334
    )
    
    
    
    
    
    
    (2,406,334
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,681,459
    
    
    
    
    
    
    
    3,681,459BALANCE, December 31, 2006
    
    
    1,851,125
    
    
    $
    185,113
    
    
    $
    21,670,997
    
    
    $
    (17,624,119
    )
    
    $
    
    
    
    $
    4,231,991Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92,551
    )
    
    
    
    
    
    
    (92,551
    )Unrealized loss on available for sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (212,472
    )
    
    
    (212,472
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (684,040
    )
    
    
    
    
    
    
    (684,040
    )BALANCE, December 31, 2007
    
    
    1,851,125
    
    
    $
    185,113
    
    
    $
    21,670,997
    
    
    $
    (18,400,710
    )
    
    $
    (212,472
    )
    
    $
    3,242,928
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ARIZONA LAND INCOME CORPORATION
 
 STATEMENTS OF CASH FLOWS FOR THE
YEARS ENDED DECEMBER 31, 2007 AND 2006
 2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (684,040
    )
    
    $
    3,681,459Adjustments to reconcile net income (loss) to net cash provided by operating activities:Gain on sale of land
    
    
    
    
    
    
    (3,567,735
    )Reserve for loss on sale of note receivable
    
    
    
    
    
    
    105,506Gain on sale of trading securitiesChanges in assets and liabilities:Realized gain on trading securities
    
    
    (126,263
    )
    
    
    (18,817
    )(Increase) decrease in accrued interest receivable
    
    
    67,550
    
    
    
    (25,008
    )Increase in accounts payable and other liabilities
    
    
    14,882
    
    
    
    5,637Increase in income taxes payable
    
    
    500,234
    
    
    
    Net cash provided by (used for) operating activities
    
    
    (227,637
    )
    
    
    181,042CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sale of mortgage note receivable
    
    
    3,411,346
    
    
    
    Purchase of trading securities
    
    
    (7,250,530
    )
    
    
    (2,499,935
    )Proceeds from sale of trading securities
    
    
    9,176,895
    
    
    
    2,049,310Purchase of available-for-sale securities
    
    
    (1,803,504
    )Collection of note receivable
    
    
    
    
    
    
    1,783,209Investment in note receivable
    
    
    
    
    
    
    (70,337
    )Net cash provided by investing activities
    
    
    3,534,207
    
    
    
    1,262,247CASH FLOWS FROM FINANCING ACTIVITIES:Payment of dividends
    
    
    (1,851,025
    )
    
    
    (740,412
    )Net cash used for financing activities
    
    
    (1,851,025
    )
    
    
    (740,412
    )INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    1,455,545
    
    
    
    702,877CASH AND CASH EQUIVALENTS, beginning of year
    
    
    773,993
    
    
    
    71,116CASH AND CASH EQUIVALENTS, end of year
    
    $
    2,229,538
    
    
    $
    773,993SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Dividends declared in excess of dividends paid
    
    $
    92,551
    
    
    $
    1,665,922Income taxes paid
    
    $
    
    
    
    $
    8,224
  14




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ARIZONA LAND INCOME CORPORATION
 
 NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
          15




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Cash and Cash Equivalents:
 Trading Securities:
 Available for Sale Securities
 Cost
    
    
    Fair Value
    
    
    UnrealizedCommon Stocks
    
    $
    334,768
    
    
    $
    326,450
    
    
    $
    (8,318
    )Preferred Stocks
    
    
    1,468,737
    
    
    
    1,264,583
    
    
    
    (204.154
    )$
    1,803,505
    
    
    $
    1,591,033
    
    
    $
    (212,472
    )
  Revenue Recognition: Accounting for Sales of Real Estate,
  Income Taxes and REIT Status
 16




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Income Per Common Share
 Use of Estimates
 Impairment of Long-lived Assets Accounting for the Impairment or Disposal of Long-Lived
Assets
 Recently Issued Accounting Pronouncements
 Accounting for Servicing of Financial
Assetsan amendment of FASB Statement No. 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities,
 Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109
  17




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Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements
 Accounting for Registration
Payment Arrangements Accounting for Contingencies.
 The Fair Value Option for Financial Assets and
Financial Liabilities
     18




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Date Declared
    
    Per Share
    
    
    AmountDecember 21, 2007
    
    $
    0.05
    
    
    $
    92,551Total 2007
    
    $
    0.05
    
    
    $
    92,551March 8, 2006
    
    
    0.10
    
    
    
    185,103June 8, 2006
    
    
    0.10
    
    
    
    185,103September 13, 2006
    
    
    0.10
    
    
    
    185,103December 1, 2006
    
    
    1.00
    
    
    
    1,851,025Total 2006
    
    $
    1.30
    
    
    $
    2,406,334
     Loan
    
    
    
    Companys
    
    CarryingNumber
    
    Property Description
    
    Participation
    
    Value17
    
    .01 acres  Southwest corner of I-17 and Deer Valley Road, Phoenix, Arizona
    
    
    100
    %
    
    $
    55,890
     
 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  20




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ITEM 8A. CONTROLS AND PROCEDURES.
    Internal Control 
Integrated Framework Internal Control  Integrated Framework
  
 ITEM 8B. OTHER INFORMATION.
  21




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PART III
 
 ITEM 9.
    
