UNITED STATES
SECURITES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 2005
Commission File #000-31935
EARTHBLOCK TECHNOLOGIES, 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, 2005: $27,000.00. Aggregate market value of the voting common stock held by non-affiliates of the registrant as of April 12, 2006 was: $4,272,289. Number of shares of the registrant’s common stock outstanding as of April 12, 2006 was 59,315,018.
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 |
| | - | 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 availability of raw materials and/or supplies |
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.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
EarthBlock Technologies, Inc. a Nevada Corporation was formerly Terra Block International, Inc., having been renamed effective February 11, 2005, (the “Company” or “EarthBlock”) 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
EarthBlock Technologies, Inc. uses compressed earth blocks in its building system to construct a variety of structures both commercial and residential, including warehouses, office buildings, outbuildings, retail stores, various types of walls and residences from expensive custom homes to low income housing.
The construction method is simple; utilizing properly mixed soil compressed into dense, non-fired, uniform building blocks at the building site. The blocks don’t require curing and are stacked on a proper foundation using thin slurry between each layer. A comprehensive bonding takes place between the blocks and results in a block-to-block bond, not a block-to-mortar bond as in concrete hollow block construction. This comprehensive bonding results in a monolithic structure and a block-to-block strength with very high shearing strength. Completed walls require a concrete bond beam on top before the roofing system of choice is installed. Completed walls receive a stucco finish. The system is fast, a single machine can produce over 3,800 blocks per day and wall construction can be completed with unskilled labor.
The blocks are strong having compressive strength between 1,000 - 1,600 psi without any additives. Building codes in the United States require a non-fired block to have a compressive strength of 300 psi.
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.
COMPRESSED EARTH BLOCK CONSTRUCTION
The Company’s building system makes possible the large-scale construction of low cost, affordable, energy-efficient homes as well as a variety of commercial structures. EarthBlock’s suppliers have perfected machines that convert our most abundant raw material (common soil) into one of our most needed building components. These portable machines convert ordinary soil on a building site, into rock-hard, durable blocks, used in construction. The machine can be towed to a site by a normal pick-up truck or SUV. It takes the dirt, which is already there in abundance and converts it into strong, stable building blocks. There is no material cost and no freight expense. The system utilizes low skilled labor to construct the walls and it’s fast as the blocks do not require curing.
The Company uses these blocks to build structures that have the following characteristics:
| | - | The raw material - dirt - is readily available at the job site. |
| | - | No expensive additives required |
| | - | Skilled labor is not required for construction. Blocks are simply plumbed and stacked which reduces labor cost significantly. |
| | - | Excellent thermal performance, reducing heating and cooling costs. |
| | - | Long lasting and durable. |
| | - | Non-toxic- materials are completely natural and don't out-gas toxic chemicals. |
| | - | Fire resistant - earthen walls don't burn. |
| | - | Insect resistant - the walls are solid and very dense, discouraging insects. |
| | - | Very strong - highly resistant to extreme wind conditions as found in hurricanes and tornadoes. |
| | - | The monolithic walls and concrete bond beam create a structure very resistant to earthquakes. |
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 # 6 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. Any financing activity is likely to result in significant dilution to current shareholders.
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.
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 seek merger or acquisition candidates which could significantly dilute current ownership or cause a change in control. 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.
INTERNATIONAL
Foreign sales are expected to account for a 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 affect 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 2005, EarthBlock received $50,000 in loans and $12,500 in equity financing. The loans have various due dates and interest rates. The loans were from two separate Investment Companies each having different due dates and interest rates. Both of the loans are in payment default.
EMPLOYEES
As of April 12, 2006, EarthBlock has 2 full-time employees and 0 part-time employees, including executive officers, non- executive officers, secretarial and clerical personnel and field personnel. EarthBlock also retains independent consultants and administrative assistance on a limited basis and expects to continue to do so in the future.
Christopher Cole, Chief Operating Officer, resigned effective June 30, 2005.
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 EarthBlock 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, 2005, EarthBlock had 49,815,018 shares of common stock outstanding and had approximately 165 stockholders of record.
The bid price of our common stock was $0.08 per share on April 12, 2006
OUR TRANSFER AGENT AS OF APRIL 12, 2006 IS:
Interwest Transfer Company, Inc.
1981 East 4800 South
Suite 100
Salt Lake City, UT 84117
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
EarthBlock Technologies, Inc. a Nevada Corporation was formerly Terra Block International, Inc., having been renamed effective February 11, 2005, (the “Company” or “EarthBlock”) 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. The Company currently trades on the OTC Bulletin Board under the symbol EBLC.
