##### 



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: September 30, 2006
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For 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
 
 (Former name, former address and former fiscal year, if changed since last report)
 þ o þ o
 o þ
 APPLICABLE ONLY TO CORPORATE ISSUERS
  o þ




---



##### 



Landmark Land Company, Inc.
 INDEX TO QUARTERLY REPORT ON FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 2006
 PageNumberPART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial Statements:
    
    
    3Condensed Consolidated Balance Sheet as of September 30, 2006
    
    
    4Condensed Consolidated Statements of Operations for the three months
and nine months ended September 30, 2006 and 2005, respectively
    
    
    6Condensed Consolidated Statement of Comprehensive Income for the three
months and nine months ended September 30, 2006 and 2005, respectively
    
    
    7Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 2006 and 2005, respectively
    
    
    8Notes to Condensed Consolidated Financial Statements
    
    
    9Item 2.
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    13Item 3.
    
    Controls and Procedures
    
    
    16PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    17Item 2.
    
    Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    17Item 3.
    
    Defaults Upon Senior Securities
    
    
    17Item 4.
    
    Submission of Matters to Vote of Security Holders
    
    
    17Item 5.
    
    Other Information
    
    
    17Item 6.
    
    Exhibits
    
    
    17Signatures
    
    
    18Exhibit IndexSection 302 CertificationsSection 906 Certifications
 IMPORTANT ADVISORY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 This report and the documents incorporated into this report contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA), including,
but not limited to, statements relating to the companys business objectives and strategy. Such
forward-looking statements are based on current expectations, management beliefs, certain
assumptions made by the companys management, and estimates and projections about the companys
industry. Words such as anticipates, expects, intends, plans, believes, seeks,
estimates, forecasts, is likely, predicts, projects, judgment, variations of such words
and similar expressions are intended to identify such forward-looking statements. These statements
are not guarantees of future performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict with respect to timing, extent, likelihood and degree
of occurrence. Therefore, actual results and outcomes may differ materially from those expressed,
forecasted, or contemplated by any such forward-looking statements.
 2




---



##### 



Factors that could cause actual events or results to differ materially include, but are not limited
to, the following: short and long-term interest rates; availability and affordability of mortgage
financing for home buyers; availability and cost of real estate for building lots; availability of
materials (including lumber) and labor; fluctuating costs of materials and labor; adverse weather
conditions and natural disasters; consumer confidence and housing demand; cost overruns; changes in
tax laws; changes in local government fees; availability and cost of rental property and resale
prices of existing homes; early terminations of existing golf course agreements;, intense
competition from other golf course developers and managers; changes in local, national and
international economies; risks inherent in and associated with doing business in a recreational
and/or interest rate sensitive industry; and other risks described in our reports and filings with
the Securities and Exchange Commission. In addition, domestic terrorist attacks and the threat or
the involvement of the United States in international armed conflict may also affect our future
business operations. Given these uncertainties, investors are cautioned not to place undue
reliance on any such forward-looking statements.
 Unless required by law, the company undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise. However, readers
should carefully review the risk factors set forth in other reports or documents that the company
files from time to time with the Securities and Exchange Commission (the SEC), particularly
Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and any Current Reports on Form
8-K.
 PART I  FINANCIAL INFORMATION
 Item 1. Condensed Consolidated Financial Statements
 3




---



##### 



Landmark Land Company, Inc.
 Condensed Consolidated Balance Sheet
 September 30, 2006
 (Unaudited)
 AssetsCurrent assetsCash and cash equivalents
    
    $
    5,911,933Accounts receivable
    
    
    374,528Receivable from affiliates, net of equity investment of ($242,005)
    
    
    844,443Inventories
    
    
    94,575Prepaid expenses and other current assets
    
    
    786,446Total current assets
    
    
    8,011,925Real estate and golf management contract rights acquiredContract rights acquired at cost, net of impairment provision of $922,083
    
    
    3,843,504Less accumulated amortization
    
    
    (995,965
    )Real estate and golf management
contract rights acquired, net
    
    
    2,847,539Real EstateReal estate held for sale
    
    
    617,040Real estate held for or under development
    
    
    10,306,604Total real estate
    
    
    10,923,644Property and equipmentOperating property and equipment, at cost
    
    
    951,921Less accumulated depreciation
    
    
    (176,161
    )Property and equipment, net
    
    
    775,760Other assetsInvestment in unconsolidated affiliates
    
    
    4,198,224Total other assets
    
    
    4,198,224Total assets
    
    $
    26,757,092
  4




---



##### 



Landmark Land Company, Inc.
 Condensed Consolidated Balance Sheet
 September 30, 2006
 (Unaudited)
 Liabilities and Stockholders EquityCurrent liabilitiesCurrent portion of notes payable to others
    