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT.
 Identification of Directors
  Thomas R. Hislop
 Robert L. Blackwell
 Burton P. Freireich
 David W. Miller
 Identification of Executive Officers
  Larry P. Staley
 Involvement in Certain Legal Proceedings
  Section 16(a) Beneficial Ownership Reporting Compliance
  22




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Code of Conduct and Ethics
  Procedures for Shareholder Recommendation of Nominees
  Audit Committee and Audit Committee Financial Expert
  
 ITEM 10. EXECUTIVE COMPENSATION.
 Executive Compensation
  23




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Summary Compensation Table
 NonqualifiedNon-Equity
    
    DeferredStock
    
    Option
    
    Incentive Plan
    
    Compensation
    
    All OtherName and Principal Position
    
    Year
    
    Salary
    
    Bonus
    
    Awards
    
    Awards
    
    Compensation
    
    Earnings
    
    Compensation
    
    Total(1)Thomas R. Hislop
    
    
    2007
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-C.E.O.
    
    
    2006
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
    
    
    
    $ -0-
 
 (1)
    
    The Company has no salaried employees. However, under an advisory
agreement with ALI, the Company paid ALI a servicing fee for servicing
the Companys First Mortgage Loans. See Certain Relationships and
Related Transactions set forth in Item 12 of this Report on Form
10-KSB. Mr. Hislop is Treasurer, Vice President and a director of ALI
and functions as its Chief Executive Officer. Mr. Hislop received no
salary from ALI in 2007 or 2006 and no servicing fee was paid to
Advisor in 2007 or 2006. Compensation of Directors
  Director Compensation
 Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    NonqualifiedEarned
    
    
    
    
    
    
    
    
    
    Non-Equity
    
    Deferredor Paid
    
    Stock
    
    Option
    
    Incentive Plan
    
    Compensation
    
    All OtherName
    
    in Cash
    
    Awards
    
    Awards
    
    Compensation
    
    Earnings
    
    Compensation
    
    TotalRobert L. Blackwell
    
    $
    10,800
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    10,800Burton P. Freireich
    
    $
    10,800
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    10,800David W. Miller
    
    $
    10,800
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    10,800
 
 ITEM 11.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.
 Securities Authorized for Issuance Under Equity Compensation Plans
  24




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Security Ownership of Certain Beneficial Owners and Management
  Amount and Nature of
    
    Percent of Class AName
    
    Beneficial Ownership(1)
    
    Common StockDirectors and Executive Officers:Thomas R. Hislop(2)
    
    
    7,700
    
    
    
    *Burton P. Freireich
    
    
    125,000
    
    
    
    6.8
    %Robert L. Blackwell(3)
    
    
    4,000
    
    
    
    *David W. Miller(4)
    
    
    1,500
    
    
    
    *Larry P. Staley(5)
    
    
    10,000
    
    
    
    *All directors and executive officers as a group (6 persons)
    
    
    148,200
    
    
    
    8.0
    %5% Holders:Phillip and Linda Barkdoll(6)
    
    
    125,000
    
    
    
    6.8
    %
  
 *
    
    Less than 1%.(1)
    
    The inclusion herein of any shares of common stock does not constitute
an admission of beneficial ownership of such shares, but is included
in accordance with rules of the Securities and Exchange Commission.(2)
    
    Includes 1,500 shares held in retirement accounts; 400 shares held in
custodian accounts; 4,800 shares held in The Hislops Family Trust
dated August 5, 2005 of which Mr. Hislop is co-trustee; and 1,000
shares held in the Carol Cain Trust of which Mr. Hislop is trustee.(3)
    
    Includes 2,900 shares held in the Robert L. and Beverly Blackwell Family Trust, and 1,100 shares held in Mr. Blackwells Individual Retirement Account.(4)
    
    Includes 500 shares held in a custodial account for Mr. Millers daughter for which account Mr. Miller serves as custodian.(5)
    
