UNITED STATES SECURITES
AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM 10-KSB

[X]  
               ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For Fiscal Year EndedDecember 31, 2003

Commission File #000-31935

TERRA BLOCK
INTERNATIONAL, INC.(Exact name of registrant as specified in its charter)

NEVADA (State
or other jurisdiction of incorporation or organization)

65-0729440(IRS Employer
Identification Number)

2637
Erie Avenue, Suite 207, Cincinnati, OH 45208 (Address of principal executive offices,
including zip code)

(513) 533-1220 (Registrants telephone no., including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $0.001 Par Value

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [ ]

Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B not contained in this form,
and no disclosure will be contained, to the best of the registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. ( )

Revenues for year ended December 31,
2003: $25,000. Aggregate market value of the voting common stock held by non-affiliates of
the registrant as of March 22, 2004, was: $438,277. Number of shares of the
registrants common stock outstanding as of March 22, 2004 was 28,065,018.

1

FORWARD-LOOKING
STATEMENTS

Statements we make in this Annual
Report on Form 10-KSB that are not historical facts are forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These statements are not guarantees of future performance and involve risks,
uncertainties and assumptions (Factors) that are difficult to predict. Factors
that could cause our actual results to differ materially from those in the forward-looking
statements include, but are not limited to:

-   the cyclical nature of our business

-   national and regional economic conditions in the U.S. and other countries
     in which we operate

-   currency fluctuations

-   seasonality of our operations

-   levels of construction spending in major markets

-   supply/demand structure of our industry

-   competition from new or existing competitors

-   unfavorable weather conditions during peak construction periods

-   changes in and implementation of environmental and other governmental
     regulations

-   our ability to successfully identify, complete and efficiently integrate
     acquisitions

-   our ability to successfully penetrate new markets

In general, we are subject to the
risks and uncertainties of the construction industry and of doing business in the U.S. and
foreign countries, particularly developing nations. The forward-looking statements are
made as of the date of this report, and we undertake no obligation to update them, whether
as a result of new information, future events or otherwise.

2

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Terra Block International, Inc., a
Nevada Corporation, (the Company or Terra Block) was formerly L.L.
Brown International, Inc. (L.L. Brown). L.L. Brown was originally incorporated
as Smart Industries, Inc. on February 19, 1997. On February 14, 2003, L.L. Brown entered
into a Share Exchange Agreement with Terra Block Consolidated. The Agreement provides for
100% of the shares of Terra Block Consolidated to be acquired by L.L. Brown in exchange
for shares of common stock of L.L. Brown; for the establishment of a new Board of
Directors consisting of Terra Block Consolidated directors; and, with total issued and
outstanding common shares of the Company immediately after the closing of 10,000,000. The
Companys former subsidiary, LLBA has been spun off, leaving Terra Block Consolidated
as the sole operating subsidiary of the Company after effecting the Agreement.

INTRODUCTION

Terra Block International, Inc. engages in
the application of technologically advanced building products and technologies through a
licensing agreement between its subsidiary Terra Block Consolidated, Inc. and Terra Block,
Inc. (TBI). The Company has the exclusive right to make, have made, use and
sell TBI products anywhere in the world. The licensing agreement provides Terra Block the
rights to all patented technologies, trade secret materials, copyrights, trademarks and
all intellectual property. This technology and expertise is referred to as the Terra
Block System and has been used worldwide for 25 years.

The Terra Block System features a
machine that manufactures building blocks (12x10x3.5) using common soil
as the only raw material. This is accomplished by compacting the soil at up to 460,000
lbs. of hydraulic pressure to form a rock hard block.

The blocks are flat, parallel and
perpendicular to within five thousandths of an inch (.005). Each block is rock solid
and will not crumble or disintegrate. Traditionally, earth blocks are formed using straw
as glue and then sun baking for 28 days i.e. adobe technology. Using Terra Block
technology cuts the time to 15 seconds and no additives are necessary.

The blocks are quick to manufacture,
durable, low maintenance, require no additives, they are energy efficient and inexpensive
(average cost is $0.12/each) and walls constructed using the Terra Block System can be
built without mortar and the blocks can be dry stacked without sacrificing structural
integrity. The Terra Block System has been used all over the world (Russia, Africa, Far
East, Latin America, Saudi Arabia, South Africa, United States (among other locations) to
construct houses, schools, churches and commercial facilities.

The Companys goal is to
become the leading provider of durable, structurally sound, low cost, and environmentally friendly,
residential and commercial buildings in the world.

PATENTS

In June 2002, Terra Block
Consolidated, Inc. entered into an exclusive licensing agreement with TBI. As part of that
agreement, Terra Block Consolidated, Inc. was granted the exclusive right to make, have
made, use and sell the Terra Block Duplex and TECSTOR represented by patent numbers
4,569,649 and 4,875,805 respectively and the Terra 250  Compact earth block machine,
Sidewinder 500  Mid-size earth block machine, TECSTOR (poured concrete),
Manufactured grooves in earth blocks, Soil Dryer (Dehydrator), TECSTOR (Rammed earth
walls), TECSTOR (Earth in filled concrete walls) and Soil Mixer represented by invention
disclosure numbers 454,813,457,060, 456,531, 454,814, 456,529, 456,532, 454,812 and
456,530 respectively. The license is valid until terminated by The Company with 30 days
advance written notice to TBI or by TBI if The Company materially breaches the licensing
agreement. Under the agreement, The Company has the exclusive right to buy the licensed
patent rights for $10,000,000.

3

THE TERRA BLOCK SYSTEM

The Terra Block System makes possible
the large-scale construction of low cost,affordable, energy-efficient homes. Terra Block,
Inc. has perfected a machine that converts our most abundant raw material (common soil)
into one of our most needed building components. These portable machines convert ordinary
earth on a building site, into rock-hard, durable blocks, used in construction. The
machine is towed to a site by a normal pick-up truck or SUV. It takes the soil, which is
already there in abundance (94% of the earths soil can be used, including sand) and
converts it into strong, stable building blocks. There is no material cost and no freight
expense. The blocks are dry stackable and do not require skilled labor. The resulting home
or commercial structure is stronger than traditional structures and up to 25 times more
energy efficient because of the massive 12" earthen walls.