    $
    1,833,080Payable to affiliates
    
    
    1,192,074Accounts payable and accrued expenses
    
    
    316,874Accrued payroll and related expenses
    
    
    281,009Accrued interest due affiliates
    
    
    732,425Accrued interest due others
    
    
    213,024Dividends payable
    
    
    603,154Other liabilities and deferred credits
    
    
    183,560Federal and state income taxes payable
    
    
    1,595,000Deferred income tax liability
    
    
    59,000Real estate sales contract deposits
    
    
    1,444,930Total current liabilities
    
    
    8,454,130Notes payable to others, due after one year
    
    
    6,755,028Total liabilities
    
    
    15,209,158Stockholders equityPreferred stock, Series C, non-voting, $.50 par value;
$100 liquidation value; $10 cumulative annual dividend;
50,000 shares authorized; 10,000 shares issued and
outstanding, stated at liquidation value
    
    
    1,000,000Common stock, $.50 par value; 20,000,000 shares
authorized; 8,804,468 shares issued;
7,660,055 shares outstanding
    
    
    4,402,234Additional paid-in capital
    
    
    30,297,929Treasury stock, at cost, 1,144,413 shares
    
    
    (1,142,527
    )Accumulated deficit
    
    
    (22,973,270
    )Accumulated other comprehensive loss
    
    
    (36,432
    )Total stockholders equity
    
    
    11,547,934Total liabilities and stockholders equity
    
    $
    26,757,092
  5




---



##### 



Landmark Land Company, Inc.
 Condensed Consolidated Statements of Operations
 (Unaudited)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005RevenueReal estate sales
    
    $
    4,618,532
    
    
    $
    4,622,760
    
    
    $
    16,732,115
    
    
    $
    12,064,125Golf course revenue
    
    
    298,049
    
    
    
    275,355
    
    
    
    1,068,686
    
    
    
    960,449Golf merchandise sales
    
    
    67,324
    
    
    
    64,373
    
    
    
    229,907
    
    
    
    194,260Food and beverage sales
    
    
    39,244
    
    
    
    39,943
    
    
    
    129,718
    
    
    
    116,150Management and consulting fees
    
    
    959,598
    
    
    
    414,573
    
    
    
    2,679,278
    
    
    
    1,756,177Reimbursement of out-of-pocket expenses
    
    
    404,358
    
    
    
    108,190
    
    
    
    1,059,166
    
    
    
    408,076Total revenues
    
    
    6,387,105
    
    
    
    5,525,194
    
    
    
    21,898,870
    
    
    
    15,499,237Costs of revenueCost of real estate sold
    
    
    2,960,538
    
    
    
    2,718,067
    
    
    
    10,619,267
    
    
    
    8,276,164Real estate operating expenses
    
    
    335,350
    
    
    
    253,351
    
    
    
    967,826
    
    
    
    876,588Cost of golf merchandise sold
    
    
    37,950
    
    
    
    41,026
    
    
    
    132,830
    
    
    
    115,631Cost of food and beverage sold
    
    
    17,067
    
    
    
    20,627
    
    
    
    56,606
    
    
    
    61,435Golf operating expenses
    
    
    376,513
    
    
    
    345,339
    
    
    
    1,116,409
    
    
    
    1,025,474Out-of-pocket expenses
    
    
    404,358
    
    
    
    108,190
    
    
    
    1,059,166
    
    
    
    408,076Management and consulting payroll
and related expenses
    
    
    894,207
    
    
    
    707,010
    
    
    
    2,454,904
    
    
    
    2,259,382Depreciation and amortization
    
    
    102,806
    
    
    
    106,994
    
    
    
    284,294
    
    
    
    393,319Total costs of revenue
    
    
    5,128,789
    
    
    
    4,300,604
    
    
    
    16,691,302
    
    
    
    13,416,069Operating income
    
    
    1,258,316
    
    
    
    1,224,590
    
    
    
    5,207,568
    
    
    
    2,083,168General, administrative and other expenses
    
    
    (233,502
    )
    
    
    (137,896
    )
    
    
    (712,102
    )
    
    
    (480,388
    )Other income (expenses)Equity in income (loss) of unconsolidated affiliates
    
    
    (79,886
    )
    
    
    16,224
    
    
    
    (398,639
    )
    
    
    (223,887
    )Interest income
    
    
    54,880
    
    
    
    5,725
    
    
    
    112,485
    
    
    
    8,587Interest expense
    
    
    (82,218
    )
    
    
    (114,460
    )
    
    
    (266,123
    )
    