    Includes 10,000 shares held in the Staley Family Trust dated July 15, 2005 of which Mr. Staley is co-trustee.(6)
    
    Shares are held by the Barkdoll Family Trust, of which Mr. and Mrs. Barkdoll are the trustees and sole beneficiaries. 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 Transactions With Related Persons
 Advisory Agreement with ALI Advisor, Inc.
   25




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Retention of and Sale of Promissory Note to Peacock, Hislop, Staley & Given, Inc.
   Company Policy Regarding Related Person Transactions
  26




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##### Table of Contents



Director Independence
  
 ITEM 13. EXHIBITS
  PageReport of Independent Registered Public Accounting Firm
    
    
    10Financial StatementsBalance Sheet at December 31, 2007
    
    
    11Statements of Operations  For the Years Ended December 31, 2007 and 2006
    
    
    12Statements of Stockholders Equity  For the Years Ended December 31, 2007 and 2006
    
    
    13Statements of Cash Flows  For the Years Ended December 31, 2007 and 2006
    
    
    14Notes to Financial Statements
    
    
    15
 Exhibit No.
    
    Description3.1
    
    
    Articles of Incorporation of the Company, as amended.
(Incorporated by reference to Exhibit 3-A to Amendment No. 3
to S-18 (No. 33-20625).)3.2
    
    
    Amended and Restated Bylaws of the Company, as amended.
(Incorporated by reference to Exhibit 3.2 of the Companys
Annual Report on Form 10-KSB filed March 31, 2005).10.1
    
    
    June 13, 1988 Advisory and Servicing Agreement between ALI
Advisor, Inc. and the Company. (Incorporated by reference to
Exhibit 10.1 of the Companys Annual Report of Form 10-KSB
filed March 31, 2005.)10.2
    
    
    Indemnification Agreement dated May 12, 1992 between the
Company and Robert Blackwell. (Incorporated by reference to
Exhibit 10.2 of the Companys Annual Report of Form 10-KSB
filed March 31, 2005.)10.3
    
    
    Indemnification Agreement dated October 1, 1991 between the
Company and Burton Freireich. (Incorporated by reference to
Exhibit 10.3 of the Companys Annual Report of Form 10-KSB
filed March 31, 2005.)10.4
    
    
    Master Formation and Contribution Agreement dated October 3,
2006 between the registrant and POP Venture, LLC.
(Incorporated by reference to Exhibit 10.1 of the Companys
current report on Form 8-K, filed with the Commission on
October 3, 2006.)10.5
    
    
    Amendment and Exhibit Acknowledgement to Master Formation and
Contribution Agreement, dated November 2, 2006, between the
Company and POP. (Incorporated by reference to Exhibit 10.1 of
the Companys current report on Form 8-K, filed with the
Commission on November 6, 2006.)10.6
    
    
    Second Amendment to Master Formation and Contribution
Agreement, dated December 7, 2006, between the Company and
Pacific Office Contributor. (Incorporated by reference to
Exhibit 10.1 of the Companys current report on Form 8-K,
filed with the Commission on December 11, 2006.)10.7
    
    
    Third Amendment to Master Formation and Contribution
Agreement, dated December 7, 2006, between the Company and
Pacific Office Contributor. (Incorporated by reference to
Exhibit 10.1 of the Companys current report on Form 8-K,
filed with the Commission on March 29, 2007.)
 27




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##### Table of Contents



Exhibit No.
    
    Description10.8
    
    
    Fourth Amendment to Master Formation and Contribution Agreement, dated November 9, 2007, between the Company and
Pacific Office Contributor. (Incorporated by reference to Exhibit 10.1 of the Companys current report on Form 8-K
filed with the Commission on November 13, 2007).10.9
    
    
    Master Amendment to Contribution Agreements, dated November 9, 2007, between the Company and Pacific Office
Contributor. (Incorporated by reference to Exhibit 10.2 of the Companys current report on Form 8-K filed with the
Commission on November 13, 2007).10.10
    
    
    Form of Contribution Agreement, dated November 2, 2006, between the Company and Pacific Office Contributor.
(Incorporated by reference to Exhibit 2.1 of the Companys current report on Form 8-K filed with the Commission on
November 6, 2006).31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)32.1
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)99.1
    
    
    Form of Advisory Agreement  Exhibit A to the Amendment and Exhibit Acknowledgement to Master Formation and
Contribution Agreement, dated as of November 2, 2006, between the Company and POP. (Incorporated by reference to
Exhibit 99.1 of the Companys current report on Form 8-K, filed with the Commission on March 29, 2007.)99.2
    
