##### 



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: June 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
 
 
  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 JUNE 30, 2006
 PageNumberPART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial Statements:
    
    
    3Condensed Consolidated Balance Sheet as of June 30, 2006
    
    
    4Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2006 and 2005, respectively
    
    
    6Condensed Consolidated Statement of Comprehensive Income for the three months and six months ended June 30, 2006 and 2005, respectively
    
    
    7Condensed Consolidated Statements of Cash Flows for the six months ended June 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 and Reports on Form 8-K
    
    
    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
 2




---



##### 



of occurrence. Therefore, actual results and outcomes may differ materially from those expressed,
forecasted, or contemplated by any such forward-looking statements.
 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
 June 30, 2006
 (Unaudited)
 AssetsCurrent assetsCash and cash equivalents
    
    $
    6,270,436Accounts receivable
    
    
    401,539Receivable from affiliates, net of equity investment
of ($228,092)
    
    
    403,481Inventories
    
    
    99,950Prepaid expenses and other current assets
    
    
    252,922Total current assets
    
    
    7,428,328Real estate and golf management contract rights acquiredContract rights acquired at cost, net of impairment
provision of $922,083
    
    
    3,843,504Less accumulated amortization
    
    
    (924,203
    )Real estate and golf management
contract rights acquired, net
    
    
    2,919,301Real EstateReal estate held for sale
    
    
    1,968,474Real estate held for or under development
    
    
    7,030,980Total real estate
    
    
    8,999,454Property and equipmentOperating property and equipment, at cost
    
    
    948,504Less accumulated depreciation
    
    
    (146,892
    )Property and equipment, net
    
    
    801,612Other assetsInvestment in unconsolidated affiliates
    
    
    4,201,587Total other assets
    
    
    4,201,587Total assets
    
    $
    24,350,282
  4




---



##### 



Landmark Land Company, Inc.
 Condensed Consolidated Balance Sheet
 June 30, 2006
 (Unaudited)
 Liabilities and Stockholders EquityCurrent liabilitiesCurrent portion of notes payable to others
    
    $
    5,513,493Current portion of liabilities to affiliates
    
    
    1,192,075Accounts payable and accrued expenses
    
    
    285,872Accrued payroll and related expenses
    
    
    250,273Accrued interest due affiliates
    
    
    693,903Accrued interest due others
    
    
    192,142Other liabilities and deferred credits
    
    
    173,258Federal and state income taxes payable
    
    
    67,000Deferred income tax liability
    
    
    1,224,000Real estate sales contract deposits
    
    
    1,176,051Total current liabilities
    
    
    10,768,067Notes payable to others, due after one year
    
    
    1,801,933Total liabilities
    
    
    12,570,000Stockholders 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
    
    
    30,292,720Treasury stock, at cost, 1,144,413 shares
    
    
    (1,142,527
    )Accumulated deficit
    
    
    (22,736,853
    )Accumulated other comprehensive loss
    
    
    (35,292
    )Total stockholders equity
    
    
    11,780,282Total liabilities and stockholders equity
    
    $
    24,350,282
  5




---



##### 



Landmark Land Company, Inc.
 Condensed Consolidated Statements of Operations
 (Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005RevenueReal estate sales
    
    $
    6,005,806
    
    
    $
    3,944,654
    
    
    $
    12,113,583
    
    
    $
    7,441,365Golf course revenue
    
    
    332,658
    
    
    
    293,356
    
    
    
    770,637
    
    
    
    685,094Golf merchandise sales
    
    
    86,182
    
    
    
    66,958
    
    
    
    162,583
    
    
    
    129,887Food and beverage sales
    
    
    48,600
    
    
    
    43,741
    
    
    
    90,474
    
    
    
    76,207Management and consulting fees
    
    
    827,018
    
    
    
    977,555
    
    
    
    1,719,680
    
    
    
    1,341,604Reimbursement of out-of-pocket expenses
    
    
    370,779
    
    
    
    145,542
    
    
    
    654,808
    
    
    
    299,886Total revenues
    
    
    7,671,043
    
    
    
    5,471,806
    
    
    
    15,511,765
    
    
    
    9,974,043Costs of revenueCost of real estate sold
    
    
    3,601,054
    
    
    
    2,987,526
    
    
    
    7,658,729
    
    
    
