Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. Yes X No ___ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of 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. |X| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes____ No X The issuer's revenues for its most recent fiscal year were $0. State the aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the price at which the common equity was sold, or the average bid and ask prices of such common equity, as of a specified date within the past 60 days. The aggregate market value of our common shares held by non-affiliates of the registrant on April 14, 2008 was approximately $222,799. As of April 14, 2008, the Issuer had 13,888,128 common shares, $.001 par value, outstanding and 974,156 preferred shares, $.001 par value, outstanding. Transitional Small Business Disclosure Format: Yes ____ No X 2 PART I Item 1. Description of Business Forward-Looking Statements -------------------------- This document contains forward-looking statements, including statements regarding the Company's strategy, plans for growth and anticipated sources of capital and revenue. The Company's actual results may differ dramatically from those anticipated in these forward-looking statements. The differences may be result from one or more of the risk factors described below or from events that we have not foreseen. Risk Factors - Leisure Direct has very limited financial resources. In order to implement our business plan we will have to raise capital. If we are unsuccessful in raising capital, our business will not grow. - Because of its limited operating history, Leisure Direct has little historical financial data on which to base its plans for future operations. Management will have to budget capital investment and expenses based, in large part, on its expectation of future revenues. If those expectations are not met, Leisure Direct may exhaust its capital resources before it achieves operational stability. - The pool and spa industry is highly competitive. We may be unable to compete effectively against well-known, well-capitalized competitors. - Only one member of our management team has any experience in the pool and spa industry. Successful implementation of our business plan will require that we recruit individuals who can expand our expertise in the industry. We may not be able to recruit such individuals. Corporate Strategy ------------------ It is the mission of the Leisure Direct, Inc. ("Leisure Direct" or "LDI") to become a premier, high quality and nationally recognized manufacturer and direct marketer of pool, spa (commonly known as "hot tubs") and patio products in the United States. LDI also intends to increase its product line to include a wider range of backyard entertainment products for cross selling opportunities in conjunction with its core products. Leisure Direct will implement its strategy through first building a direct marketing distribution network through consolidation by acquiring existing dealers of competing products and converting each location to direct sales points of Leisure Direct's products. The next step will be to acquire existing manufacturers of other backyard entertainment products and marketing these products through the same distribution channel. 3 The total pool and spa industry is a multi-billion dollar per year industry. The retail channels in this industry are extremely fragmented with only a few companies having any sort of nationwide presence. This fragmentation of product distribution channels and retail outlets creates the ideal opportunity for funneling and directing consumer demand with a direct marketing approach. In broad terms, Leisure Direct's strategy is to be a manufacturer and retailer of outdoor, backyard recreational products that will be able to deliver its products directly to its customers nationwide. Leisure Direct intends to expand its product line to include a greater variety of outdoor home entertainment products. Leisure Direct intends to achieve consolidation by acquiring a selected number of pool and spa dealers and then converting these dealers into Customer Service Centers that market LDI products directly to the consumer. The outcome will be a significant increase in the distribution system for Leisure Direct's products. This strategy will also cause the transformation of Leisure Direct from a manufacturer of leisure products to a manufacturer and direct marketer of these products. Concurrently, Leisure Direct will utilize a multi-media marketing strategy (print advertising, direct mail, radio and TV, mall kiosks, and the Internet) to stimulate sales of a wide range of outdoor recreational products, and to provide information to dealers and consumers regarding Leisure Direct's products, with the goal of driving consumers to company-owned customer service centers. The result will be a direct marketing manufacturing company that has control of its distribution network, while at the same time is increasing its product offerings to include those of other manufacturers. Current Business Operations --------------------------- LDI is in the business of selling above ground pools which it manufactures. The pools that the Company sells are made of wood and steel. These pools serve the middle price points of the swimming pool market. The Company's distribution channel currently involves selling its products to retail dealers of pools and spas. These retail dealers then sell the Company's products to the ultimate consumer of the products. Approximately 25% of LDI's sales were made to Springfield TERRA-FIRMA Properties, Ltd., to whom we have licensed the right to operate as "Olympic Pools." LDI has many suppliers for the inputs that are used in the production of its pools. As such, LDI is not dependent upon any single supplier for its inventory. 