The Terra Block 250 compressed earth
block machine produces 250 blocks per hour.

These blocks The Terra Block System
uses these blocks to build structures that have the following characteristics:

-   Highly energy efficient -   R-value exceeding 25 as produced.
-   The raw material - dirt - is readily available at the job site. Low material cost or freight.
-   No expensive additives required
-   Dry stacked-Skilled labor is not required for construction. Blocks are simply plumbed and
stacked which reduces labor cost significantly.
-   Provides a heat bank thermal mass, balancing out temperature fluctuations.
-   Low maintenance.
-   Long lasting and durable.
-   Inexpensive - Historical average cost is $ .12/each.
-   Bullet and fire proof.
-   Exceed a 210 mph wind load as independently tested.

CERTAIN RISK FACTORS

GOING CONCERN RISK

We have had and could have losses,
deficits and deficiencies in liquidity, which could impair our ability to continue as a
going concern.

In Note # 7 to our consolidated
financial statements, our independent auditors have indicated that certain factors raise
substantial doubt about our ability to continue as a going concern.

The ability of the Company to
continue as a going concern is dependent upon generating sufficient cash flow to conduct
operations and obtaining additional capital and financing.

The Companys strategic plan for
dealing with its insufficient cash flow is currently being developed, and may include
additional private placements of the Companys common stock, the abandonment of
unprofitable projects and the exchange of common stock for settlement of vendor accounts.
There can be no assurance that any of the plans developed by the Company will produce cash
flows sufficient to overcome current liquidity problems.

4

The Companys long-term
viability as a going concern is dependent on certain key factors, as follows:

-   The Companys ability to
obtain adequate sources of outside financing.

-   The Companys ability to
ultimately achieve adequate profitability and cash flows necessary to sustain continuing
operations.

IMPLEMENTATION OF BUSINESS STRATEGY DEPENDENT ON ADDITIONAL FINANCING

Our plan of operation calls for
additional capital to facilitate growth and support long-term development and marketing
programs. It is likely that we will seek additional financing through subsequent future
public or private sales of our securities, including equity securities, borrowing, or
other sources of third party financing. Further, the sale of equity securities could
substantially dilute our existing stockholders interests, and borrowings from third
parties could result in our assets being pledged as collateral. Loan terms, which would
increase our debt service requirements, could restrict our operations. There is no
assurance that we can obtain financing on favorable terms. Any such additional financing
may result in significant dilution to existing stockholders. We may also seek funding for
the development and marketing of our services through strategic partnerships and other
arrangements with investment partners. There can be no assurance, however, that such
collaborative arrangements or additional funds will be available when needed, or on terms
acceptable to us, if at all. If adequate funds are not available, we may be required to
curtail one or more of our future programs.

GOVERNMENTAL REGULATION

We are subject to general business
regulations, including Federal and state construction, environmental and hazardous
material handling regulations. In other countries in which we operate, we may be subject
to additional regulations as well.

NEW PROJECTS.

The Company may undertake one or more
new projects worldwide without limitation. Management may fail to accurately gauge
conditions prior to undertaking a new project, and therefore may not achieve anticipated
results from a new project. If this were to occur, the Company may experience lower cash
flow from operations. To the extent that the Company incurs debt to finance a portion of
the capital costs of a new project, the cash flow from the new project may be inadequate
to cover the debt service.

WEATHER CONDITIONS

Due to the fact that a substantial
portion of our revenues may be derived from construction operations, our business
operations, revenues and operating income could be negatively affected by weather
phenomenon such as but not limited to, hurricanes, monsoon rain seasons, droughts,
excessive heat, wind-storms etc. Such weather phenomena could interfere with operations
and disrupt delivery schedules and revenue streams. In addition, occurrences like those
described above could negatively impact our customers ability to pay us, or
interfere with financing operations within a specific region.

5

INTERNATIONAL

Foreign sales are expected to account
for a substantial portion of sales and revenue.. Sales of products and services obtained
outside the United States are typically negotiated, invoiced and paid in local currency.
Changes in exchange rates may also adversely effect the ability of customers to purchase
the Companys products. Economic instability may have an adverse effect on the
Companys foreign sales. In addition, the Companys international business
strategy may require it to make significant investments outside of the United States.

RECENT FINANCING

In 2003, Terra Block received $75,000
in loans. These loans have various due dates and interest rates. Two of the loans totaling
$30,000 are in payment default while three loans totaling $45,000 are in good standing.
All loans were from individuals who were not shareholders or affiliates of the Company

EMPLOYEES

As of March 22, 2004, Terra Block has
5 full-time employees and 0 part-time employees, including executive officers, non-
executive officers, secretarial and clerical personnel and field personnel. Terra Block
also retains independent consultants and administrative assistance on a limited basis and
expects to continue to do so in the future.

ITEM 2. DESCRIPTION OF PROPERTY

The Company maintains its executive
offices at 2637 Erie Avenue, Suite 207, Cincinnati, Ohio 45208. Approximately, 850 square
feet of space is devoted entirely to Terra Block as office space. This space is leased by
Vector Capital Group, Inc. (Vector) owned equally by Gregory A. Pitner, the
Companys President, Chief Executive Officer and Chairman and by James E. Hines, the
Companys Chief Financial Officer and Director. The Company is under no lease
obligation to Vector. Its telephone number is (513) 533-1220 and its facsimile number is
(513) 533-1990. The Company was formerly located at L.L. Brown International, Inc., 19435
68th Avenue South, Suite S-105, Kent, Washington 98032 until February of 2003 when L.L.
Brown International, Inc. consummated a reverse merger with Terra Block.

ITEM 3. LEGAL PROCEEDINGS

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of December 31, 2002, Terra Block
had 22,965,018 shares of common stock outstanding and had approximately 160 stockholders
of record.

The bid price of our common stock was
$0.051 per share on March 22, 2004.