    5,558,097Real estate operating expenses
    
    
    288,983
    
    
    
    289,667
    
    
    
    632,476
    
    
    
    623,237Cost of golf merchandise sold
    
    
    48,068
    
    
    
    39,632
    
    
    
    94,880
    
    
    
    74,605Cost of food and beverage sold
    
    
    21,533
    
    
    
    21,271
    
    
    
    39,539
    
    
    
    40,808Golf operating expenses
    
    
    390,301
    
    
    
    343,696
    
    
    
    739,896
    
    
    
    680,135Out-of-pocket expenses
    
    
    370,779
    
    
    
    145,542
    
    
    
    654,808
    
    
    
    299,886Management and consulting payroll
and related expenses
    
    
    825,590
    
    
    
    823,215
    
    
    
    1,560,697
    
    
    
    1,552,372Depreciation and amortization
    
    
    78,169
    
    
    
    209,728
    
    
    
    181,488
    
    
    
    286,325Total costs of revenue
    
    
    5,624,477
    
    
    
    4,860,277
    
    
    
    11,562,513
    
    
    
    9,115,465Operating income
    
    
    2,046,566
    
    
    
    611,529
    
    
    
    3,949,252
    
    
    
    858,578General, administrative and other expenses
    
    
    (294,936
    )
    
    
    (149,387
    )
    
    
    (478,600
    )
    
    
    (342,492
    )Other income (expenses)Equity in loss of unconsolidated affiliates
    
    
    (133,898
    )
    
    
    (4,248
    )
    
    
    (318,753
    )
    
    
    (240,111
    )Interest income
    
    
    32,407
    
    
    
    1,157
    
    
    
    57,605
    
    
    
    2,862Interest expense
    
    
    (85,574
    )
    
    
    (109,753
    )
    
    
    (183,905
    )
    
    
    (202,398
    )Total other income (expenses)
    
    
    (187,065
    )
    
    
    (112,844
    )
    
    
    (445,053
    )
    
    
    (439,647
    )Net income before income taxes
    
    
    1,564,565
    
    
    
    349,298
    
    
    
    3,025,599
    
    
    
    76,439Federal and state income taxes
    
    
    (555,000
    )
    
    
    
    
    
    
    (1,031,181
    )
    
    
    Net income
    
    $
    1,009,565
    
    
    $
    349,298
    
    
    $
    1,994,418
    
    
    $
    76,439Basic income per common share
    
    $
    0.13
    
    
    $
    0.05
    
    
    $
    0.26
    
    
    $
    0.01Basic weighted average shares outstanding
    
    
    7,660,055
    
    
    
    7,473,988
    
    
    
    7,660,055
    
    
    
    7,445,009Diluted income per common share
    
    $
    0.13
    
    
    $
    0.05
    
    
    $
    0.26
    
    
    $
    0.01Diluted weighted average shares outstanding
    
    
    7,663,458
    
    
    
    7,473,988
    
    
    
    7,661,766
    
    
    
    7,445,009
  6




---



##### 



Landmark Land Company, Inc.
 Condensed Consolidated Statements of Comprehensive Income
 (Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    1,009,565
    
    
    $
    349,298
    
    
    $
    1,994,418
    
    
    $
    76,439Other comprehensive lossForeign currency translation adjustments
    
    
    (2,379
    )
    
    
    (22,813
    )
    
    
    (5,677
    )
    
    
    (32,311
    )Comprehensive income
    
    $
    1,007,186
    
    
    $
    326,485
    
    
    $
    1,988,741
    
    
    $
    44,128
  7




---



##### 



Landmark Land Company, Inc.
 Condensed Consolidated Statements of Cash Flows
 Six Months Ended June 30, 2006 and 2005
 (Unaudited)
 2006
    
    
    2005Cash flows from operating activitiesNet income for the period
    
    $
    1,994,418
    
    
    $
    76,439Adjustments to reconcile net income to net cash
provided (used) by operating activities:Depreciation and amortization
    
    
    181,488
    
    
    
    286,325Director and employee bonus paid in stock or options
    
    
    101,860
    
    
    
    60,611Equity in loss of unconsolidated affiliates
    
    
    318,753
    
    
    
    240,111(Increase) decrease inAccounts receivable
    
    
    (46,901
    )
    
    
    27,340Receivable from affiliates
    
    
    2,021,527
    
    
    