EarthBlock Technologies, Inc. engages in the application of technologically advanced building products and technologies for earthen construction. EarthBlock uses machinery from a variety of manufactures to manufacture Compressed Earth Blocks for construction. The Company’s machines manufacture building blocks of various sizes 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.
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 2005, the Company had total revenues of $27,000. The Company was successful in securing $62,500 of working capital from several sources.
The Company continues to search for a joint venture partner to begin its first housing foreign development.
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.
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.
2006 OUTLOOK
During 2006 The Company is planning on expanding development in its housing construction 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.
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 April 12, 2006, 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 | 42 | Chairman, President and CEO |
| James E. Hines | 49 | CFO, Vice-President and Director |
| Gary S. Barker | 49 | Director |
GREGORY A. PITNER, PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN
Before accepting his position with EarthBlock, 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.
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.
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.
GARY S. BARKER, DIRECTOR
Gary S. Barker joined EarthBlock as a Director in October, 2004.
Mr. Barker has been involved in the oil and gas industry for the past 25 years. Early in his career, he worked as a landman for several oil and gas companies before becoming an independent oil and gas operator in 1990. While forming his own company, Mr. Barker gained experience in obtaining and securing financing for the acquisitions of oil and gas properties. His responsibilities included management control, acquisition negotiations, and deal structure.
Mr. Barker is currently a partner in Barker Brown Investments, LLC in Midland, Texas. Barker Brown Investments, LLC owns and operates over 250 oil and gas wells in Texas.
Mr. Barker is a member of the Texas Alliance of Energy Producers, New Mexico Landmen’s Association, Permian Basin Landmen’s Association, and American Association of Professional Landmen.
Mr. Barker graduated from the University of New Mexico with a Bachelor of University Studies Degree in Geography.
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. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
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.
ITEM 10. EXECUTIVE COMPENSATION
Name and Post | Year | Annual Comp Salary (1) | Annual Comp Bonus ($) | Annual Comp Other | LT Comp Rest Stock | LT Comp Options | LTIP Payouts | All Other (1) |
| Gregory A | 2003 | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
| Pitner | 2004 | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
| President | 2005 | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
| James E | 2003 | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
| Hines | 2004 | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
| Vice President | 2005 | -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 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 April 12, 2006, 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.
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 | 5.0% |
| James E. Hines (1) | Common | 2,955,702 | 5.0% |
| All Executive Officers and | | | |
| Directors as a Group | | | |
| (Two (2) persons) | Common | 5,911,404 | 10.0% |
| Pablo Roemers | Common | 3,600,000 | 6.1% |
| Prendiville Revocable Trust | Common | 15,000,000 | 25.3% |
| Scott Sieck | Common | 3,500,000 | 5.9% |
| Darrel Uselton | Common | 3,500,000 | 5.9% |
| | (1) | The address for each of the above is c/o EarthBlock Technologies, Inc. 2637 Erie Avenue, Suite 207 Cincinnati, OH 45208. |
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
At December 31, 2005 the Company had a note payable to Dorothy L. Pitner, a shareholder of EarthBlock Technologies, Inc. and mother of Gregory A. Pitner in the amount of $5,000.
At December 31, 2005 the Company had a note payable to Barker, Brown Investments, LLC. in the amount of $20,000. Gary S. Barker, a Director of EarthBlock Technologies, Inc. is an affiliate of Barker, Brown Investments.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
| | (a) | The following documents are filed as part of this report: |
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| | (b) | Reports on Form 8-K: None |
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 April 12, 2006.
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| | EARTHBLOCK TECHNOLOGIES, INC. |
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| Date: April 12, 2006 | By: | /s/ Gregory A. Pitner |
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| | CEO and Chairman |
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| | EARTHBLOCK TECHNOLOGIES, INC. |
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| Date: April 12, 2006 | By: | /s/ James E. Hines |
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| | 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.