4 The competitors of LDI are very fragmented. There are several national manufacturers of very low-end above-ground swimming pools; however, these manufacturers are not direct competitors because of the price points at which their pools sell. There are no national manufacturers of above ground swimming pools that compete at the same price points as the pools that LDI produces. The manufacturers of above ground swimming pools are mostly local in nature. The prices of the pools produced by the Company are competitive with these producers. Overall, the Company produces pools that sell in the mid-range price points. Pools at the low end of the price range are typically aluminum or plastic above ground pools, and are priced from a few hundred dollars to several thousand dollars. Pools at the mid-range price points also tend to be above ground. However, these pools tend to be more substantial in nature, and are made of wood and steel, and have decking and fencing attached to the pool. The price points for these types of pools range from $4,000 to $20,000. At the higher end of the market are in ground, i.e. pools in which the entire structure is below ground level. The price points for these pools range begin at $15,000. The most common in ground pools sell from $20,000 to $40,000. The sale of swimming pools is a very seasonal business, with most sales taking place between May and August. Generally, small backlogs develop in June and July. However, the Company is still able to deliver its product within 5 to 7 days of taking an order. As the Company grows, it will be able to maintain this delivery model. The pools produced by the Company are modular in nature. Therefore, the Company needs to maintain adequate levels of each modular unit, as opposed to individualized pools. With its acquisition of Avalon, Ltd. In July 2004, LDI became a direct importer and wholesaler of wicker baskets, home decorating and home & garden products. Avalon is well known in its industry as a reliable supplier of product with outstanding customer service. For many years, Avalon had concentrated on the sale of wicker baskets, and related products, for home decorating and gift packaging. In recent years, Avalon has increased its product offering to include a greater array of furniture, home decorating and home & garden products. These latter products carry higher margins and a wider customer appeal. Additionally, Avalon's peak selling seasons are counter-seasonal to those in the pool and spa industry. Personnel --------- Two of LDI's principal's, John R. Ayling, Chairman and CEO, Robert Dapper, President, spent a material amount of time working on behalf of the Company during the year. The company expects to hire from time to time, independent consultants and contractors during the stages of implementing our business plan. Because of the seasonal nature of the pool business, the Company can meet its operating needs with seasonal labor. As the Company grows, it will develop a group of full time employees that will be supplemented with seasonal labor. 5 Item 2. Description of Property The Company's executive offices are currently located at 1070 Commerce Drive, Building II, Suite 303, Perrysburg, Ohio 43551. The Company shares a portion of an office complex located at this address with Capital First Corporation, a shareholder of the Company. The Company currently pays rent of $2,500 under a sublease agreement with Capital First for this location. Item 3. Legal Proceedings None Item 4. Submission of Matters to a Vote of Security Holders None. PART II Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Small Business Issuer Purchases of Equity Securities (a) Market Information The Company's common stock has been quoted on the OTC Bulletin Board under the symbol "LDTI" since September 27, 2004. Prior to that date, the Company's common stock was quoted on the Pink Sheets, beginning on August 2, 2004. Set forth below are the high and low bid prices for the fiscal quarters, 2006, since quotes were first posted. The reported bid quotations reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions. Quarter Ended High Bid Low Bid ------------- -------- ------- December 31, 2007 $ .12 $ .04 September 30, 2007 $ .07 $ .04 June 30, 2007 $ .13 $ .04 March 31, 2007 $ .14 $ .04 December 31, 2006 $ .07 $ .06 September 30, 2006 $ .06 $ .04 June 30, 2006 $ .12 $ .12 March 31, 2006 $ .205 $ .15 (b) Shareholders On April 14, 2008, there were 165 holders of record of the Company's common stock. (c) Dividends 6 The Company has not paid cash dividends since inception. The Company intends to retain all of its earnings, if any, for use in its business and does not anticipate paying any cash dividends in the foreseeable future. The payment of any future dividends will be at the discretion of the board of directors and will depend upon a number of factors, including future earnings, the success of the company's business activities, capital requirements, the general financial condition and future prospects of the company, general business conditions and such other factors as the board of directors may deem relevant. (d) Recent Sales of Unregistered Securities The Company did not sell any securities during the 4th quarter of 2007 that were not registered under the Securities Act. (e) Repurchase of Equity Securities The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Act during the 4th quarter of 2007. Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations For the years ended December 31, 2007 and 2006 LDI had revenues of $0. LDI had a working capital shortage throughout 2007 and did not emphasize current operations. Because of the several acquisition opportunities available to LDI, management elected to devote all of it's time seeking financing partners for these acquisitions. LDI's gross margin was 0 in both 2007 and 2006. There was no gross margins due to focus on acquisition funding fixed expenses, including depreciation expenses payment of rent on facilities and the write off of professional services rendered in cultivating investment capital. During 2007 LDI incurred general and administrative expenses of $481,509 compared to $880,311 in 2006. The primary drivers were impairment expense, salaries and wages, rent, management fees, professional fees and consulting expenses for the change in general and administrative expenses. Of the $87,855 in salaries $60,250 was paid in the form of common stock. The Company's operating loss for 2007 was $406,645 compared to $1,063,354 in 2006. While a majority of the 2007 operating loss stems from the charge from the financing transaction, funding of the company came from loans from LDI's principal shareholders. 