6

OUR TRANSFER AGENT AS OF MARCH 24,
2004 IS:

Interwest Transfer Company,
Inc. 1981 East 4800 SouthSuite 100Salt Lake City, UT 84117 (801) 272-9294

DIVIDENDS

We intend to retain future earnings
to support our growth. The Company has never paid a cash dividend on the Common Stock and
does not expect to pay a cash dividend in the foreseeable future.

PART II

ITEM 6. MANAGEMENTS DISCUSSION
AND ANALYSIS OR PLAN OF OPERATIONS The following is a discussion of our financial
condition, results of operations, liquidity and capital resources. This discussion should
be read in conjunction with our Consolidated Financial Statements and the notes thereto
included elsewhere in this Form 10-KSB.

FORWARD-LOOKING
INFORMATION-GENERAL

This report contains a number of
forward-looking statements, which reflect the Companys current views with respect to
future events and financial performance including statements regarding the Companys
projections. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from historical results
or those anticipated. In this report, the words anticipates,
believes, expects, intends, future,
plans, targets and similar expressions identify forward-looking
statements. Readers are cautioned to not place undue reliance on the forward-looking
statements contained herein, which speak only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements, to reflect
events or circumstances that may arise after the date hereof. Additionally, these
statements are based on certain assumptions that may prove to be erroneous and are subject
to certain risks including, but not limited to, the Companys dependence on limited
cash resources, and its dependence on certain key personnel within the Company.
Accordingly, actual results may differ, possibly materially, from the predictions
contained herein.

GENERAL

Terra Block International, Inc., a
Nevada Corporation, (the Company or Terra Block) was formerly L.L.
Brown International, Inc. (L.L. Brown). L.L. Brown was originally incorporated
as Smart Industries, Inc. on February 19, 1997. On February 14, 2003, L.L. Brown entered
into a Share Exchange Agreement with Terra Block Consolidated, Inc. The Agreement
provides for 100% of the shares of Terra Block Consolidated, Inc. to be acquired by the
L.L. Brown in exchange for shares of common stock of the L.L. Brown; for the establishment
of a new Board of Directors consisting of Terra Block directors; and, with total issued
and outstanding shares of the Company immediately after the closing of 10,000,000. The
Companys former subsidiary, LLBA has been spun off, leaving Terra Block Consolidated
as the sole operating subsidiary of the Company after effecting the Agreement. The Company
currently trades on the OTC Bulletin Board under the symbol TBLK.

Terra Block engages in the
 application of technologically advanced building products through a licensing agreement
with Terra Block, Inc. (TBI). Terra Block has the exclusive right to
make, have made, use and sell TBI
products anywhere in the world. The license agreement provides Terra Block the rights to
all patented technologies, trade secret materials, copyrights, trademarks and all
intellectual property. This technology and expertise is referred to as the Terra
Block System and has been used worldwide for 25 years.

7

GOING CONCERN STATEMENT

The Companys strategic plan for
dealing with its cash flow problems is currently being developed, and may include
additional private placements of the Companys common stock, the abandonment of
unprofitable projects and the exchange of common stock for settlement of vendor accounts.
There can be no assurance that any of the plans developed by the Company will produce cash
flows sufficient to overcome current liquidity problems.

-   The Companys long-term
viability as a going concern is dependent on certain key factors, as follows:

-   The Companys ability to
obtain adequate sources of outside financing

-   The Companys ability to ultimately
achieve adequate profitability and cash flows to sustain continuing operations.

RESULTS OF OPERATIONS

During fiscal 2003, the Company had
total revenues of $25,000. The Company was also successful in securing $75,000 of working
capital from several sources.

On January 21, 2004 the Company
entered into a Stock Purchase Agreement with an individual to sell 3,600,000 shares of
common stock for $250,000. In addition the purchaser received redeemable common stock
purchase warrants to acquire 1,000,000 shares of common stock at an exercise price of $.10
per share until January 20, 2009. The monies due under this agreement have been received
and the shares issued on January 30, 2004.

In addition the company has continued
to work to finalize the plan for and begin its first housing development and joint venture
in Guatemala, C.A.

LIQUIDITY AND CAPITAL
RESOURCES

While the Company currently has
several projects in development and a business plan for growing the business, it requires
additional capital in order to fully implement its business plan. The Company has been
developing a plan to deal with its liquidity problems. These steps may include additional
private placements of the Companys common stock, a business combination with a more
profitable entity and/or efforts to raise additional debt financing. There can be no
assurance that any of the plans developed by the Company will produce cash flows
sufficient to ensure its long-term viability as a going concern.

8

The Companys long-term
viability as a going concern is dependent on certain key factors, as follows:

-   The Companys ability to obtain adequate sources of outside financing to support near
term operations and to allow the Company to continue forward with current strategic plans.

-   The
Companys ability to implement its operating business plan.

-   The Companys ability to ultimately achieve adequate profitability and cash flows to
sustain continuing operations.

2004 OUTLOOK

During 2004 The Company is planning
on expanding development in two of its three business segments:

-   Housing Development and Construction: The Company is working toward developments both
domestically and abroad to capitalize on its unique construction and building system.

-   TECSTOR: The Company is working to finalize a beta site for its patented above ground
hazardous waste storage facility.

The Company is de-emphasizing the
manufacture and sale of its proprietary machines in favor of Housing Development and
TECSTOR due to anticipated higher margins and increased scalability of these two business
segments.

ITEM 7. FINANCIAL STATEMENTS

The financial statements of the
company are set forth beginning on page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

PART III

ITEM 9. DIRECTORS AND EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The directors and officers of the Company, as of March 5, 2003, are set forth below. The
directors hold office for their respective term and until their successors are duly
elected and qualified. The officers serve at the will of the Board of Directors.

DIRECTORS AND EXECUTIVE
OFFICERS

Set forth below are the names, ages,
and positions of the executive officers and directors of the Company

|Name                                                 | Age      | Position(s) with Company                                                     
|---------------------------------------------------- | -------- | -----------------------------------------------------------------------------
|Gregory A. Pitner
James E. Hines   
Michael A. Gross | 40
47
46 | Chairman, President and CEO
CFO, Vice-President and Director
COO and Director

GREGORY A. PITNER, PRESIDENT, CHIEF
EXECUTIVE OFFICER AND CHAIRMAN Before accepting his position with Terra Block, Mr. Pitner
was formerly President/CEO of Vector Capital Group, Inc. a Cincinnati, OH based investment
banking and consulting firm. Vector Capital Group, Inc. has experience and expertise in a
broad spectrum of investment banking and consulting services, including: corporate
finance, start-up consulting, executive management, capital structure, mergers and
acquisitions, bankruptcy and workout management, cash flow management and turn-around
investing.

