##### 



SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-QSB (Mark One) [X]
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended: September 30, 2004[   ]
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor the transition period from to
 Commission file number : Landmark Land Company, Inc. 
  Delaware
    
    77-0024129(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)
 2817 Crain Highway, Upper Marlboro, Maryland 20774 
  (301) 574-3330
(Issuers telephone number)  
  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 report(s) Yes
[X]  No  [   ], and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]  No  [   ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
 Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes
 [   ] No  [X] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date: 7,415,708 shares of common stock, $0.50 par value per share as of September 30,
2004. 1




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Landmark Land Company, Inc. INDEX TO QUARTERLY REPORT ON FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 2004 Page NumberPART I FINANCIAL INFORMATIONItem 1.Condensed Consolidated Financial Statements:
    
    
    3Condensed Consolidated Balance Sheet as of September 30, 2004
    
    
    4Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2004 and 2003, respectively
    
    
    5Condensed Consolidated Statement of Comprehensive Income (Loss) for the three months and nine months ended September 30, 2004 and 2003, respectively
    
    
    6Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003, respectively
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2.Plan of Operation
    
    
    10Item 3.Controls and Procedures
    
    
    10PART II OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    11Item 2.Changes in Securities
    
    
    11Item 3.Defaults Upon Senior Securities
    
    
    11Item 4.Submission of Matters to Vote of Security Holders
    
    
    11Item 5.Other Information
    
    
    11Item 6.Exhibits
    
    
    11Signatures
    
    
    12Exhibit IndexSection 302 CertificationsSection 906 Certifications
 2




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IMPORTANT ADVISORY NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements contained in this report on Form 10-QSB constitute
forward-looking statements that involve risks and uncertainties. We caution
readers of this report that these statements involve a number of known and
unknown risks that may cause our actual results to be materially different from
those contemplated by these statements. Factors that might cause such a
difference include, but are not limited to, those discussed in this report
under the caption Plan of Operation as well as those set forth in other
periodic reports and filings that we make with the Securities and Exchange
Commission. PART I  FINANCIAL INFORMATION. Item 1. Condensed Consolidated Financial Statements 3




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Landmark Land Company, Inc. Condensed Consolidated Balance Sheet September 30, 2004 (Unaudited) AssetsCurrent assetsCash
    
    $
    1,091,398Accounts receivable
    
    
    89,436Receivable from affiliates
    
    
    1,906,978Receivable from employees
    
    
    1,191Other current assets
    
    
    107,263Total current assets
    
    
    3,196,266Real estate and golf management contract rights acquiredLong Island, NY, net of impairment loss provision of $922,083
    
    
    557,917Hudson Valley, NY
    
    
    2,550,000Spain
    
    
    500,000South Padre Island, TX
    
    
    180,000Golf management contracts
    
    
    235,5874,023,504Less accumulated amortization
    
    
    (504,962
    )Total real estate and golf management
contract rights acquired, net
    
    
    3,518,542Other assetsInvestment in unconsolidated affiliate
    
    
    243,062Receivable from affiliate-deferred fees
    
    
    70,522Reimbursable pre-acquisition costs
    
    
    447,475Interest in real estate held for sale
    
    
    1,250,000Property and equipment, net
    
    
    19,355Total other assets
    
    
    2,030,414Total assets
    
    $
    8,745,222Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable and accrued expenses
    
    $
    35,289Accrued payroll and related expenses
    
    
    133,824Accrued interest due affiliates
    
    
    470,161Accrued interest due others
    
    
    68,754Short-term notes payable
    
    
    600,000Notes and advances payable to affiliates
    
    
    702,051Total liabilities
    
    
    2,010,079Stockholders equityCommon stock, $.50 par value; 20,000,000 shares
authorized; 8,804,468 shares issued;
7,415,708 shares outstanding
    
    
    4,402,234Additional paid-in capital
    
    
    30,382,797Treasury stock, at cost, 1,388,760 shares
    
    
    (1,388,760
    )Accumulated deficit
    
    
    (26,609,369
    )Accumulated other comprehensive loss
    
    
    (51,759
    )Total stockholders equity
    
    
    6,735,143Total liabilities and stockholders equity
    
    $
    8,745,222
 See Accompanying Notes 4




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Landmark Land Company, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three months ended September 30,
    