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| | EARTHBLOCK TECHNOLOGIES, INC. |
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| Date: April 12, 2006 | By: | /s/ Gregory A. Pitner |
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| | CEO and Chairman |
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| | EARTHBLOCK TECHNOLOGIES, INC. |
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| Date: April 12, 2006 | By: | /s/ James E. Hines |
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| | Vice-President, CFO and Director |
EARTHBLOCK TECHNOLOGIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
TABLE OF CONTENTS
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Auditing Services 3250 West Market St, Suite 307
Fairlawn, OH 44333 330-864-2265
Report of Independent Registered Public Accounting Firm
EarthBlock Technologies, Inc. and Subsidiary
(Formerly Terra Block International, Inc. and Subsidiary)
(A Development Stage Company)
Cincinnati, Ohio
We have audited the accompanying balance sheets of EarthBlock Technologies and Subsidiary, (formerly Terra Block International, Inc and Subsidiary), (A Development Stage Company) as of December 31, 2005 and 2004, and the related statements of income, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conduct our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 raises considerable doubt the Company will be able 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, the financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2005 and 2004, and the results of its operations and it cash flows for each of the two years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting standards.
Pollard-Kelley Auditing Services, Inc.
/S/ Pollard-Kelley Auditing Services, Inc.
Fairlawn, Ohio
March 26, 2005
EarthBlock Technologies, Inc and Subsidiary | | | | | | | |
| (A Development Stage Company) | | | | | | | |
| | | | | | | |
| December 31, 2005 and December 31, 2004 | | | | | | | |
| | | | 2005 | | | 2004 | |
| ASSETS | | | | | | | |
| | | | | | | | |
| Current Assets | | | | | | | |
| Cash and cash equivalents | | $ | - | | $ | 8,360 | |
| | | | | | | | |
| Total Current Assets | | | - | | | 8,360 | |
| | | | | | | | |
| Fixed Assets | | | | | | | |
| Computers | | | 9,402 | | | 9,099 | |
| Less: Accumulated depreciation | | | (2,669 | ) | | (910 | ) |
| | | | 6,733 | | | 8,189 | |
| | | | | | | | |
| Total Assets | | $ | 6,733 | | $ | 16,549 | |
| | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | |
| | | | | | | | |
| Current Liabilities | | | | | | | |
| Bank overdrafts | | $ | 4,307 | | $ | - | |
| Notes payable | | | 260,000 | | | 210,000 | |
| Accounts payable | | | 102,908 | | | 102,410 | |
| Accrued salaries | | | 703,440 | | | 597,440 | |
| Accrued interest | | | 88,675 | | | 60,875 | |
| | | | | | | | |
| Total Current Liabilities | | | 1,159,330 | | | 970,725 | |
| | | | | | | | |
| Stockholders' Equity | | | | | | | |
| Preferred stock | | | - | | | - | |
| Common stock | | | 49,815 | | | 40,815 | |
| Additional contributed capital | | | 380,008 | | | 379,008 | |
| Deficit accumulated during the | | | | | | | |
| development stage | | | (1,582,420 | ) | | (1,298,999 | ) |
| Subscriptions receivable | | | - | | | (75,000 | ) |
| | | | (1,152,597 | ) | | (954,176 | ) |
| | | | | | | | |
| Total Liabilities and Stockholders' Equity | | $ | 6,733 | | $ | 16,549 | |
| See accompanying notes to financial statements. | | | | | | | |
EarthBlock Technologies, Inc and Subsidiary | | | | | | | | | | |
| (A Development Stage Company) | | | | | | | | | | |
| | | | | | | | | | |
| For the Years Ended December 31, 2005 and 2004, and Since Inception | | | | | | |
| | | | | | | | | | | |
| | | | Year to | | | Year to | | | | |
| | | | Date | | | Date | | | Since | |
| | | | 2005 | | | 2004 | | | Inception | |
| | | | | | | | | | | |
| Revenues | | $ | 27,000 | | $ | - | | $ | 52,000 | |
| | | | | | | | | | | |
| Cost of Sales | | | | | | | | | | |
| Direct cost of sales | | | 24,057 | | | - | | | 24,057 | |
| Gross Profit | | | 2,943 | | | - | | | 27,943 | |
| | | | | | | | | | | |
| Expenses | | | | | | | | | | |
| Office | | | 12,873 | | | 46,983 | | | 65,758 | |