    
    (316,858
    )Total other income (expenses)
    
    
    (107,224
    )
    
    
    (92,511
    )
    
    
    (552,277
    )
    
    
    (532,158
    )Net income before income taxes
    
    
    917,590
    
    
    
    994,183
    
    
    
    3,943,189
    
    
    
    1,070,622Federal and state income taxes
    
    
    (363,000
    )
    
    
    
    
    
    
    (1,394,181
    )
    
    
    Net income
    
    $
    554,590
    
    
    $
    994,183
    
    
    $
    2,549,008
    
    
    $
    1,070,622Basic income per common share
    
    $
    0.07
    
    
    $
    0.13
    
    
    $
    0.33
    
    
    $
    0.14Basic weighted average shares outstanding
    
    
    7,660,055
    
    
    
    7,668,255
    
    
    
    7,660,055
    
    
    
    7,519,150Diluted income per common share
    
    $
    0.07
    
    
    $
    0.13
    
    
    $
    0.33
    
    
    $
    0.14Diluted weighted average shares outstanding
    
    
    7,660,055
    
    
    
    7,668,255
    
    
    
    7,661,452
    
    
    
    7,519,150
  6




---



##### 



Landmark Land Company, Inc.
 Condensed Consolidated Statements of Comprehensive Income
 (Unaudited)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    554,590
    
    
    $
    994,183
    
    
    $
    2,549,008
    
    
    $
    1,070,622Other comprehensive income (loss)
Foreign currency translation adjustments
    
    
    (1,141
    )
    
    
    25,137
    
    
    
    (6,818
    )
    
    
    (7,174
    )Comprehensive income
    
    $
    553,449
    
    
    $
    1,019,320
    
    
    $
    2,542,190
    
    
    $
    1,063,448
  7




---



##### 



Landmark Land Company, Inc.
 Condensed Consoldated Statements of Cash Flows
 Nine Months Ended September 30, 2006 and 2005
 (Unaudited)
 2006
    
    
    2005Cash flows from operating activitiesNet income for the period
    
    $
    2,549,008
    
    
    $
    1,070,622Adjustments to reconcile net income to net cash
provided (used) by operating activities:Depreciation and amortization
    
    
    284,294
    
    
    
    393,319Director and employee bonus paid in stock or options
    
    
    107,068
    
    
    
    60,611Equity in loss of unconsolidated affiliates
    
    
    398,639
    
    
    
    223,887(Increase) decrease inAccounts receivable
    
    
    (19,890
    )
    
    
    107,537Receivable from affiliates
    
    
    1,566,651
    
    
    
    147,889Inventories
    
    
    1,572
    
    
    
    (20,060
    )Prepaid expenses and other assets
    
    
    (532,680
    )
    
    
    (61,589
    )Increase (decrease) inAccounts payable and accrued expenses
    
    
    (229,206
    )
    
    
    (190,287
    )Accrued payroll and related expenses
    
    
    84,415
    
    
    
    60,268Accrued interest
    
    
    70,859
    
    
    
    69,028Other liabilities and deferred credits
    
    
    59,553
    
    
    
    2,359Federal and state income tax liabilities
    
    
    1,351,000
    
    
    
    Real estate sales contract deposits
    
    
    804,703
    
    
    
    452,867Net cash provided by operating activities
    
    
    6,495,986
    
    
    
    2,316,451Cash flows from investing activitiesPurchase of property and equipment
    
    
    (82,972
    )
    
    
    (218,200
    )Sale of property and equipment, net
    
    
    15,531
    
    
    
    38,781Purchase and development of real estate inventory
    
    
    (13,458,684
    )
    
    
    (7,848,706
    )Sale of real estate inventory
    
    
    10,850,227
    
    
    
    8,389,731Investment in unconsolidated affiliates
    
    
    (4,487,500
    )
    
    
    Net cash provided (used) by investing activities
    
    
    (7,163,398
    )
    
    
    361,606Cash flows from financing activitiesProceeds from debt to others
    
    
    11,887,631
    
    
    
    6,622,170Repayments on debt to others
    
    
    (9,626,238
    )
    
    
    (7,644,657
    )Cash dividends on common stock
    
    
    (547,490
    )
    
    
    (191,356
    )Cash dividends on preferred stock
    
    
    (78,562
    )
    
    
    Net cash provided (used) by financing activities
    
    
    1,635,341
    
    
    
    (1,213,843
    )Net increase in cash during period
    
    
    967,929
    
    
    
    1,464,214Cash balance, beginning of period
    
    
    4,944,004
    
    
    
    1,775,274Cash balance, end of period
    
    $
    5,911,933
    
    
    $
    3,239,488Supplemental disclosure of cash flow information:Cash paid for interest, including $291,103 and $156,283
capitalized in 2006 and 2005, respectively.
    