    Nine months ended September 30,2004
    
    2003
    
    2004
    
    2003RevenueConsulting and management fees
    
    $
    780,476
    
    
    $
    206,963
    
    
    $
    2,171,255
    
    
    $
    206,963Operating expensesPayroll and related expenses
    
    
    658,143
    
    
    
    204,824
    
    
    
    2,048,254
    
    
    
    204,824Other general and administrative expenses
    
    
    224,306
    
    
    
    363,316
    
    
    
    476,020
    
    
    
    1,042,006Depreciation and amortization
    
    
    124,131
    
    
    
    35,233
    
    
    
    366,515
    
    
    
    35,233Estimated impairment loss
    
    
    922,083
    
    
    
    
    
    
    
    922,083
    
    
    
    Total operating expenses
    
    
    1,928,663
    
    
    
    603,373
    
    
    
    3,812,872
    
    
    
    1,282,063Loss from operations
    
    
    (1,148,187
    )
    
    
    (396,410
    )
    
    
    (1,641,617
    )
    
    
    (1,075,100
    )Other income (expenses)Interest income
    
    
    4,466
    
    
    
    10,074
    
    
    
    15,977
    
    
    
    38,499Interest expense
    
    
    (27,473
    )
    
    
    (13,634
    )
    
    
    (79,891
    )
    
    
    (13,634
    )Proceeds from litigation settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    953,670Settlement of previously recorded liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    479,268Equity in loss of unconsolidated affiliate
    
    
    (225,940
    )
    
    
    (83,260
    )
    
    
    (517,923
    )
    
    
    (234,960
    )Total other income (expenses)
    
    
    (248,947
    )
    
    
    (86,820
    )
    
    
    (581,837
    )
    
    
    1,222,843Net income (loss)
    
    $
    (1,397,134
    )
    
    $
    (483,230
    )
    
    $
    (2,223,454
    )
    
    $
    147,743Earnings (loss) per common share
    
    $
    (0.19
    )
    
    $
    (0.09
    )
    
    $
    (0.30
    )
    
    $
    0.03Weighted average shares outstanding
    
    
    7,415,708
    
    
    
    5,596,171
    
    
    
    7,415,708
    
    
    
    5,012,449
 Diluted earnings per share are not presented as the Company has no common stock equivalents. See Accompanying Notes 5




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Landmark Land Company, Inc. Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2004
    
    2003
    
    2004
    
    2003Net income (loss)
    
    $
    (1,397,134
    )
    
    $
    (483,230
    )
    
    $
    (2,223,454
    )
    
    $
    159,121Other comprehensive lossForeign currency translation adjustments
    
    
    6,688
    
    
    
    (1,108
    )
    
    
    (96,846
    )
    
    
    (10,516
    )Comprehensive income (loss)
    
    $
    (1,390,446
    )
    
    $
    (484,338
    )
    
    $
    (2,320,300
    )
    
    $
    148,605
 See Accompanying Notes 6




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Landmark Land Company, Inc. Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2004 and 2003
(Unaudited) 2004
    
    2003Cash flows from operating activitiesNet income (loss) for the period
    
    $
    (2,223,454
    )
    
    $
    159,121Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:Depreciation and amortization
    
    
    366,515
    
    
    
    36,153Estimated impairment loss
    
    
    922,083
    
    
    
    Settlement of previously recorded liability
    
    
    
    
    
    
    (479,268
    )Equity in loss of unconsolidated subsidiary
    
    
    517,923
    
    
    
    234,960(Increase) decrease inAccounts receivable
    
    
    141,899
    
    
    
    1,624Receivable from affiliates
    
    
    (991,290
    )
    
    
    (150,332
    )Other assets
    
    
    (49,283
    )
    
    
    (37,633
    )Increase (decrease) inAccounts payable to affiliates
    
    
    61,873
    
    
    
    Accounts payable and accrued expenses
    
    
    (31,408
    )
    