9

Mr.
          Pitner oversaw all aspects of Vector, and had direct responsibility for, and
          utilized his background and expertise in, coordinating the acquisition and
          management of turn-around opportunities. From 1995 to 1999 as a Vice President
          of Navicap Corporation, a Cincinnati, OH based merchant banking firm, Mr. Pitner
          successfully provided financing for a number of firms both private and publicly
          held. His responsibilities included deal structure, acquisition negotiation,
          dealer and market maker networking, financing, management control, as well as
          due-diligence. Clients ranged from basic industry rollups to technology
          companies.

Mr.
          Pitner has enjoyed success acting in the capacity as senior management for
          client firms as well as direct investments. He has occupied a seat on several
          boards and has also acted as interim manager for companies of various sizes. In
          the past Mr. Pitner has demonstrated expertise in structuring venture level
          investments, as well as providing management consulting and guidance to early
          stage companies. Also, he has enjoyed success working with technology related
          firms, such as Internet start-ups, IT consulting companies, as well as data
          collection and management companies ranging in size from start-ups to over $600
          million in revenues both domestically as well as internationally. He spearheaded
          the acquisition of a gold mining facility in Zaire, now known as The Democratic
          Republic of Congo and has significant international experience.

Mr.
          Pitner graduated from DePauw University, Greencastle, Indiana with a Bachelor of
          Science Degree majoring in Economics as a Rector Scholar.

JAMES E. HINES, VICE-PRESIDENT, CHIEF
FINANCIAL OFFICER AND DIRECTOR Before accepting his position with the Company, Mr. Hines
was formerly CFO and co-founder of Vector Capital Group, Inc., a boutique investment bank
that originated during 1999 and specializes in turnaround, debt and equity capital
advisory services. A finance and strategic planning specialist he also has extensive
experience in bankruptcy proceedings and asset liquidations.

Mr.
          Hines has extensive knowledge in general and financial management, particularly
          in business and strategic planning, mergers and acquisitions, as well as cash
          flow management. He has developed short and intermediate term revitalization
          strategies specializing in crisis management, general bankruptcy and
          pre-bankruptcy consulting for clients in the real estate, retail, manufacturing,
          entertainment and restaurant industries. To assist in these crisis management
          and bankruptcy engagements, he created a number of analytical tools including
          cash flow projection models, short and long term strategic plans, and detailed
          tactics used for the revitalization of troubled companies.

Mr.
          Hines was formerly Vice President for Navicap Corporation, a Cincinnati, Ohio
          based merchant bank from 1998-1999 where he was responsible for developing a
          secured lending group. This group secured capital for client companies exceeding
          $20 million. Mr. Hines was a major participant in overseeing the successful
          disposition of assets to Navicap shareholders.

Mr.
          Hines was from 1992-1998 a principal in Spectrum Capital, a consulting company
          that specialized in debt and equity capital placements up to $23 million for
          corporate clients. Spectrum also successfully completed several corporate
          restructurings of leveraged buyout transactions.

10

Mr.
          Hines was from 1990-1992 President for Tius Elcon, Ltd. a startup Israeli
          medical device manufacturer where he was primarily responsible for raising
          approximately $11 million in venture capital and for sales increasing to $2.5
          million within six months of inception. He successfully negotiated for the
          products to be manufactured in Hong Kong to be shipped and sold in the United
          States. Tius Elcon was profitable and cash flow positive every month during his
          tenure. Tius Elcon was subsequently sold to an Israeli conglomerate. Mr. Hines
          was from 1981-1990 a Vice President for Citicorp Leveraged Capital Group where
          he originated financing for a wide variety of leveraged buyouts. These buyouts
          ranged in size from $5 million to $2.5 billion. Companies included food
          processing, basic manufacturing, consumer products, retail and energy related
          concerns. Mr. Hines has vast experience acting as the lead bank agent
          coordinating up to 90 separate lenders in a single transaction along with
          leading several of these buyout companies back to becoming publicly traded.

Mr.
          Hines received a Bachelor of Science Degree, specializing in Finance from
          Huntington College, Huntington, Indiana.

MICHAEL A. GROSS, CHIEF OPERATIONS OFFICER AND DIRECTOR
Michael Gross has spent the last 20
years assisting in the development and sales of the Terra Block System. He has worked
extensively throughout the world, negotiating numerous large purchases of Terra Block
products. He has supervised projects in the Congo, Africa, Nigeria, Holland, Germany,
France, England, Saudi Arabia, Canada, and South America, as well as many parts of the
United States, building with, or surveying proposed Terra Block projects. He is intimately
aware of the technological aspects of earth construction in particular and housing
construction in general. He is highly experienced in the management of the current
operations and is responsible for all field operation activities.

Mr.
          Gross is a creative inventor in his own right. He has many inventions to his
          credit, which have produced several million dollars in revenue. He has brought
          his innovative and dynamic thinking to bear on the challenges and hurdles that
          have faced Terra Block, Inc. over the past decade. He studied Chemistry at Snead
          College in Alabama. He is a veteran of the U.S. Armed forces, having served in
          the Navy. Mr. Gross is 46 years old.

All officers and directors listed
above will remain in office until the next annual meeting of our stockholders, and until
their successors have been duly elected and qualified. There are no agreements with
respect to the election of Directors. We have not compensated our Directors for service on
our Board of Directors, any committee thereof, or reimbursed for expenses incurred for
attendance at meetings of our Board of Directors and/or any committee of our Board of
Directors. Officers are appointed annually by our Board of Directors and each Executive
Officer serves at the discretion of our Board of Directors. We do not have any standing
committees. Our Board of Directors may in the future determine to pay Directors fees
and reimburse Directors for expenses related to their activities.