| Depreciation | | | 1,759 | | | 910 | | | 2,669 | |
| Interest | | | 27,800 | | | 21,758 | | | 89,639 | |
| Licensor expenses | | | 500 | | | 32,113 | | | 81,528 | |
| Professional fees | | | 36,582 | | | 81,851 | | | 182,238 | |
| Rent | | | 14,815 | | | 7,845 | | | 26,835 | |
| Salaries | | | 169,800 | | | 404,760 | | | 941,940 | |
| Travel | | | 22,235 | | | 32,523 | | | 64,513 | |
| | | | 286,364 | | | 628,743 | | | 1,455,120 | |
| | | | | | | | | | | |
| Net Loss | | $ | (283,421 | ) | $ | (628,743 | ) | $ | (1,427,177 | ) |
| | | | | | | | | | | |
| Loss per share | | $ | (0.01 | ) | | | | | | |
| | | | | | | | | | | |
| Average shares outstanding | | | 48,065,018 | | | | | | | |
| | | | | | | | | | | |
| See accompanying notes to financial statements. | | | | | | | | | | |
EarthBlock Technologies, Inc and Subsidiary | | | | | | | | | | | | | | | | | | |
| (A Development Stage Company) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Since Inception through December 31, 2005 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Deficit | | | | | | | |
| | | | | | | | | | | | | | | | | | Accumulated | | | | | | | |
| | | | | | | | | | | | | | | | Additional | | | During the | | | Stock | | | | |
| | | Preferred Stock | Common Stock | | Contributed | | | Development | | | Subscription | | | | |
| | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Stage | | | Receivable | | | Total | |
| May, 2002 Inception | | | - | | $ | - | | | - | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | |
| Original issue for cash | | | | | | | | | | | | | | | | | | | | | | | | | |
| and services | | | - | | | - | | | 10,505,000 | | | 8,001 | | | - | | | - | | | - | | | 8,001 | |
| Net Loss | | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
| Balance December 31, 2002 | | | - | | | - | | | 10,505,000 | | | 8,001 | | | - | | | - | | | - | | | 8,001 | |
| Merger with LL Brown | | | | | | | | | | | | | | | | | | | | | | | | | |
| International Inc. | | | - | | | - | | | (504,982 | ) | | 1,999 | | | 3,808 | | | (154,243 | ) | | - | | | (148,436 | ) |
| Shares issued for services | | | - | | | - | | | 12,000,000 | | | 12,000 | | | - | | | - | | | - | | | 12,000 | |
| Shares issued for interest | | | - | | | - | | | 965,000 | | | 965 | | | - | | | - | | | - | | | 965 | |
| Dividends paid | | | - | | | - | | | - | | | - | | | - | | | (1,000 | ) | | - | | | (1,000 | ) |
| Net loss | | | - | | | - | | | - | | | - | | | - | | | (515,013 | ) | | - | | | (515,013 | ) |
| Balance December 31, 2003 | | | - | | | - | | | 22,965,018 | | | 22,965 | | | 3,808 | | | (670,256 | ) | | - | | | (643,483 | ) |
| Shares issued for services | | | - | | | - | | | 3,050,000 | | | 3,050 | | | - | | | - | | | - | | | 3,050 | |
| Share sales | | | - | | | - | | | 14,800,000 | | | 14,800 | | | 375,200 | | | - | | | (75,000 | ) | | 315,000 | |
| Net Loss | | | - | | | - | | | - | | | - | | | - | | | (628,743 | ) | | - | | | (628,743 | ) |
| Balance December 31, 2004 | | | - | | | - | | | 40,815,018 | | | 40,815 | | | 379,008 | | | (1,298,999 | ) | | (75,000 | ) | | (954,176 | ) |
| Collection of stock | | | | | | | | | | | | | | | | | | | | | | | | | |
| subscription receivable | | | - | | | - | | | - | | | - | | | - | | | - | | | 72,500 | | | 72,500 | |
| Share sales | | | - | | | - | | | 4,000,000 | | | 4,000 | | | 6,000 | | | - | | | - | | | 10,000 | |
| Collection of stock | | | | | | | | | | | | | | | | | | | | | | | | | |
| subscription receivable | | | - | | | - | | | - | | | - | | | - | | | - | | | 2,500 | | | 2,500 | |
| Correction of 2004 share | | | | | | | | | | | | | | | | | | | | | | | | | |
| sales | | | - | | | - | | | 5,000,000 | | | 5,000 | | | (5,000 | ) | | - | | | - | | | - | |
| Net Loss | | | - | | | - | | | - | | | - | | | - | | | (283,421 | ) | | - | | | (283,421 | ) |
| Balance December 31, 2005 | | | - | | | - | | | 49,815,018 | | | 49,815 | | | 380,008 | | | (1,582,420 | ) | | - | | | (1,152,597 | ) |
| See accompanying notes to financial statements. | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
EarthBlock Technologies, Inc and Subsidiary | | | | | | | | | | |
| (A Development Stage Company) | | | | | | | | | | |
| | | | | | | | | | |