    
    (192
    )Accrued payroll and related expenses
    
    
    25,421
    
    
    
    Accrued interest
    
    
    77,476
    
    
    
    8,231Other liabilities and deferred credits
    
    
    
    
    
    
    (225,000
    )Net cash provided (used) by operating activities
    
    
    (1,182,245
    )
    
    
    (452,336
    )Cash flows from investing activitiesPurchase of equipment
    
    
    (2,310
    )
    
    
    (640
    )Sale of real estate
    
    
    41,782
    
    
    
    Investment in unconsolidated affiliate
    
    
    (987,393
    )
    
    
    (263,194
    )Preacquisition costs capitalized or reimbursable
    
    
    
    
    
    
    14,896Net cash used in investing activities
    
    
    (947,921
    )
    
    
    (248,938
    )Cash flows from financing activitiesLoans from affiliates
    
    
    
    
    
    
    (14,896
    )KES cash acquired for treasury stock issued
    
    
    
    
    
    
    118,297Net cash provided (used) by financing activities
    
    
    
    
    
    
    103,401Net (decrease) in cash during period
    
    
    (2,130,166
    )
    
    
    (597,873
    )Cash balance, beginning of period
    
    
    3,221,564
    
    
    
    4,355,620Cash balance, end of period
    
    $
    1,091,398
    
    
    $
    3,757,747
 See Accompanying Notes 7




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Landmark Land Company, Inc.
Notes To Condensed Consolidated Financial Statements
(Unaudited) 1. Basis Of Presentation The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for condensed interim
financial information and with the instructions to Form 10-QSB and Item 310 of
Regulation S-B promulgated by the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of those of a
normal recurring nature) considered necessary for a fair presentation have been
included. Operating results for the nine-month period ended September 30, 2004
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 2004. For further information, please refer to
the audited financial statements and footnotes thereto included in the
companys Form 10-KSB for the year ended December 31, 2003, as filed with the
Securities and Exchange Commission. On August 31, 2003, the company acquired KES, Inc. and subsidiaries (KES).
KES owned, directly or indirectly, 100% of the outstanding capital stock of
DPMG, Inc., Landmark Hellas, Inc., Delos Partners, Inc. and OTP, Inc., whose
primary assets consist of real estate and golf and real estate management and
development contracts having a net fair value of approximately $5.4 million.
The principal shareholder of the company held a minority ownership position in
KES. The shareholders of KES received a total of 2,699,958 shares of the $.50
par value common stock of the company, which shares were previously held as
treasury stock. Because of the limited market for the companys common stock,
the company recorded the transaction at the fair value of the net assets
acquired, the most reliable determinant of value available. KESs assets were
determined to have a fair value of approximately $7.5 million (book value of
approximately $1.1 million). The fair value of the liabilities were
approximately $2.1 million (approximately equal to the sellers carrying
value.) The purchase price of approximately $5.4 million was allocated among
the acquired assets and liabilities based on their respective estimated fair
values. The accompanying financial statements include the assets, liabilities,
revenues and expenses of the company and its wholly-owned subsidiaries,
Landmark of Spain, Inc. and KES, Inc. and the KES subsidiaries, DPMG, Inc.,
Landmark Hellas, Inc., Delos Partners, Inc. and OTP, Inc. Revenues and
expenses of KES and its subsidiaries are included only for the periods
subsequent to the companys acquisition date of August 31, 2003. All
significant intercompany accounts and transactions have been eliminated in
consolidation. Landmark of Spain, Inc. owns a 50% interest in a Spanish
company, Landmark Developments of Spain, S.L., as discussed in Form 10-QSB
filed May 15, 2003. Landmark of Spain, Inc. accounts for its investment on the
equity basis. Landmark Developments of Spain, S.L. reported the following
results from start up operations for the three and nine months ended September
30, 2004 and 2003: Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2004
    
    2003
    
    2004
    
    2003Revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross profit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from continuing operations
    
    $
    (451,880
    )
    
    $
    (196,520
    )
    
    $
    (1,035,846
    )
    