    
    Form of Registration Rights Agreement  Exhibit B to the Amendment and Exhibit Acknowledgement to Master Formation
and Contribution Agreement, dated as of November 2, 2006, between the Company and POP. (Incorporated by reference to
Exhibit 99.2 of the Companys current report on Form 8-K, filed with the Commission on November 6, 2006.)99.3
    
    
    Form of Articles of Incorporation (including Articles Supplementary)  Exhibit C to the Amendment and Exhibit
Acknowledgement to Master Formation and Contribution Agreement, dated as of November 2, 2006, between the Company
and POP. (Incorporated by reference to Exhibit 99.3 of the Companys current report on Form 8-K, filed with the
Commission on November 6, 2006.)99.4
    
    
    Form of Bylaws  Exhibit D to the Amendment and Exhibit Acknowledgement to Master Formation and Contribution
Agreement, dated as of November 2, 2006, between the Company and POP. (Incorporated by reference to Exhibit 99.4 of
the Companys current report on Form 8-K, filed with the Commission on November 6, 2006.)99.5
    
    
    Form of Certificate of Formation of Pacific Office Properties, L.P.  Exhibit F to the Amendment and Exhibit
Acknowledgement to Master Formation and Contribution Agreement, dated as of November 2, 2006, between the Company
and POP. (Incorporated by reference to Exhibit 99.6 of the Companys current report on Form 8-K, filed with the
Commission on November 6, 2006.)99.6
    
    
    Form of Limited Partnership Agreement of Pacific Office Properties, L.P.  Exhibit E to the Master Formation and
Contribution Agreement, dated as of October 3, 2006, as amended between the Company and Pacific Office Contributor.
(Incorporated by reference to Exhibit 99.2 of the Companys current report on Form 8-K, filed with the Commission on
March 29, 2007.)99.7
    
    
    Form of Non-Competition Agreement  Exhibit G to the Master Formation and Contribution Agreement, dated as of
October 3, 2006, as amended between the Company and Pacific Office Contributor. (Incorporated by reference to
Exhibit 99.2 of the Companys current report on Form 8-K, filed with the Commission on December 11, 2006.)
 28




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  CATEGORY
    
    2006
    
    
    2007Audit Fees
    
    $
    17,925
    
    
    $
    171,940
    1Audit-Related Fees
    
    
    0
    
    
    
    0Tax Fees
    
    
    3,980
    
    
    
    4,405All other fees
    
    
    0
    
    
    
    0Total
    
    $
    21,905
    
    
    $
    176,345
 
 1
    
    Includes $131,210 reimbursed
to the auditor in connection with insurance
costs incurred in connection with the audit.  29




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##### Table of Contents



SIGNATURES
 th
 ARIZONA LAND INCOME CORPORATIONBy:
    
    /s/ Thomas R. HislopThomas R. HislopChairman of the Board, Vice President, ChiefFinancial Officer and Treasurer
    Signature
    
    Title
    
    Date/s/ Thomas R. Hislop
    
    Chairman of the Board
    
    March 12, 2008Thomas R. Hislop
    
    Chief Financial Officer and Treasurer(Principal Executive Officer andPrincipal Financial Officer)/s/ Robert Blackwell

Robert Blackwell
    
    Unaffiliated Director
    
    March 12, 2008/s/ Burton P. Freireich

Burton P. Freireich
    
    Unaffiliated Director
    
    March 12, 2008/s/ David W. Miller

David W. Miller
    
    Unaffiliated Director
    
    March 12, 2008
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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description3.1
    
    
    Articles of Incorporation of the Company, as amended. (Incorporated by reference to Exhibit 3-A to Amendment
No. 3 to S-18 (No. 33-20625).)3.2
    
    
    Amended and Restated Bylaws of the Company, as amended. (Incorporated by reference to Exhibit 3.2 of the
Companys Annual Report on Form 10-KSB filed March 31, 2005).10.1
    
    
    June 13, 1988 Advisory and Servicing Agreement between ALI Advisor, Inc. and the Company. (Incorporated by
reference to Exhibit 10.1 of the Companys Annual Report on Form 10-KSB filed March 31, 2005).10.2
    
    
    Indemnification Agreement dated May 12, 1992 between the Company and Robert Blackwell. (Incorporated by
reference to Exhibit 10.2 of the Companys Annual Report on Form 10-KSB filed March 31, 2005).10.3
    
    
    Indemnification Agreement dated October 1, 1991 between the Company and Burton Freireich. (Incorporated by
reference to Exhibit 10.3 of the Companys Annual Report on Form 10-KSB filed March 31, 2005).10.4
    