None of our Officers and/or Directors
have ever filed any bankruptcy petition, been convicted of or been the subject of any
criminal proceedings or the subject of any order, judgment or decree involving the
violation of any state or federal securities laws.

11

CERTAIN LEGAL PROCEEDINGS

No existing director, or executive
officer of the Company has appeared as a party in any legal proceeding material to an
evaluation of his ability or integrity during the past five years.

Section 16(a) of the Securities
Exchange Act of 1934, as amended (the Exchange Act) requires the
Companys officers, directors and persons who own more than 10% of the Companys
Common Stock to file reports of ownership and changes in ownership with the SEC and the
National Association of Securities Dealers, Inc. Officers, directors and greater than 10%
stockholders are required by regulation to furnish the Company with copies of all forms
they file pursuant to Section 16(a) of the Exchange Act.

|Name and
Post  | Year | Annual
Comp
Salary
(1) | Annual
Comp
Bonus
($) | Annual
Comp
Other | LT Comp
Rest
Stock | LT
Comp
Options | LTIP
Payouts | AllOther
(1)
|-------------- | ---- | ---------------------- | --------------------- | ----------------- | ------------------ | --------------- | ------------ | ------------
|Gregory A      | 2001 | n/a                    | n/a                   | n/a               | n/a                | n/a             | n/a          | n/a         
|Pitner         | 2002 | -0-                    | -0-                   | -0-               | -0-                | -0-             | -0-          | -0-         
|President      | 2003 | -0-                    | -0-                   | -0-               | -0-                | -0-             | -0-          | -0-         
|James E        | 2001 | n/a                    | n/a                   | n/a               | n/a                | n/a             | n/a          | n/a         
|Hines          | 2002 | -0-                    | -0-                   | -0-               | -0-                | -0-             | -0-          | -0-         
|Vice President | 2003 | -0-                    | -0-                   | -0-               | -0-                | -0-             | -0-          | -0-         
|Michael A      | 2001 | n/a                    | n/a                   | n/a               | n/a                | n/a             | n/a          | n/a         
|Gross          | 2002 | -0-                    | -0-                   | -0-               | -0-                | -0-             | -0-          | -0-         
|COO            | 2003 | -0-                    | -0-                   | -0-               | -0-                | -0-             | -0-          | -0-         

(1)    
          All other compensation includes certain health and life insurance benefits paid
          by the Company on behalf of its employees.

EMPLOYMENT AGREEMENTS

During 2003, the Company entered into
employment agreements with Messrs. Pitner, Gross and Hines which provide for three year
terms, an agreed upon annual salary, benefits, and provisions concerning termination of
employment upon sale or change of control of the Company.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth
information as of March 3, 2003 (post-split), regarding the ownership of the
Companys Common Stock by each shareholder known by the Company to be the beneficial
owner of more than five percent (5%) of its outstanding shares of Common Stock, each
director and all executive officers and directors as a group. Except as otherwise
indicated, each of the shareholders has sole voting and investment power with respect to
the share of Common Stock beneficially owned.

12

|Name and Address of
Beneficial Owner | Title of
Class | Amount and Nature of
Beneficial Owner | Percent of
Class
|------------------------------------ | -------------- | ------------------------------------- | ----------------
|Gregory A. Pitner (1)                | Common         | 2,955,702                             | 10.5            
|James E. Hines (1)                   | Common         | 2,955,702                             | 10.5%           
|Michael A. Gross (1)                 | Common         | 2,000,000                             | 7.2%            
|All Executive Officers and          
|Directors as a Group                
|(Three (3) persons)                  | Common         | 7,911,404                             | 28.2%           
|Craig Kaufman                        | Common         | 4,229,972                             | 15.1%           
|Pablo Roemers                        | Common         | 3,600,000                             | 12.8%           
|Terra Block, Inc. (2)                | Common         | 2,229,972                             | 8.0%            
|C & M Capital                        | Common         | 1,500,000                             | 5.3%            

| | (1) | The address for each of the above is c/o Terra Block International, Inc. 2637
                    Erie Avenue, Suite 207 Cincinnati, OH 45208.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Michael A. Gross is sole officer and director and majority shareholder of Terra
                    Block, Inc. which owns 2,229,972 shares of the Companys common stock.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 12. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.

At December 31, 2003 the Company had
notes payable to Dorothy L. Pitner, a shareholder of Terra Block and mother of Gregory A.
Pitner in the amount of $10,000.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)    
          The following documents are filed as part of this report: 

31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

31.2   Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.

32.1   Certification of the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2   Certification of the Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002..

(b)     Reports on Form 8-K:
None

13

SIGNATURES

Pursuant to the requirements of
section 13 or 15(d) of the Securities Exchange Act of 1934, the undersigned has duly
caused this Form 10-KSB to be signed on its behalf by the undersigned, there unto duly
authorized, in the City of Cincinnati, Ohio, on March 26, 2003.

| | TERRA BLOCK INTERNATIONAL, INC.
By:     /s/ Gregory A. Pitner
Gregory A. Pitner, President,
CEO and Chairman
By:     /s/ James E. Hines
James E. Hines, Vice-President,
CFO and Director
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Pursuant to the requirements of the
Securities Exchange Act of 1933, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the date indicated.

| | By:  /s/ Gregory A. Pitner
   Gregory A. Pitner, President, CEO and Chairman
By:  /s/ James E. Hines
   James E. Hines, Vice-President,CFO and Director
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

TERRA BLOCK INTERNATIONAL, INC. 
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003

TABLE OF CONTENTS

|                                               | PAGE NO
|---------------------------------------------- | -------
|Auditors' Report                               | F-1    
|Financial statements                          
|Consolidated Balance Sheets                    | F-2    
|Consolidated Statement of Operations           | F-3    
|Consolidated Statement of Stockholders' Equity | F-4    
|Consolidated Statement of Cash Flows           | F-5    
|Notes to Financial Statements                  | F-6    

INDEPENDENT AUDITOR'S REPORT

Pollard-Kelley Auditing
Services, Inc.Auditing Services 3250 West Market St,
Suite 307, Fairlawn, OH 44333 330-864-2265

Terra Block
International, Inc. and Subsidiary(A Development Stage Company)Cincinnati, Ohio

We have audited the Consolidated
Balance Sheet of Terra Block International, Inc. and Subsidiary (a development stage
company, as of December 31, 2003 and the related Consolidated Statements of Operations,
Changes in Stockholders Equity, and Cash Flows for the year then ended. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on those financial statements based on our audits.