    $
    (499,919
    )Net loss
    
    $
    (451,880
    )
    
    $
    (196,520
    )
    
    $
    (1,035,846
    )
    
    $
    (499,919
    )
 Effective June 30, 2004, KES, Inc., Landmark Hellas, Inc., Delos Partners,
Inc. and OTP, Inc. were merged into DPMG Inc. in a tax-free reorganization
under Internal Revenue Code Section 368. 8




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2. Estimated Impairment of Real Estate and Management Contract Rights The company periodically reviews the carrying amount of its real estate
and management contract rights. During the third quarter review, the company
determined that the fair value of its management contract for property on Long
Island, New York was less than the related carrying amount on the balance sheet
and, accordingly, recorded an estimated impairment loss of $922,083 to reduce
the carrying amount to the contracts fair value. The companys contract
provides for planning, obtaining regulatory approvals and subsequent
development of approximately 320 acres of industrial land on Long Island.
Development approvals for the property have been delayed and now appear
doubtful, since a local public university has threatened condemnation of a
significant portion of the property for expansion of its campus. While
negotiations with the university continue, the company determined to reduce the
carrying value of the contract to the amount of the minimum cancellation fee to
be paid in the event the owner cancels the management contract. 3. Earnings Per Share The computations of basic earnings (loss) per share and diluted earnings
(loss) per share are in conformity with the provisions of Statement of
Financial Accounting Standards No. 128. Weighted shares outstanding during the
respective periods reported reflect approximately 2.7 million treasury shares
reissued to the KES shareholders in August 2003. 4. Reclassifications Certain reclassifications have been made in the 2003 financial statements
to conform to the 2004 presentation. These changes had no effect on net
income. 5. Income Taxes No provision for income taxes is included in the Statements of Operations
since 2003 taxable income was offset by net operating losses carried over from
prior periods and the company has experienced operating losses during the first
nine months of 2004. 6. Pro Forma Financial Information As stated in Note 1, the accompanying statement of operations includes the
operations of KES and its subsidiaries in 2004. The following table shows how
the transaction might have affected the companys historical operating
statements if the transaction had been consummated at January 1, 2003. Pro Forma Operating Information
For the Nine Months Ended September 30, 2003 Revenue
    
    $
    2,075,704Operating (loss)
    
    $
    (876,650
    )Net income
    
    $
    283,910Basic earnings per share
    
    $
    .04
 Additional pro forma financial information is available in the amendment to the
companys Form 8-K originally filed with the Securities and Exchange Commission
on September 7, 2003 and amended on November 7, 2003. 9