| For the Years Ended December 31, 2005 and 2004, and Since Inception | | | | | | |
| | | | Year to | | | Year to | | | Since | |
| | | | Date | | | Date | | | | |
| | | | 2005 | | | 2004 | | | Inception | |
| Cash Flows from Operating Activities | | | | | | | | | | |
| Net Loss | | $ | (283,421 | ) | $ | (628,743 | ) | $ | (1,427,177 | ) |
| Adjustments to reconcile net loss to net | | | | | | | | | | |
| cash provided by operating activities | | | | | | | | | | |
| Depreciation and amortization | | | 1,759 | | | 910 | | | 2,669 | |
| Stock for services | | | - | | | 3,050 | | | 15,050 | |
| Stock for interest | | | - | | | - | | | 965 | |
| Decrease in Start Up Costs | | | - | | | - | | | 33,408 | |
| Increase in Accounts payable | | | 498 | | | 408 | | | 3,472 | |
| Increase in Accrued salaries | | | 106,000 | | | 230,060 | | | 703,440 | |
| Increase in Accrued interest | | | 27,800 | | | 21,759 | | | 88,675 | |
| Net Cash (Used) by Operating Activities | | | (147,364 | ) | | (372,556 | ) | | (579,498 | ) |
| | | | | | | | | | | |
| Cash Flows from Investing Activities | | | | | | | | | | |
| Increase in Start Up Costs | | | - | | | - | | | (33,408 | ) |
| Purchase of fixed assets | | | (303 | ) | | (9,099 | ) | | (9,402 | ) |
| Subscriptions receivable | | | 75,000 | | | (75,000 | ) | | - | |
| Net Cash (Used) by Investing Activities | | | 74,697 | | | (84,099 | ) | | (42,810 | ) |
| | | | | | | | | | | |
| Cash Flows from Financing Activities | | | | | | | | | | |
| Increase in Notes payable | | | 50,000 | | | 75,000 | | | 260,000 | |
| Funds paid for Merger shell | | | - | | | - | | | (49,000 | ) |
| Dividend paid | | | - | | | - | | | (1,000 | ) |
| Sale of Common stock | | | 10,000 | | | 390,000 | | | 408,001 | |
| Cash Flows Provided by Financing Activities | | | 60,000 | | | 465,000 | | | 618,001 | |
| | | | | | | | | | | |
| Net Increase in Cash and Cash Equivalents | | | (12,667 | ) | | 8,345 | | | (4,307 | ) |
| | | | | | | | | | | |
| Cash and Cash Equivalents - Beginning | | | 8,360 | | | 15 | | | - | |
| | | | | | | | | | | |
| Cash and Cash Equivalents - Ending | | $ | (4,307 | ) | $ | 8,360 | | $ | (4,307 | ) |
| | | | | | | | | | | |
| See accompanying notes to financial statements. | | | | | | | | | | |
EarthBlock Technologies, Inc. and Subsidiary
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
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 provide 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. This agreement was terminated January 10, 2005.
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. The purchaser also, 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. In addition, 1,500,000 shares of common stock were issued as a commission in connection with this stock sale.
EarthBlock Technologies, Inc. and Subsidiary
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
On August 10, 2004, the Company issued 1,250,000 shares of common stock as compensation. The shares were valued at par value.
On October 4, 2004, the Company issued 300,000 shares of common stock as prepaid interest. The shares were valued at par value.
On October 29 and December 16, 2004, the Company entered into two stock subscription agreements with the same party. The agreements sold 10,000,000 shares of common stock at $125,000. At June 30, 2005 there is $0 due the Company from this transaction.
On December 16, 2004, the Company sold 1,200,000 shares of common stock for $15,000.
On February 11, 2005, the Company changed it name to EarthBlock Technologies, Inc.
On June 8, 2005, the Company sold 4,000,000 shares of common stock for $10,000.
Basis of Consolidation:
The accompanying consolidated financial statements include the accounts of EarthBlock Technologies, Inc. and Terra Block Consolidated, Inc. All significant inter-company accounts and transactions, if any, have been eliminated in consolidation.
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:
| | 2004 | 2005 | Inception Since |
| Interest | $0 | $0 | $0 |
| Income taxes | $0 | $0 | $0 |
EarthBlock Technologies, Inc. and Subsidiary
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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 carry forward at December 31, 2005 is approximately $1,400,000.