We conducted our audits in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. Audits include
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Audits also include assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

The Company has not generated
significant revenues or profits to date. This factor among others, may indicate the
Company will be unable to continue as a going concern. The Companys continuation as
a going concern depends upon its ability to generate sufficient cash flow to conduct its
operations and its ability to obtain additional sources of capital and financing. The
accompanying consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

In our opinion, based on our audits,
the financial statements referenced above present fairly, in all material respects, the
financial position of Terra Block International, Inc. and Subsidiary (a development stage
company) as of December 31, 2003, and the results of their operations and their cash flows
for the year then ended, in conformity with generally accepted accounting principles
accepted in the United States of America.

Terance L. KelleyCertified
Public Accountant March 24, 2004Fairlawn,
Ohio

F-1

TERRA BLOCK
INTERNATIONAL, INC AND SUBSIDIARY (A Developemnt Stage
Company) CONSOLIDATED BALANCE SHEET December 31, 2003 and 2002

|                                           | 2003 | 2002
|------------------------------------------ | ---- | ----
|ASSETS                                     |      |     
|Current Assets                             |      |     
|Cash and cash equivalents                  |      |     
|                                           |      |     
|Total Current Assets                       |      |     
|Other Assets                               |      |     
|Start Up Costs                             |      |     
|                                           |      |     
|Total Assets                               |      |     
|                                           |      |     
|LIABILITIES AND STOCKHOLDERS' EQUITY       |      |     
|Current Liabilities                        |      |     
|Notes payable                              |      |     
|Accounts payable                           |      |     
|Accrued salaries                           |      |     
|Accrued interest                           |      |     
|                                           |      |     
|Total Current Liabilities                  |      |     
|Stockholders' Equity                       |      |     
|Preferred stock                            |      |     
|Common stock                               |      |     
|Additional contributed capital             |      |     
|Deficit accumulated during the             |      |     
|development stage                          |      |     
|                                           |      |     
|                                           |      |     
|                                           |      |     
|Total Liabilities and Stockholders' Equity |      |     
|                                           |      |     

See
accompanying notes to financial statements.

F-2

TERRA BLOCK
INTERNATIONAL, INC AND SUBSIDIARY (A Development Stage
Company)CONSOLIDATED STATEMENT OF
OPERATIONS For the years ended December 31, 2003
and 2002, and Since Inception

|                           | 2003 | 2002 | Since
Inception
|-------------------------- | ---- | ---- | ---------------
|Revenues                   |      |      | $              
|Expenses                   |      |     
|Office                     |      |      |                
|Interest                   |      |      |                
|Licensor expenses          |      |      |                
|Professional fees          |      |      |                
|Rent                       |      |      |                
|Salaries                   |      |      |                
|Travel                     |      |      |                
|                           |      |      |                
|                           |      |      |                
|                           |      |      |                
|Net Loss                   |      |      | $              
|                           |      |      |                
|Loss per share             |      |      | $              
|Average shares outstanding |      |      |                

See
accompanying notes to financial statements.

F-3

TERRA BLOCK INTERNATIONAL, INC AND
SUBSIDIARY (A Development Stage Company) CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS EQUITY Since Inception through December 31, 2003

|                           | Preferred Stock
Shares    Amount | Common Stock
Shares           Amount | Additional
Contributed
Capital | Deficit
Accumulated
During the
Development
Stage | Total |       | 
|-------------------------- | -------------------------------- | ------------------------------------ | ------------------------------ | ------------------------------------------------ | ----- | ----- | 
|May, 2002 Inception        |                                  |                                      | --                             |                                                  |       | $  -- | 
|Original issue for cash    |                                  |                                     
|and services               |                                  |                                      | --                             |                                                  |       | --    | 
|Net Loss                   |                                  |                                      | --                             |                                                  |       | --    | 
|                           |                                  |                                      |                                |                                                  |       |       | 
|Balance December 31, 2002  |                                  |                                      | --                             |                                                  |       | --    | 
|Merger with LL Brown       |                                  |                                     
|International Inc.         |                                  |                                      | --                             |                                                  |       | --    | 
|Shares issued for services |                                  |                                      | --                             |                                                  |       | --    | 
|Shares issued for interest |                                  |                                      | --                             |                                                  |       | --    | 
|Dividends paid             |                                  |                                      | --                             |                                                  |       | --    | 
|Net loss                   |                                  |                                      | --                             |                                                  |       | --    | 
|                           |                                  |                                      |                                |                                                  |       |       | 
|Balance December 31, 2003  |                                  |                                      | --                             |                                                  |       | $  -- | 
|                           |                                  |                                      |                                |                                                  |       |       | 

See
accompanying notes to financial statements.

F-4

TERRA BLOCK
INTERNATIONAL, INC AND SUBSIDIARY (A Development Stage
Company) CONSOLIDATED STATEMENT OF
CASH FLOWS For the years ended December 31, 2003
and 2002, and Since Inception

|                                            | 2003 | 2002 | Since
Inception
|------------------------------------------- | ---- | ---- | ---------------
|Cash Flows from Operating Activities        |      |      |                
|Net Loss                                    |      |      | $              
|Adjustments to reconcile net loss to net    |      |     
|cash provided by operating activities       |      |     
|Depreciation and amortization               |      |      |                
|Stock for services                          |      |      |                
|Stock for interest                          |      |      |                
|Decrease in Start Up Costs                  |      |      |                
|Increase in Accounts payable                |      |      |                
|Increase in Accrued salaries                |      |      |                
|Increase in Accrued interest                |      |      |                
|                                            |      |      |                
|Net Cash (Used) by Operating Activities     |      |      |                
|Cash Flows from Investing Activities        |      |     
|Increase in Start Up Costs                  |      |      |                
|                                            |      |      |                
|Net Cash (Used) by Investing Activities     |      |      |                
|Cash Flows from Financing Activities        |      |     
|Increase in Notes payable                   |      |      |                
|Funds paid for Merger shell                 |      |      |                
|Dividend paid                               |      |      |                
|Sale of Common stock                        |      |      |                
|                                            |      |      |                
|                                            |      |      |                
|Cash Flows Provided by Financing Activities |      |      |                
|                                            |      |      |                
|Net Increase in Cash and Cash Equivalents   |      |      |                
|                                            |      |      |                
|Cash and Cash Equivalents - Beginning       |      |      |                
|                                            |      |      |                
|Cash and Cash Equivalents - Ending          |      |      | $              
|                                            |      |      |                

See
accompanying notes to financial statements.