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Item 2. Plan of Operation Prior to the companys acquisition of KES, Inc. on August 31, 2003, the
company had minimal ongoing operations. Subsequent to the aforementioned
acquisition, the company, through its subsidiaries, has continued the acquired
real estate and golf management operations and is pursuing additional
management and investment opportunities in the United States and Europe.
Effective October 1, 2004, the company, through its wholly-owned subsidiary
DPMG Inc. (DPMG), purchased South Padre Island Development, L.P. (South
Padre), the owner of South Padre Island Golf Club, an eighteen hole
championship golf course in the Town of Laguna Vista, Texas. South Padre also
owns a portion of the property surrounding the golf course and for the past
five years has been in the business of developing residential lots and
constructing residential housing around the golf course. Prior to the
purchase, DPMG was the contract manager for the golf and real estate
development activities at South Padre. The consideration paid by DPMG totaled $2,460,000 (subject to closing
adjustments), which approximates the net fair value of South Padres assets and
liabilities. The purchase price was paid $695,000 in cash from the companys
assets, $965,000 was financed by a 5-year, 8% promissory note and the balance
of $800,000 consisted of a credit for deferred management fees owed to DPMG by
New Delos Partners, L.P., the former owner of South Padre, and certain of its
subsidiaries. The note is payable in quarterly installments of interest and
principal equal to 4% of quarterly real estate sales proceeds at South Padre.
South Padres liabilities as of October 1, 2004 include approximately
$5,300,000 in short-term bank construction financing previously incurred to
finance development and real estate inventory, and approximately $704,000
payable to an affiliate of the companys chairman and chief executive officer.
The company has agreed to guarantee substantially all of South Padres
construction financing. As a result of the purchase, the number of persons employed by the company
increased from approximately 20 to approximately 75. Unless the company were
to acquire another golf course or real estate operation, the company does not
expect any significant additional changes in the number of employees or any
material purchase or sale of property or equipment during the next twelve
months. Barring future investments requiring significant cash or other unforeseen
circumstances, the company will not require additional cash to maintain its
current operations for the next twelve months. However, in the event cash were
needed for an investment opportunity or otherwise, the company has explored the
possibility of issuing preferred stock. The company feels that this vehicle
could be an attractive method for raising cash in the future on terms favorable
to the company. There can be no assurance, however, that any such additional
capital will be available in the future. The companys performance over the next twelve months will be subject to a
number of business factors, including those beyond our control, such as
economic downturn and an oversupply of golf courses, as well as the increased
level of competition and our ability to successfully market our services in the
face of such competition. There can be no assurance that we will be able to
successfully implement our marketing strategy to sell our management services
or to generate significant revenue out of new projects. The company has had active operations for approximately one year. Since
most of the investment opportunities which the company is pursuing generally
take multi-year periods to mature and generate revenue, the company is
currently exploring a number of ways to generate short-term fee income in order
to support its current operational costs. One source of potential fee income
involves the management of distressed golf properties on behalf of lenders and
servicers. The company believes that the oversupply of golf courses and
general downturn in the golf business should generate a growing business in
this area over the next several years and the company feels that it has the
resources to successfully compete for such business, however, there are no
assurances the company will generate any significant revenue from such
management agreements. 10




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Item 3. Controls and Procedures The company maintains a system of disclosure controls and procedures that
is designed to ensure that information required to be disclosed is accumulated
and communicated to management, including the Chief Executive Officer and the
Chief Financial Officer, in a timely manner. Within 90 days prior to the end of the period covered by this report,
management carried out an evaluation, under the supervision and with the
participation of the Chief Executive Officer and the Chief Financial Officer,
of the effectiveness of the design and operation of disclosure controls and
procedures. Based on this evaluation, the Chief Executive Officer and the
Chief Financial Officer concluded that the disclosure controls and procedures
are effective. In addition, management evaluated the companys internal control over
financial reporting and there have been no changes that have materially
affected, or are reasonably likely to materially affect, internal control over
financial reporting. PART II  OTHER INFORMATION Item 1. Legal Proceedings Other than a pending legal action by the company for the collection of
approximately $530,000 in unpaid fees and other damages arising from work
performed by the company on a proposed golf development on the island of
Barbados, which was reported on Form 10-QSB for the period ending June 30,
2004, the company currently is not involved in any material litigation. Items 2 through 5 of this report on Form 10-QSB are not applicable. Item 6. Exhibits (a)     Exhibits: Exhibit 31.1
    
    Section 302 CertificationExhibit 31.2
    
    Section 302 CertificationExhibit 32.1
    
    Section 906 CertificationExhibit 32.2
    
    Section 906 Certification
 Signatures and Certifications of the Chief Executive Officer and the Chief
Financial Officer of the Company The following pages include the Signatures page for this report and
Exhibits containing the Certifications of the Chief Executive Officer and the
Chief Financial Officer of the company. 11




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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. Date: November 10, 2004
    
    
    
    LANDMARK LAND COMPANY, INC.(Registrant)By:
    
    /s/ GERALD G. BARTONGerald G. BartonPresident and Chief Executive OfficerBy:
    
    /s/ JOE V. OLREEJoe V. OlreeVice President and Chief Financial Officer
 12




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LANDMARK LAND COMPANY, INC. FORM 10-QSB EXHIBIT INDEX ExhibitNumber31.1
    
    Section 302 Certification of Gerald G. Barton.31.2
    
    Section 302 Certification of Joe V. Olree32.1
    
    Section 906 Certification of Gerald G. Barton.32.2
    
    Section 906 Certification of Joe V. Olree