    (1,754
    )Inventories
    
    
    (3,803
    )
    
    
    (22,922
    )Prepaid expenses and other assets
    
    
    844
    
    
    
    (11,176
    )Increase (decrease) inAccounts payable and accrued expenses
    
    
    (260,208
    )
    
    
    (225,891
    )Accrued payroll and related expenses
    
    
    53,679
    
    
    
    70,237Accrued interest
    
    
    11,455
    
    
    
    91,550Other liabilities and deferred credits
    
    
    49,251
    
    
    
    7,443Federal and
state income tax liabilities
    
    
    988,000Real estate sales contract deposits
    
    
    535,824
    
    
    
    175,062Net cash provided by operating activities
    
    
    5,946,187
    
    
    
    773,375Cash flows from investing activitiesPurchase of property and equipment
    
    
    (77,077
    )
    
    
    (179,647
    )Sale of property and equipment, net
    
    
    14,828
    
    
    
    18,095Purchase and development of real estate inventory
    
    
    (8,504,865
    )
    
    
    (4,352,002
    )Sale of real estate inventory
    
    
    7,820,599
    
    
    
    5,610,388Investment in unconsolidated affiliate
    
    
    (4,423,749
    )
    
    
    Net cash provided (used) by investing activities
    
    
    (5,170,264
    )
    
    
    1,096,834Cash flows from financing activitiesProceeds from debt to others
    
    
    7,695,730
    
    
    
    3,690,433Repayments on debt to others
    
    
    (6,707,020
    )
    
    
    (4,756,396
    )Cash dividends on common stock
    
    
    (384,639
    )
    
    
    Cash dividends on preferred stock
    
    
    (53,562
    )
    
    
    Net cash provided (used) by financing activities
    
    
    550,509
    
    
    
    (1,065,963
    )Net increase in cash during period
    
    
    1,326,432
    
    
    
    804,246Cash balance, beginning of period
    
    
    4,944,004
    
    
    
    1,775,274Cash balance, end of period
    
    $
    6,270,436
    
    
    $
    2,579,520Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    345,215
    
    
    $
    212,135
  8




---



##### 



Landmark Land Company, Inc.
 Notes To Condensed Consolidated Financial Statements
 (Unaudited)
 1. Basis of Presentation
    Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Revenue
    
    $
    524,581
    
    
    $
    1,967,968
    
    
    $
    1,025,700
    
    
    $
    1,969,501Gross profit
    
    $
    (152,839
    )
    
    $
    (8,496
    )
    
    $
    (351,986
    )
    
    $
    (480,222
    )Loss from continuing operations
    
    $
    (152,839
    )
    
    $
    (8,496
    )
    
    $
    (351,986
    )
    
    $
    (480,222
    )Net loss
    
    $
    (152,839
    )
    
    $
    (8,496
    )
    
    $
    (351,986
    )
    
    $
    (480,222
    )
   9




---



##### 



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross profit
    
    $
    (172,438
    )
    
    
    
    
    
    $
    (428,281
    )
    
    
    Loss from continuing operations
    
    $
    (172,438
    )
    
    
    
    
    
    $
    (428,281
    )
    
    
    Net loss
    
    $
    (172,438
    )
    
    
    
    
    
    $
    (428,281
    )
    
    
    
   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 June 30, 2006
    
    
    200,000
    
    
    
    2.00
    
    
    4.8 years
    

    
    Exercisable at June 30, 2006
    
    
    200,000
    
    
    
    2.00
    
    
    4.8 years
    

    
    
  Incentive Stock Option Plan
   Assumption
    
    June 2006Expected volatility
    
    
    43
    %Expected term (in years)
    
    
    7.5Risk 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 June 30, 2006
    
    
    186,000
    
    
    
    1.74
    
    
    9.9 years
    
    $
    29,760Exercisable at June 30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  WeightedAverage GrantNon-vested Options
    
    Shares
    
    

Date Fair ValueNon-vested at January 1, 2006
    
    
    
    
    
    
    Granted
    
    
    186,000
    
    
    $
    0.60Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Non-vested at June 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,
 Real estate operating expenses
 14




---



##### 



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
  Net income
  15




---



##### 



Liquidity and capital resources
 Current assets
 Real estate and golf management contract rights
 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: August 10, 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