7 The Company had a loss for tax purposes in 2007 and 2006. The Company did not recognize a deferred tax asset for tax loss carry forwards as the Company can not determine when, if ever, it will be able to use the tax loss carry forwards. Liquidity and Capital Resources The Company has no available cash balances. The depletion of cash was primarily attributable to the operating losses incurred during the year. LDI had a working capital deficit of $2,441,679 at December 31, 2007. Although more than half of the debts that produce the deficit are owed to shareholders and are, therefore, friendly, the remainder is primarily owed to the vendors. Our inability to make timely payments makes it difficult for us to obtain preferential pricing. LDI will require additional capital to remedy its working capital deficit, as well as to implement its business plan. We are currently seeking sources of capital, either from the sale of our securities or incurring of debt. Without additional capital, LDI will have to curtail its operations, and it will not be able to implement its business plan. LDI does not have any arrangements with investment banking firms or institutional lenders, but is relying on the experience of its Chairman to establish relationships with sources of capital. In the event that additional funding is not procured, possible outcomes to LDI's lack of liquidity include voluntary or involuntary bankruptcy filing, or voluntary liquidation of the company. Application of Critical Accounting Policies In preparing our financial statements we are required to formulate working policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for 2007, there was one estimate made which was (a) subject to a high degree of uncertainty and (b) material to our results. This estimate was our determination, detailed in the Footnotes to the Financial Statements on Income Taxes, that we should record a valuation allowance for the full value of the deferred tax asset created by our net operating loss carry forward. The primary reason for the determination was our lack of certainty as to whether Leisure Direct will carry on profitable operations in the future. We made no material changes to our critical accounting policies in connection with the preparation of financial statements for 2007. Impact of Accounting Pronouncements There were no recent accounting pronouncements that have had or are likely to have a material effect on the Company's financial position or results of operations. 8 Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations. Item 7. Financial Statements and Supplementary Data The financial statements of the Company, together with notes and the Report of Independent Certified Public Accountants, are set forth immediately following Item 14 of this Form 10-KSB. Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 8A. Controls and Procedures Management of the Company has evaluated, with the participation of the Chief Executive Officer of the Company, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the fiscal year covered by this Annual Report on Form 10-KSB. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of the Company have concluded that the Company's disclosure controls and procedures as of the end of the fiscal year covered by this Annual Report on Form 10-KSB are effective to provide reasonable assurance the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that the information required to be disclosed in the reports is accumulated and communicated to management, including our Chief Executive Officer to allow timely decisions regarding required disclosure. We did however identify a material weakness as defined in Public Accounting Oversight Board Standard No. 2 in our internal control over financial reporting. Our auditors have identified the following material weaknesses in our internal controls as of December 31, 2007 and December 31, 2006: A material weakness in the Company's internal controls exists in that there is limited segregation of duties amongst the Company's employees with respect to the Company's preparation and review of the Company's financial statements. This 9 material weakness is a result of the Company's limited number of personnel. This material weakness may affect management's ability to effectively review and analyze elements of the financial statement closing process and prepare financial statements in accordance with U.S. GAAP. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report. Our registered public accounting firm will be required to attest to our management's assessment of internal control over financial reporting beginning with our annual report for the year ended December 31, 2008. CHANGES IN INTERNAL CONTROLS. Management of the Company has evaluated, with the participation of the Chief Executive Officer of the Company, any change in the Company's internal control over financial reporting (s defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year covered by this Annual Report on Form 10-KSB. There was no change in the Company's internal control over financial reporting identified in that evaluation that occurred during the fiscal year covered by this Annual Report on Form 10-KSB that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting, other than what has been reported above. RISK FACTOR RELATED TO CONTROLS AND PROCEDURES The Company has limited segregation of duties amongst its employees with respect to the Company's