    
    Master Formation and Contribution Agreement dated October 3, 2006 between the registrant and POP Venture,
LLC. (Incorporated by reference to Exhibit 10.1 of the Companys current report on Form 8-K, filed with the
Commission on October 3, 2006).10.5
    
    
    Amendment and Exhibit Acknowledgement to Master Formation and Contribution Agreement, dated November 2, 2006,
between the Company and POP. (Incorporated by reference to Exhibit 10.1 of the Companys current report on
Form 8-K, filed with the Commission on November 6, 2006).10.6
    
    
    Second Amendment to Master Formation and Contribution Agreement, dated December 7, 2006, between the Company
and Pacific Office Contributor. (Incorporated by reference to Exhibit 10.1 of the Companys current report on
Form 8-K, filed with the Commission on December 11, 2006).10.7
    
    
    Third Amendment to Master Formation and Contribution Agreement, dated December 7, 2006, between the Company
and Pacific Office Contributor. (Incorporated by reference to Exhibit 10.1 of the Companys current report on
Form 8-K, filed with the Commission on March 29, 2007).10.8
    
    
    Fourth Amendment to Master Formation and Contribution Agreement, dated November 9, 2007, between the Company
and Pacific Office Contributor. (Incorporated by reference to Exhibit 10.1 of the Companys current report on
Form 8-K filed with the Commission on November 13, 2007).10.9
    
    
    Master Amendment to Contribution Agreements, dated November 9, 2007, between the Company and Pacific Office
Contributor. (Incorporated by reference to Exhibit 10.2 of the Companys current report on Form 8-K filed
with the Commission on November 13, 2007).10.10
    
    
    Form of Contribution Agreement, dated November 2, 2006, between the Company and Pacific Office Contributor.
(Incorporated by reference to Exhibit 2.1 of the Companys current report on Form 8-K filed with the
Commission on November 6, 2006).14.2
    
    
    Arizona Land Income Corporation Supplemental Code of Ethics for Chief Executive Officer and Senior Financial
Officers. (Incorporated by reference to Appendix C to the Companys Definitive Proxy Statement filed April 5,
2004.)24.1
    
    
    Power of Attorney. (Included on signature page.)
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##### Table of Contents



Exhibit No.
    
    Description31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)32.1
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)99.1
    
    
    Form of Advisory Agreement  Exhibit A to the Amendment and Exhibit Acknowledgement to Master Formation and
Contribution Agreement, dated as of November 2, 2006, between the Company and POP. (Incorporated by reference to
Exhibit 99.1 of the Companys current report on Form 8-K, filed with the Commission on March 29, 2007.)99.2
    
    
    Form of Registration Rights Agreement  Exhibit B to the Amendment and Exhibit Acknowledgement to Master Formation
and Contribution Agreement, dated as of November 2, 2006, between the Company and POP. (Incorporated by reference to
Exhibit 99.2 of the Companys current report on Form 8-K, filed with the Commission on November 6, 2006.)99.3
    
    
    Form of Articles of Incorporation (including Articles Supplementary)  Exhibit C to the Amendment and Exhibit
Acknowledgement to Master Formation and Contribution Agreement, dated as of November 2, 2006, between the Company
and POP. (Incorporated by reference to Exhibit 99.3 of the Companys current report on Form 8-K, filed with the
Commission on November 6, 2006.)99.4
    
    
    Form of Bylaws  Exhibit D to the Amendment and Exhibit Acknowledgement to Master Formation and Contribution
Agreement, dated as of November 2, 2006, between the Company and POP. (Incorporated by reference to Exhibit 99.4 of
the Companys current report on Form 8-K, filed with the Commission on November 6, 2006.)99.5
    
    
    Form of Certificate of Formation of Pacific Office Properties, L.P.  Exhibit F to the Amendment and Exhibit
Acknowledgement to Master Formation and Contribution Agreement, dated as of November 2, 2006, between the Company
and POP. (Incorporated by reference to Exhibit 99.6 of the Companys current report on Form 8-K, filed with the
Commission on November 6, 2006.)99.6
    
    
    Form of Limited Partnership Agreement of Pacific Office Properties, L.P.  Exhibit E to the Master Formation and
Contribution Agreement, dated as of October 3, 2006, as amended between the Company and Pacific Office Contributor.
(Incorporated by reference to Exhibit 99.2 of the Companys current report on Form 8-K, filed with the Commission on
March 29, 2007.)99.7
    
    
    Form of Non-Competition Agreement  Exhibit G to the Master Formation and Contribution Agreement, dated as of
October 3, 2006, as amended between the Company and Pacific Office Contributor. (Incorporated by reference to
Exhibit 99.2 of the Companys current report on Form 8-K, filed with the Commission on December 11, 2006.)
 32