F-5

TERRA BLOCK INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company) NOTES TO FINANCIAL
STATEMENTS December 31, 2003

NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

History:

The Company is a Nevada  corporation
 incorporated  on February  19,  1997,  and is a  reporting  company  with the Securities
 and  Exchange  Commission.  It changed  its name from L.L.  Brown  International,  Inc.
 to Terra Block International Inc. on February 19, 2003.

On February 14, 2003 the Company
entered into a Share Exchange Agreement with Terra Block Consolidated, Inc. The agreement
provides for 100% of the shares of Terra Block Consolidated, Inc. to be acquired by the
Company in exchange for shares of common stock of the Company, with the total issued and
outstanding shares of the Company immediately after the closing and a 2 to 1 reverse
split, of 10,000,018. The Companys former subsidiary, LLBA has been spun off,
leaving Terra Block Consolidated, Inc. as the sole operating subsidiary of the Company
after effecting the agreement. The new combination also assumed $100,660 of accounts
payable. The combination was accounted for as a reverse merger whereby the acquired
company is treated as the acquiring company for accounting purposes.

Terra Block Consolidated, Inc. was
incorporated in Nevada on May 30, 2002 and engages in the manufacture, distribution and
application of technologically advanced building products through a licensing arrangement
with Terra Block, Inc. Terra Block Consolidated, Inc. has the exclusive right to make,
have made, use and sell Terra Block, Inc.s products anywhere in the world. Terra
Block, Inc. is a related party of Terra Block International, Inc. as a shareholder. The
license agreements provides Terra Block Consolidated, Inc. the rights to all patented
technologies, trade secret materials, copyrights, trademarks and all intellectual property
of Terra Block Inc. The license is valid until terminated by Terra Block Consolidated,
Inc. with 30 days advance written notice to Terra Block, Inc. or by Terra Block, Inc. if
there is a material breach of the licensing agreement by Terra Block Consolidated, Inc.
Under this agreement, Terra Block Consolidated, Inc. has the exclusive right to buy the
license patent rights for $10,000,000.

Basis of Consolidation:

The accompanying consolidated
financial statements include the accounts of Terra Block International Inc. and Terra
Block Consolidated, Inc. All significant inter-company accounts and transactions, if any,
have been eliminated in consolidation.

F-6

TERRA BLOCK INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company) NOTES TO FINANCIAL
STATEMENTS December 31, 2003

NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES  CONTINUED

Cash and Cash Equivalents:

For the purposes of the Statement of
Cash Flows, the Company considers all short-term debt securities to be cash equivalents.

Cash paid during the period for:

|             | Ended:
2003 | 2002 | Inception
|------------ | ----------- | ---- | ---------
|Interest     |             |      | $        
|Income taxes |             |      | $        

Income Taxes:

The Company accounts for income taxes
under a method, which requires a company to recognize deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in a
companys financial statements or tax returns. Under this method, deferred tax assets
and liabilities are determined based on the difference between the financial statements
carrying amounts and tax basis of assets and liabilities using enacted tax rates. The
Company presently prepares its tax return on the cash basis and its financial statements
on the accrual basis. No deferred tax assets or liabilities have been recognized at this
time, since the Company has shown losses for both tax and financial reporting. The
Companys net operating loss carryforward at December 31, 2003 is approximately
$850,000.

Use of Estimates:

The preparation of financial
statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

Development Stage:

The Company is classified as a
development stage entity since it devotes most of its activities to establishing business
and its principal activities have not yet commenced.

F-7

TERRA BLOCK INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company) NOTES TO FINANCIAL
STATEMENTS December 31, 2003

NOTE 2  START UP
COSTS

Initial incorporation costs were
expensed in 2003 in keeping with the Securities and Exchange Commissions accounting
directives.

NOTE 3  NOTES
PAYABLE

Terra Block Consolidated,
Inc.s Notes Payable:

On October 15, 2002 the Company
entered into a loan agreement with an individual to borrow $15,000. The terms of the
agreement called for the principal sum of $15,000 to be paid on or before November 15,
2002 and an additional interest amount of $15,000 to be paid on April 15, 2003. The note
is unsecured. No payments have been made on the note to date and accordingly the Company
is in default under this agreement. The lender has not made formal demand for payment to
date. The balance due on this note at December 31, 2003 and 2002 was $15,000 plus accrued
interest.

On October 21, 2002 the Company
entered into a loan agreement with an individual to borrow $10,000. The terms of the
agreement called for the principal sum of $10,000 to be paid within 45 days, and an
additional interest amount of $10,000 to be paid within 180 days. The note is unsecured.
No payments have been made on the note to date and accordingly the Company is in default
under this agreement. The lender has not made formal demand for payment to date. The
balance due on this note at December 31, 2003 and 2002 was $10,000 plus accrued interest.

On December 19, 2002 the Company
entered into a loan agreement with an individual to borrow $10,000. The terms of the
agreement called for the principal sum of $10,000 to be paid on or before April 15, 2003
plus interest of $2,000. In the event that the principal has not been repaid by April 30,
2003, additional interest is owed equal to $200 per month thereafter. In addition 10,000
shares of common stock will be delivered as additional consideration. The note is
unsecured. No payments, other than the issue of common stock, have been made on the note
to date and accordingly the Company is in default under this agreement. The lender has not
made formal demand for payment to date. The balance due on this note at December 31, 2003
and 2002 was $10,000 plus accrued interest.