preparation and review of the Company's financial statements due to the limited number of employees, which is a material weakness in internal controls, and if the Company fails to maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in the Company's financial reporting which could harm the trading price of the Company's stock. Effective internal controls are necessary for the Company to provide reliable financial reports and prevent fraud. Inferior internal controls could cause investors to lose confidence in the Company's reported financial information, which could have a negative financial effect on the trading price of the Company's stock. Management has found it necessary to limit the Company's administrative staffing in order to conserve cash, until the Company's level of business activity increases. As a result, there is very limited segregation of duties amongst the administrative employees, and the Company its independent public accounting firm has identified this as a material weakness in the Company's internal controls. The Company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist. Despite the limited number of administrative employees and limited segregation of duties, management believes that the Company's administrative employees are capable of following its disclosure controls and procedures effectively. 10 There have been no significant changes in the Company's internal controls or in other factors that could significantly affect those controls subsequent to the date on which Mr. Ayling performed his evaluation. PART III Item 9. Directors and Executive Officers of the Registrant The persons listed below are the current directors and officers of the Company: Director Name Age Position Since ---- --- -------- -------- John R. Ayling 64 CEO and Director (Chairman of the Board) 2004 Robert Dapper 42 President 2007 John R. Ayling -CEO and Chairman of the Board. John R. Ayling, 64, has been CEO of the Company since October of 2003. Since 1989 to present, he has served as President of Capital First Management, Inc., a Perrysburg, Ohio money management firm. From 1983 to 1988, he served as a Vice President at Otherwise Securities. From 1969 to 1982, he managed accounts for individuals and institutions with Bell & Beckwith, a Toledo, Ohio financial investment broker. Mr. Ayling is a NASD registered representative and holds Series 7, 24 and 63 licenses. From 1966 to 1968, he served as a Captain with the U.S. Army, and served in Vietnam as a company commander with the 23rd Infantry, American Division. Mr. Ayling has helped launch several start-up operations and financed several business enterprises and provided management support and development for all phases of management, with an emphasis on business integration and financial controls. Robert Dapper, 42, became President of Leisure Direct in May, 2007. Mr. Dapper is the founder of Royal Spa Manufacturing, based in Indianapolis, IN. He started Royal Spas as an engineering student at Purdue University and incorporated in 1983, and has grown the company to one of the most successful spa manufacturing and distribution companies in the industry, with its wholly owned stores, and over 60 affiliated dealers in 17 states. AUDIT COMMITTEE The Board of Directors has not appointed an Audit Committee of the Board. The Board of Directors has determined that John R. Ayling is qualified to serve as an "audit committee financial expert", as defined in the Regulations of the Securities and Exchange Commission, by reason of his work and educational experience. Mr. Ayling is not an "independent director", as defined in the Regulations of the Securities and Exchange Commission. 11 CODE OF ETHICS The Company has not adopted a written code of ethics applicable to executive officers. The Board of Directors has determined that a code of ethics is not needed at this time due to the relatively small number of members of management. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT None of the directors, officers, or beneficial owners of more than 10% of our common stock failed to file on a timely basis reports required during 2004 by Section 16(a) of the Exchange Act. Item 10. Executive Compensation In 2007, no officer or director received any cash compensation from the Company. In 2007, the Company agreed to pay Mr. Ayling salary of $120,000 per year. This table itemizes the compensation we paid to John Ayling, who served as our Chief Executive Officer during 2007. There was no other officer whose salary and bonus for services rendered during the year ended December 31, 2007 exceeded $100,000. Compensation Year Salary Stock Grant ---- ------ ----------- John Ayling....... 2007 $120,000 0 2006 $120,000 0 The following tables set forth certain information regarding the stock options acquired by the Company's Chief Executive Officer during the year ended December 31, 2007 and those options held by him on December 31, 2007. <TABLE> <CAPTION> Option Grants in the Last Fiscal Year ------------------------------------- Percent of total Potential realizable Number of options value at assumed securities granted to annual rates of underlying employees Exercise appreciation of option in fiscal Price Expiration for option term Name granted year ($/share) Date 5% 10% ---- ------------ ----------- --------- ---------- -------- --------- <S> <C> <C> <C> <C> <C> <C> John Ayling 48,000 .50 5 years </TABLE> 12 Aggregated Fiscal Year-End Option Values ---------------------------------------- Value of Number of securities underlying unexercised in-the-money unexercised options at fiscal options at fiscal year-end Name year-end (#) (All exercisable) ($) (All exercisable) ------------ ------------------------------ -------------------------- John Ayling 0 0 Item 11. Security Ownership of Certain Beneficial Owners and Management The following table shows the beneficial shareholdings of the Company's officers and directors and the holders of 5% or more of the Company's outstanding voting securities as of 12/31/07. Amount and Nature of Percentage Name and Address Beneficial of Common of Beneficial Owner(1) Ownership(2) Ownership ------------------------------------------------------------------------------- John R. Ayling 2,161,847(3) 15.5% 974,156 100.0% All Officers and Directors As a Group (2 persons) 2,161,847(3) 15.5% DABE Inc 1,028,410(3) 7.4% Capital First Corporation, LLC 974,156 100.0% Olympic Pools, Inc. 1,133,437 8.1% ------------------------------------ (1) The address of Mr. Ayling is c/o Leisure Direct, Inc., 1070 Commerce Drive, Building II, Suite 303, Perrysburg, OH 43551 (2) All shares are owned of record unless otherwise indicated. 