    $
    486,366
    
    
    $
    404,112
  8




---



##### 



Landmark Land Company, Inc.
 Notes To Condensed Consolidated Financial Statements
 (Unaudited)
 1. Basis of Presentation
    Three Months Ended
    
    Nine months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Revenue
    
    $
    501,458
    
    
    $
    873,640
    
    
    $
    1,527,158
    
    
    $
    2,843,141Gross profit (loss)
    
    $
    (25,547
    )
    
    $
    32,448
    
    
    $
    (377,533
    )
    
    $
    (447,774
    )Profit (loss) from
continuing
operations
    
    $
    (25,547
    )
    
    $
    32,448
    
    
    $
    (377,533
    )
    
    $
    (447,774
    )Net profit (loss)
    
    $
    (25,547
    )
    
    $
    32,448
    
    
    $
    (377,533
    )
    
    $
    (447,774
    )
   9




---



##### 



Three Months Ended
    
    Nine months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross loss
    
    $
    (201,360
    )
    
    
    
    
    
    $
    (629,641
    )
    
    
    Loss from continuing operations
    
    $
    (201,360
    )
    
    
    
    
    
    $
    (629,641
    )
    
    
    Net loss
    
    $
    (201,360
    )
    
    
    
    
    
    $
    (629,641
    )
    
    
    
   2. Earnings Per Share
  3. Reclassifications
  4. Income Taxes
   10




---



##### 



.
  5. Stockholders Equity
  6. Stock Option Plans
  Stock Option Agreements
   Assumption
    
    May 2006Expected volatility
    
    
    43
    %Expected term (in years)
    
    
    2.5Risk free rate
    
    
    4.87
    %Expected dividends
    
    
    4.00
    %
 11




---



##### 



WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    IntrinsicOptions
    
    Shares
    
    Price
    
    Term
    
    ValueOutstanding at
January 1, 2006
    
    
    
    
    
    
    Granted
    
    
    200,000
    
    
    
    2.00Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Outstanding at
September 30, 2006
    
    
    200,000
    
    
    
    2.00
    
    
    
    4.5
    years
    
    
    Exercisable at
September 30, 2006
    
    
    200,000
    
    
    
    2.00
    
    
    
    4.5
    years
    
    
    
  Incentive Stock Option Plan
   Assumption
    
    June 2006Expected volatility
    
    
    43
    %Expected term (in years)
    
    
    7.5Expected forfeiture
    
    
    5.0
    %Risk free rate
    
    
    5.01
    %Expected dividends
    
    
    4.00
    %
 12




---



##### 



WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    Shares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at
January 1, 2006
    
    
    
    
    
    
    Granted
    
    
    186,000
    
    
    
    1.74Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Outstanding at
September 30, 2006
    
    
    186,000
    
    
    
    1.74
    
    
    
    9.7
    years
    
    $
    20,460Exercisable at
September 30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  WeightedAverage GrantNon-vested Options
    
    Shares
    
    
    Date Fair ValueNon-vested at January 1, 2006
    
    
    
    
    
    
    Granted
    
    
    186,000
    
    
    $
    0.60Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Non-vested at September 30, 2006
    
    
    186,000
    
    
    $
    0.60
  Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation
 Overview
  13




---



##### 



Revenue
 Real estate sales
 Golf
  Management and consulting
   Costs of Revenues
 Costs of real estate sold,
 14




---



##### 



Real estate operating expenses
 Costs of golf merchandise sold
 Golf operating expenses
 Management and consulting payroll and related expenses
 Depreciation and amortization
 General, administrative and other expenses
 General, administrative and other expenses
 Other income and expense
 Equity in loss of unconsolidated affiliates
 Interest expense
 Federal and state income taxes
  15




---



##### 



Net income
  Liquidity and capital resources
 Current assets
 Real estate and golf management contract rights acquired
 Real estate
 Property and equipment
 Liabilities
 Stockholders equity
  Item 3. Controls and Procedures
  16




---



##### 



PART II  OTHER INFORMATION
 Item 1. Legal Proceedings
  Items 2 through 5 of this report on Form 10-QSB are not applicable.
 Item 6. 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
  17




---



##### 



SIGNATURES
  Date: November 13, 2006
    

    LANDMARK LAND COMPANY, INC.
(Registrant)By:
    /s/ GERALD G. BARTONGerald G. BartonChairman and Chief Executive OfficerBy:
    /s/ JOE V. OLREEJoe V. OlreeSenior Vice President and
Chief Financial Officer 18




---



##### 



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