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.
NOTE 2 - 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. A payment of $7,500 was made on February 3, 2004. 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, 2005 and December 31, 2004 was $7,500 plus accrued interest.
EarthBlock Technologies, Inc. and Subsidiary
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 2 - NOTES PAYABLE - CONTINUED
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. A payment of $5,000 was made on February 3, 2004. 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, 2005 and December 31, 2004 was $5,000 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. In addition to the issue of common stock, a payment of $5,000 was made on February 3, 2004. 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, 2005 and December 31, 2004 was $5,000 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. In addition to the issue of common stock, a payment of $5,000 was made on February 3, 2004. 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, 2005 and December 31, 2004 was $5,000 plus accrued interest.
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. A payment of $5,000 was made on February 3, 2004. 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, 2005 and December 31, 2004 was $5,000 plus accrued interest.
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. A payment of $2,500 was made on February 3, 2004. 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, 2005 and December 31, 2004 was $2,500 plus accrued interest.
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. In addition to the issue of common stock, a payment of $10,000 was made on February 3, 2004. 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, 2005 and December 31, 2004 was $10,000 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. A payment of $5,000 was made on February 3, 2004. 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, 2005 and December 31, 2004, was $5,000 plus accrued interest.
EarthBlock Technologies, 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, 2005 and December 31, 2004 was $20,000 plus accrued interest.
EarthBlock Technologies, Inc. and Subsidiary
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 2 - NOTES PAYABLE - CONTINUED
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, 2005 and December 31, 2004 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 balance on this note at December 31, 2005 and December 31, 2004 was $12,500 plus accrued interest.
On April 30, 2004 the Company entered into a loan agreement with an Investment Company to borrow $100,000 at 10% interest due December 31, 2004. The note is unsecured. The balance on this note at December 31, 2005 and December 31, 2004 was $100,000 plus accrued interest.
On July 13, 2004 the Company entered into a loan agreement with an Investment Company to borrow $20,000 at 10% interest due January 15, 2005. The note is unsecured. The balance on this note at December 31, 2005 and December 31, 2004 was $20,000 plus accrued interest.
On August 23, 2005 the Company entered into a loan agreement with an individual to borrow $35,000 at 12% interest due February 23, 2006. The note is unsecured. The balance on this note at December 31, 2005 and December 31, 2004 was $35,000 and $0 plus accrued interest respectively.
On August 23, 2005 the Company entered into a loan agreement with an Investment Company to borrow $15,000 at 12% interest due February 23, 2006. The note is unsecured. The balance on this note at December 31, 2005 and December 31, 2004 was $15,000 and $0 plus accrued interest respectively.
All notes are in default, payment was not made on notes stated due dates. The Company has not received any notices of default.
NOTE 3 - STOCKHOLDERS’ EQUITY
Preferred Stock:
At December 31, 2005 and December 31, 2004, the Company had 10,000,000 shares authorized of convertible preferred stock with a par value of $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, 2005 and December 31, 2004.
Common Stock:
At December 31, 2005 and December 31, 2004 the Company had 100,000,000 shares authorized common stock with a par value of $0.001 per share. There were 49,815,018 and 40,815,018 shares outstanding at December 31, 2005 and December 31, 2004 respectively.
NOTE 4 - COMMITMENTS
The Company rents its present shared office space on a month to month basis. The Company expects to continue on that basis in 2006. Rent expense through December 31, 2005 and December 31, 2004 was $14,815 and $7,845 respectively.
EarthBlock Technologies, Inc. and Subsidiary
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 5 - RELATED PARTIES
The Company owed its officers who are also shareholders $706,440 and $597,440 in accrued wages at December 31, 2005 and December 31, 2004 respectively. There are no other amounts due to or from these shareholder officers. The Company entered into employment agreements with its three officers. The agreements are identical. The agreements are for three years, call for annual wages of $120,000 each, with an annual inflation adjustment. The agreements also provide for twelve paid holidays, seven paid personal days and fifteen paid vacation days annually. In addition the Company is to provide $500,000 of group live insurance for each officer, at no cost. The agreements expired in June 2005.
NOTE 6 - GOING CONCERN
The Company has not generated significant revenues or profits to date. This factor among others raises considerable doubt the Company will be able 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 may result from the outcome of this uncertainty. Managements plans to relieve these problems by continuing to raise working capital either through stock sales or loans.
-F11-