13 (3) The shares beneficially owned by Mr. Ayling include 974,156 preferred shares owned by Capital First Corporation, LLC, and 1,133,437 shares owned by Olympic Pools, Inc., and 1,028,410 shares owned by DABE, Inc. all of which are owned and managed by Mr. Ayling. Item 12. Certain Relationships and Related Transactions During 2007 and 2006, the Company paid expenses of Olympic Pools, Inc. (OPI). OPI is a shareholder of the Company. PCPI is wholly owned by John Ayling, President and Chairman of the Company. The Company is indebted to OPI for loans made to the Company. During 2007 and 2006, the Company issued demand notes, net, in the amount of $0 and $36,579, respectively payable to DABE, Inc., with interest accruing at a rate of 10% per annum, computed on a 360-day basis. Any and all of these notes are guaranteed by a security interest in all present and hereafter acquired inventory, receivables, equipment, general intangibles, chattel paper, documents and contract rights of the Company as collateral. Mr. Ayling is the sole shareholder of DABE, Inc. On August 2, 2006 the company issued 1,028,410 shared of common stock in lieu of interest expense on these loans in payment of $103,638 in accrued interest. As of December 31, 2006, the Company has made advances totaling $7,000 to Ernie Stevens, an officer of the Company. PART IV Item 13. Exhibit List and Reports on Form 8-K (a) Financial Statements Independent Auditors' Report Balance Sheet Statements of Operations Statements of Changes in Stockholders' Equity Statements of Cash Flows Notes to the Financial Statements 14 (b) Exhibits Incorporated By Exhibit Reference from No. in Number Description Document Document 3.1 Certificate of Incorporation A 3.1 3.2 Bylaws A 3.2 4.1 Form of Common Stock Certificate A 4.1 31 Rule 13a-14(a) Certification 32 Rule 13a-14(b) Certification A. Registrant's Registration Statement on Form SB-2 (Registration Statement No. 333-53186). (c) Reports on Form 8-K. None. Item 14. Principal Accountant Fees and Services Audit Fees Rosenberg Rich Baker Berman & Co. billed $40,500 and $41,050 to the Company for professional services rendered for the audit of our 2007 and 2006 financial statements and review of the financial statements included in our 10-QSB and 10-KSB filings for the four quarters of 2007. Audit-Related Fees Rosenberg Rich Baker Berman & Co. billed $0.00 to the Company in 2007 and 2006 for assurance and related services that are reasonably related to the performance of the 2007 audit or review of the quarterly financial statements. Tax Fees Rosenberg Rich Baker Berman & Co. billed $0.00 to the Company in 2007 and 2006 for professional services rendered for tax compliance, tax advice and tax planning. All Other Fees Rosenberg Rich Baker Berman & Co. billed $0.00 to the Company in 2007 and 2006 for services not described above. It is the policy of the Company's Board of Directors that all services other than audit, review or attest services, must be pre-approved by the Board of Directors. All of the services described above were approved by the Board of Directors. 15 Report of the Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Leisure Direct, Inc. We have audited the accompanying consolidated balance sheet of Leisure Direct, Inc. as of December 31, 2007 and the related consolidated statements of operations, changes in stockholder's impairment and cash flows for the years ended December 31, 2007 and 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards established by 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. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Leisure Direct, Inc. as of December 31, 2007 and the results of its operations, changes in shareholder's equity and cash flows for the years ended December 31, 2007 and 2006 in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that Leisure Direct, Inc. will continue as a going concern. As more fully described in the notes to the consolidated financial statements, the company has suffered recurring losses from operations and has a working capital deficiency as of December 31, 2007. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in the notes. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Rosenberg Rich Baker Berman & Company Bridgewater, New Jersey April 14, 2008 16 Leisure Direct, Inc. Consolidated Balance Sheet December 31, 2007 Assets Total Assets $ - ================ Liabilities and Stockholder's Impairment Current Liabilities Accounts payable and accrued expenses 1,147,195 Accrued interest payable 120,258 Accrued interest payable - related parties 152,058 Promissory notes payable 178,940 Promissory notes payable - related parties 843,228 ---------------- Total Current Liabilities 2,441,679 ---------------- Stockholders' Impairment Common stock, par value $0.001; 100,000,000 shares authorized 13,888,128 shares issued and outstanding 13,888 Preferred stock, par value $0.001; 10,000,000 shares authorized 974,156 shares issued and outstanding 9,742 Additional paid in capital 3,947,614 Accumulated deficit (6,412,923) ---------------- Total Stockholders' Impairment (2,441,679) ---------------- Total Liabilities and Stockholders' Impairment $ - ================ The attached notes are an integral part of these financial statements. 