On December 19, 2002 the Company
entered into a loan agreement with an individual to borrow $10,000. The terms of the
agreement called for the principal sum of $10,000 to be paid on or before April 15, 2003
plus interest of $2,000. In the event that the principal has not been repaid by April 30,
2003, additional interest is owed equal to $200 per month thereafter. In addition 10,000
shares of common stock will be delivered as

F-8

TERRA BLOCK INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company) NOTES TO FINANCIAL
STATEMENTS December 31, 2003

NOTE 3  NOTES
PAYABLE  CONTINUED

additional consideration. The note is
unsecured. No payments, other than the issue of common stock, have been made on the note
to date and accordingly the Company is in default under this agreement. The lender has not
made formal demand for payment to date. The balance due on this note at December 31, 2003
and 2002 was $10,000 plus accrued interest and $0 respectively.

On December 20, 2002 the Company
entered into a loan agreement with an individual to borrow $10,000. The terms of the
agreement called for the principal sum of $10,000 to be paid on or before March 20, 2003
plus interest of $2,000. The note is unsecured. No payments have been made on the note to
date and accordingly the Company is in default under this agreement. The lender has not
made formal demand for payment to date. The balance due on this note at December 31, 2003
and 2002 was $10,000 plus accrued interest and $0 respectively.

On December 23, 2002 the Company
entered into a loan agreement with an individual to borrow $5,000. The terms of the
agreement called for the principal sum of $5,000 to be paid on or before April 23, 2003
plus interest of $1,000. The note is unsecured. No payments have been made on the note to
date and accordingly the Company is in default under this agreement. The lender has not
made formal demand for payment to date. The balance due on this note at December 31, 2003
and 2002 was $5,000 plus accrued interest and $0 respectively.

On January 15, 2003 the Company
entered into a loan agreement with an individual to borrow $20,000. The terms of the
agreement called for the principal sum of $20,000 to be paid on or before April 30, 2003
plus interest of $4,000. In the event that the principal has not been repaid by April 30,
2003, additional interest is owed equal to $400 per month thereafter. In addition 20,000
shares of common stock will be delivered as additional consideration. The note is
unsecured. No payments, other than the issue of common stock, have been made on the note
to date and accordingly the Company is in default under this agreement. The lender has not
made formal demand for payment to date. The balance on this note at December 31, 2003 was
$20,000 plus accrued interest.

On March 14, 2003 the Company entered
into a loan agreement with an individual to borrow $10,000. The terms of the agreement
called for the principal sum of $10,000 to be paid on or before July 14, 2003 plus
interest of $2,000. The note is unsecured. No payments have been made on the note to date
and accordingly the Company is in default under this agreement. The lender has not made
formal demand for payment to date. The balance due on this note at December 31, 2003, was
$10,000 plus accrued interest.

F-9

TERRA BLOCK INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company) NOTES TO FINANCIAL
STATEMENTS December 31, 2003

NOTE 3  NOTES
PAYABLE  CONTINUED

Terra Block International
Inc.s Notes Payable:

On October 6, 2003 the Company
entered into a loan agreement with an individual to borrow $20,000 at 10% interest due
October 6, 2004. In addition 50,000 shares of common stock will be delivered as additional
consideration. The note is unsecured. The Company has issued the common stock required
under this agreement. The balance on this note at December 31, 2003 was $20,000 plus
accrued interest.

On October 6, 2003 the Company
entered into a loan agreement with an investment consortium to borrow $12,500 at 10%
interest due October 6, 2004. In addition 200,000 shares of common stock will be delivered
as additional consideration. The note is unsecured. The Company has issued the common
stock required under this agreement. The balance on this note at December 31, 2003 was
$12,500 plus accrued interest.

On October 6, 2003 the Company
entered into a loan agreement with an individual to borrow $12,500 at 10% interest due
October 6, 2004. The note is unsecured. The Company has issued the common stock required
under this agreement. The balance on this note at December 31, 2003 was $12,500 plus
accrued interest.

NOTE 4 
STOCKHOLDERS EQUITY

Preferred Stock:

At December 31, 2003 the Company had 10,000,000
shares authorized of convertible preferred stock with a par value 0f $0.001 per share.
Additional terms and conditions of the stock are to be set by the board of directors of
the Company at the time of issue. There were no shares outstanding at December 31, 2003.

The Company did not have any
authorized preferred stock at December 31, 2002.

Common Stock:

At December 31, 2003 the Company had
100,000,000 shares authorized common stock with a par value of $0.001 per share. There
were 22,965,018 shares outstanding at December 31, 2003.

At December 31, 2002 the Company had
10,505,000 shares of authorized no par value common stock outstanding.

F-10

TERRA BLOCK INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company) NOTES TO FINANCIAL
STATEMENTS December 31, 2003

NOTE 5  COMMITIMENTS

The Company rents its present office
space on a month to month basis and expects to continue on that basis in 2004. Rent
expense for 2003 was $4,175.

NOTE 6  RELATED
PARTIES

The Company owed its officers who are
also shareholders $367,380 in accrued wages. There are no other amounts due to or from
these shareholder officers.

The Company paid $48,915 to the
licensor who is also a shareholder during 2003. The were no other amounts due to or from
this shareholder.

NOTE 7  GOING
CONCERN

The Company has not generated
significant revenues or profits to date. This factor among others including the notes
payable defaults, may indicate the Company will be unable to continue as a going concern.
The Companys continuation as a going concern depends upon its ability to generate
sufficient cash flow to conduct its operations and its ability to obtain additional
sources of capital and financing. The accompanying consolidated financial statements do
not include any adjustments that might result from the outcome of this uncertainty.

NOTE 8  SUBSQUENT
EVENTS

On January 21, 2004 the Company
entered into a Stock Purchase Agreement with an individual to sell 3,600,000 shares of
common stock for $250,000. In addition the purchaser is to receive redeemable common stock
purchase warrants to acquire 1,000,000 shares of common stock at an exercise price of $.10
per share until January 20, 2009. The monies due under this agreement have been received
and the shares were issued on January 30, 2004.

F-11