17 Leisure Direct, Inc. Consolidated Statements of Operations Year Ended December 31, ----------------------------------- 2007 2006 --------------- ---------------- Net Sales $ - $ - Cost of Goods Sold - - --------------- ---------------- Gross (Deficit) Profit - - --------------- ---------------- Selling, General & Administrative Expenses 481,509 880,311 --------------- ---------------- Operating Loss (481,509) (880,311) --------------- ---------------- Other Income (Expense) Interest Expense (104,704) (183,043) Gain(Loss) on impaired assets (113,442) - Gain on extinguished debt 293,010 - --------------- ---------------- Total Other Income (Expense) 74,864 (183,043) --------------- ---------------- Net Loss $ (406,645) $ (1,063 354) =============== ================ Loss per share, basic and diluted $ (.03) $ (.11) =============== ================ Weighted Average Common Shares Outstanding 13,163,094 10,016,394 =============== ================ The attached notes are an integral part of these financial statements. 18 <TABLE> <CAPTION> Leisure Direct, Inc. Consolidated Statement of Changes in Stockholders' Impairment Years Ended December 31, 2007 and 2006 Total Common Stock Preferred Stock Additional Stock- -------------------- ----------------- Paid in Retained Deferred Subscription Treasury Stock holders' Shares Amount Shares Amount Capital (Deficit) Consulting Receivable Shares Amount Impairment ---------- -------- -------- ------- ---------- ----------- ---------- ------------ ------ ------ ----------- <S> <C> <C> <C> <C> Balance - January 1, 2006 17,368,573 $ 17,368 974,156 $ 9,742 $4,677,091 $(4,942,924) $ (189,504) $ (1,312,500) $ - $(1,750,469) ---------- -------- -------- ------- ---------- ----------- ---------- ------------ ------ ------ ------------ Repayment of related party interest 1,028,410 1,028 112,097 - - - 113,125 Shares issued for payment of wages 800,000 800 66,200 - - 67,000 Shares issued for services 888,408 889 159,542 - (97,390) - 63,041 Options issued for services 68,150 - (58,350) - 9,800 Shares issued as collateral on note payable 400,000 400 (400) - - - - Amortization of consulting fees 284,192 284,192 Impaired Prepaid Subscrip- tion - - (1,312,500) - - 1,312,500 - - Exercised Options 100,000 100 8,900 9,000 Net loss, 2006 - - - (1,063,354) - (1,063,354) ---------- -------- -------- ------- ---------- ----------- ---------- ------------ ------ ------ ------------ Balance - December 31, 2006 10,843,828 $ 10,843 974,156 $ 9,742 $3,779,080 $(6,006,278) $ (61,052) $ - $ - $(2,267,665) ========== ======== ======== ======== ========== =========== ========== ============ ====== ====== ============ Repayment of related party interest 1,464,300 1,465 73,216 - - - 74,681 Shares issued for payment of wages 1,250,000 1,250 59,548 - - 60,798 Shares issued for services 330,000 330 25,970 - (5,600) - 20,700 Amortization of consulting fees 66,652 66,652 Employee stock options - - 9,800 - - - 9,800 Net loss, 2007 - - (406,645) - (406,645) ---------- -------- -------- ------- ---------- ----------- ---------- ------------ ------- ------ ----------- Balance - December 31, 2007 13,888,128 $ 13,888 974,156 $ 9,742 $3,947,614 $(6,412,923) $ - $ - - $ - $(2,441,679) ========== ======== ======== ======= ========== =========== ========== ============ ====== ====== ============ The attached notes are an integral part of these financial statements. 19 </TABLE> Leisure Direct, Inc. Consolidated Statements of Cash Flows Year Ended December 31, ----------------------------------- 2007 2006 --------------- ---------------- Cash Flows From Operating Activities: Net Loss $ (406,645) $ (1,063,354) Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities: Amortization of consulting fees 66,652 284,192 Impairment of equipment 113,442 - Gain on extinguishment of debt (293,010) - Depreciation and amortization - 44,792 Shares issued for services and interest on note 91,299 139,841 Changes in Operating Assets and Liabilities Accounts payable and accrued expenses 234,334 385,529 Accrued interest payable - related party notes 66,788 Accrued interest payable 37,155 --------------- ---------------- Net Cash Used by Operating Activities (89,985) (209,000) --------------- ---------------- Cash Flows From Financing Activities Proceeds from notes payable 139,942 283,545 Proceeds from third party note 15,000 Repayment of notes payable - (84,182) Cash received from exercise of warrants/options - 9,000 Repayment of related party note (64,957) - --------------- ---------------- Net Cash Provided by Financing Activities 89,985 208,363 --------------- ---------------- Net Decrease in Cash and Equivalents - (637) Cash and Equivalents at Beginning of Year - 637 --------------- ---------------- Cash and Equivalents at End of Year $ - $ - =============== ================ The attached notes are an integral part of these financial statements. 20 Leisure Direct, Inc. Consolidated Statements of Cash Flows 2007 2006 --------------- ---------------- Supplemental Disclosure of Cash Flow Information: Cash paid during the year for: Interest - - --------------- ---------------- Income taxes - - --------------- ---------------- Supplemental Disclosure of Non-Cash Investing and Financing Activities: Common conversion into preferred shares $ $ 9,142 =============== ================ Shares issued in settlement of notes and accounts payable 74,680 113,125 =============== ================ Shares issued for subscription receivable (1,312,500) =============== ================ Shares issued for deferred financing fees 155,740 =============== ================ The attached notes are an integral part of these financial statements. 21 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Organization Leisure Direct, Inc. (the Company), formerly known as ePoolSpas.com, Inc., was formed on January 1, 2000. The formation was effected by the issuance of 1,750,000 shares of the Company's common stock for the intangible assets of the former operating companies, Olympic Pools, Inc. (OPI) and Preferred Concrete Placement, Inc (PCPI). The Company is located in Perrysburg, Ohio, and currently operates under the trade name Olympic Manufacturing Company. The Company manufactures and assembles components of above ground pools. Fair Value of Financial Instruments The fair values of cash, accounts receivable, accounts payable and other short-term obligations approximate their carrying values because of the short-term maturity of these financial instruments. The carrying values of the Company's long-term obligations approximate their fair value. In accordance with Statement of Financial Accounting Standards No. 107, "Disclosure About Fair Value of Financial Instruments," rates available to the Company at balance sheet dates are used to estimate the fair value of existing debt. Cash and Equivalents For the purpose of the statements of cash flows, cash equivalents include time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. Revenue Recognition Sales revenue is recognized when the product is delivered to the customer and the resulting receivable is deemed probable of collection. Income Taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences for financial and income tax reporting related to net operating losses that are available to offset future federal and state income taxes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. 22 Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Stock-Based Compensation On July 26, 2004 the Company's Board of Directors adopted the 2004 Employee/Consultant Stock Compensation Plan (the "Plan"). The Plan was established to further the growth of the Company by allowing the Company to compensate employees, consultants and other persons who provide bona-fide services to the Company through the award of Common Stock. The Board of Directors, at its discretion, is authorized to compensate eligible employees and consultants up to an aggregate of 1,500,000 shares. The Company issued 3,044,300 and 1,688,408 shares under the plan in 2007 and 2006, respectively. Net Loss Per Share Loss per share, in accordance with the provisions of Financial Accounting Standards Board No. 128, "Earnings Per Share," is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The effect of assuming the exchange of any stock options, warrants and convertible notes would be anti-dilutive as of December 31, 2007 and 2006. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a loss of $406,645 and $1,063,354 during the years ended December 31, 2007 and 2006, respectively. Also, as of December 31, 2007, the Company only had $0 in cash, and current liabilities exceeded current assets by $2,441,679. These factors all raise substantial doubt about the ability of the Company to continue as a going concern. Due to these conditions, the auditors have issued a going concern note. Management's plans include raising additional funding from debt and equity transactions that will be used to acquire additional point of sale outlets that should in turn increase sales. Also, the implementation of strong cost management practices and an increased focus on business development should result in the elimination of the operating losses suffered and improvement of cash flows. However, any results of the Company's plans cannot be assumed. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. 23 3. PROPERTY AND EQUIPMENT At December 31, 2007, the Company recorded $113,442 in impairment expense. The equipment was considered fully impaired due to lack of use for over two years. 4. NOTES PAYABLE - RELATED PARTIES Notes payable - related parties at December 31, 2007 consist of the following: Notes payable - DABE, Inc. - with interest accruing at 10% per annum. The notes are guaranteed by a security interest in inventory, receivables, intangibles, chattel paper and contract rights. John Ayling, the CEO of Leisure Direct, Inc. is the sole shareholder of DABE, Inc. $ 343,652 Note payable - Capital First Management LLC - unsecured, non-interest bearing and due on demand. John Ayling, the CEO Leisure Direct, Inc. is the sole member of Capital First Management Company, LLC. 180,650 Notes payable - President. The president has advanced $290,000 with various notes bearing interest at 12%. 290,000 Notes payable - OPI, PCPI; OMC and LD LLC - non-interest Bearing and due on demand. John Ayling, the CEO of Leisure Direct, Inc., is the sole member of OPI & PCPI. 28,926 ---------------- $ 843,228 ================ The Company leases it principle offices from a company that is owned solely by the principal shareholder of Leisure Direct. The month to month lease calls for monthly payments of $2,500. Operations were charged with rental expense of $30,000 in both 2007 and 2006. 24 5. PROMISSORY NOTES PAYABLE Notes payable at December 31, 2007 consist of the following: Notes payable - on September 9, 2001, the Company borrowed $100,000 bearing interest at 30% due March 9, 2006. Additionally, the lender was issued 100,000 shares valued at $41,176. The loan is currently in default. $ 100,000 Note payable - individual unsecured bearing interest at 6% Payment was due March 24, 2008 in full plus unpaid interest. The note is currently in default 15,000 Notes payable - Bank - line of credit of $25,000 bearing interest at prime plus 6 1/2%. The loan is currently in default as of March 1, 2006. 11,897 Notes payable - Individuals at 10% - 12% interest due on Demand. 52,043 ---------------- $ 178,940 ================ The promissory notes payable are notes with warrants attached. The notes accrue interest at a rate of 12% per annum and are currently in default. The warrants are exercisable at the option of the creditors, with 157,500 total shares potentially exercisable at the exercise price of 13 and 1/3 cents per share through the extended due date of the notes. 6. ROYALTIES PAYABLE Pursuant to the Asset Purchase Agreements entered into with OPI and PCPI, the Company is obligated to make royalty payments at a rate of 2% of Company revenues attributable to doing business as Olympic Manufacturing Company (due to OPI) and 1% of Company revenues attributable to doing business as Preferred Concrete Placement Company (due to PCPI) for the first two years of operations. At December 31, 2007, the balance of royalties payable is $24,652. 7. INCOME TAXES The differences between income tax provisions in the financial statements and the tax expense (benefit) computed at the U.S. Federal Statutory rate are as follows: Year Ended December 31, ----------------------------------- 2007 2006 --------------- ---------------- Tax provision at the U. S. Federal Statutory rate 34% 34% Valuation allowance (34)% (34)% --------------- ---------------- Effective tax rates -% -% =============== ================ The Company's provision for income taxes differs from applying the statutory U.S. federal income tax rate to income before income taxes. The primary differences result from recognition of net operating loss carry forwards and from deducting goodwill impairment/amortization expense for financial statement purposes but not for federal income tax purposes. 25 Those amounts have been presented in the Company's financial statements as follows: December 31, 2007 ---------------- Deferred tax asset, non-current $ 2,409,397 Total valuation allowance recognized for deferred taxes (2,409,397) ---------------- Net deferred tax asset $ - ================ The valuation allowance was established to reduce the net deferred tax asset to the amount that will more likely than not be realized. This reduction is necessary due to uncertainty of the Company's ability to utilize the net operating loss and tax credit carry forwards before they expire. The Company has available net operating loss carry forwards which may be used to reduce Federal and State taxable income and tax liabilities in future years as follows: Federal State --------------- ---------------- Available Through 2020 $ 413,465 $ 413,465 2021 262,952 262,952 2022 121,232 121,232 2023 127,017 127,017 2024 3,020,391 3,020,391 2025 1,014,436 1,014,436 2026 1,064,000 1,064,000 --------------- ---------------- Total $ 6,023,493 $ 6,023,493 =============== ================ 8. COMMITMENTS AND CONTINGENCIES During 2001, the Company's insurance policies were each cancelled for non-payment of premiums. These policies for general liability, commercial property and workers' compensation have not been reinstated. Given the above facts, the Company has potential exposure to loss at December 31, 2007 for which a reasonable estimate cannot be made. Management believes its potential liability with regard to product liability is mitigated based on the fact that the Company has had no such claims since inception and that OPI, the predecessor company, had no claims in the 20 years prior to acquisition by the Company. 26 As of December 31, 2007, the Company had liabilities for federal and state payroll taxes dating back to the year 2000. The Company owes approximately $260,380 for federal payroll taxes and approximately $38,000 for state and local payroll taxes. These past due amounts will continue to accrue interest and penalties as long as they remain unpaid. On April 14, 2000, the Company entered into a joint venture agreement with Springfield Terra-Firma Properties, LTD. (Springfield). Under the terms of the agreement, the Company grants a license to use the "Olympic" name and trademark and to use the term "Factory Outlet" in signage and advertising, so long as Springfield sells products manufactured by the Company at certain minimum quantities. Both parties may develop their own retail stores, with the Company having the right to invest in a new Springfield store at up to a 49% interest, while Springfield having the right of first refusal to manage a new store opened by the Company for a management fee. 9. COMMON STOCK WARRANTS A summary of the warrant activity for the two years ended December 31, 2006 is set forth below: Number of Weighted Average Warrants Exercise Price Outstanding at December 31, 2006 610,000 $ .063 Granted 0 .063 Exercised 0 .037 Cancelled or Expired (610,000) .063 --------------- ---------------- Outstanding at December 31, 2007 0 - 10. LITIGATION In 2006, John Leo has commenced action against the Company for outstanding obligations owed by the Company. The note and accrued interest payable are recognized within promissory notes payable. 27 11. SUBSEQUENT EVENTS The Company entered into a management consulting service agreement on January 2, 2008 to provide management consulting for a period of one year from the date of the agreement. As consideration the consultant shall receive 125,000 shares of common stock per month up to a maximum of 1,500,000 at a stated value of .04 per share plus out of pocket expenses. Additionally, the consultant has an option to purchase up to 1,000,000 of additional shares in blocks of 250,000 each based on a scheduled exercise price per share with varying expiration dates. The agreement may be terminated by either party prior to the expiration with a 30 day notice. In the event of a termination all unexercised options shall be cancelled. The Company entered into a complex consulting agreement on March 17, 2008 with another Company to provide services in the areas of Mergers and Acquisitions; Financial Restructuring and Investment Relations. In consideration the consultant shall receive 375,000 restricted Rule 144 common shares plus warrants for 1,000,000 common shares on a ladder basis between $.50 and $1.00 per share for up to three years. SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. LEISURE DIRECT, INC. (Registrant) Dated: April 14, 2008 By: /S/ John R. Ayling -------------------------- Name: John R. Ayling Title: Chairman and CEO Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name Title Date /S/ John R. Ayling Chairman & CEO, Director April 14, 2008 ------------------- John R. Ayling * * * * * 28 -------------------------------------------------------------------------------- </TEXT> </DOCUMENT>