UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
AMENDMENT I
GENERAL FORM FOR REGISTRATION OF SECURITIES
SMALL BUSINESS ISSUERS
UNDER SECTION 12 (b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
Marina Capital, Inc.
(Name of Small Business Issuer in its charter)
Utah 87-0554-016
.......................... ........................
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
2605 Wall Ave., Ogden, Utah 84401 (801) 394-2400
..................................... .........................
(Address of principal executive offices) (Issuer's Telephone Number)
Securities to be registered pursuant to section 12 (b) of the Act:
Title of each class Name of each exchange on which
each class is to be registered:
N/A N/A
................... ...................
Securities to be registered pursuant to section 12 (g) of the Act:
Title of each class Name of each exchange on which
each class is to be registered:
Common stock
..................... ...................
<PAGE>
Marina Capital, Inc.
FORM 10-SB
TABLE OF CONTENTS
PART I
Item 1 Description of Business...........................................3
Item 2 Management's Discussion and Analysis or Plan of Operation........15
Item 3 Properties.......................................................18
Item 4 Security Ownership of Certain Beneficial Owners and Management...18
Item 5 Directors and Executive Officers.................................19
Item 6 Executive Compensation...........................................21
Item 7 Certain Relationships and Related Transactions...................21
Item 8 Description of Securities........................................22
PART II
Item 1 Legal Proceedings................................................23
Item 2 Market Price of Securities and Dividends on the Registrant's
Common Equity and Other Shareholder Matters......................23
Item 3 Changes and Disagreements with Accountants.......................24
Item 4 Recent Sales of Unregistered Securities..........................24
Item 5 Indemnification of directors and Officers........................25
PART III
Item 1 Index to Exhibits................................................26
Item 2 Description of Exhibits..........................................27
PART IV
Item 1 Financial Statements.............................................27
Item 2 Financial Statements.............................................27
Item 3 Financial Statements and Exhibits................................27
2
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business
The Company Marina Capital, Inc. (the "Company") was incorporated in the
State of Utah on the 5th day of March, 1996, as a Subchapter-S Corporation.
The Subchapter-S Corporation election was terminated by the Company as of
January 1, 1997. The Company established a C-Corporation in place of the
Subchapter S Corporation on January 1, 1997. The Company is considered as
being in the development stage.
The Company is, and has been for the past three years, a development stage
Company that is in the business of real estate development, real estate
sales, mortgage brokering, land planing and business consulting. The Company
identifies and develops specific parcels of real property in various
locations within the State of Utah and other geographical locations. The
real property may be acquired through outright purchases, lease, options or
through other acceptable arrangements. In addition, the Company in some
instances may act as a lender, broker, marketer or business consultant for
other companies.
The Company is a development stage Company which is comprised of a group of
highly experienced professionals, specializing in real estate planning,
development, sales, mortgage banking, marketing, consulting, acquisitions and
business development. The management group has accumulated over 100 years of
combined experience in providing services in the areas of management,
accounting, advertising, marketing, land planning, legal, mortgage banking, real
estate sales, real estate development, and the raising of capital through equity
and debt financing. Thus the Company is uniquely structured to operate as a
real estate developer, broker, mortgage lender, principal, facilitator,
marketer, consulting and joint venture partner.
The Company specializes primarily in the development of real estate projects
and real estate sales in the State of Utah, but will consider other
geographical areas as opportunities arise. The Company develops its own
residential, recreational and commercial projects as well as provides
consulting and professional services for other developers.
The Company is also the manager of Marina Holdings, LLC, a Utah Limited
Liability Company and is the sole member. Marina Holding, LLC is the manager
of Shupe Williams Plaza, LLC, a Utah Limited Liability company. Shupe Williams
Plaza, LLC, is the owner (by Warranty Deed) of the Shupe Williams property
located at 2605 Wall Ave, Ogden, Utah.
The Company has several projects in various stages of development; however, most
of these projects are still in the planning and financing stages and major
development has not commenced. The Company has begun construction of the Shupe-
Williams building, but has not completed the build out or sales of the property.
3
<PAGE>
Divisions
The Company is composed of three (3) divisions: (a) Marina Capital Development
Services-land planning/engineering and consulting; (b) Marina Capital-real
estate sales and marketing, at this time, has generated a total sales volume of
$1,553,390 between twelve (12) properties representing $58,074 in commissions;
and (c) Marina Capital Mortgage-originating, processing and funding
construction and mortgage loans division, has not, as yet, been developed by the
Company. However, the Company proposes to develop this division in the year
2000.
The Company began its real estate sales business in January of 1997, opening
the Ogden, Utah office in March of 1997, and the San Francisco office in
April, 1998. The Company has four real estate sales associates and one
mortgage loan originator.
The Market
Utah's business growth over the past several years has been extensive.
With the selection of Salt Lake City as the site of the 2002 WINTER OLYMPIC
GAMES, the State's robust economy, job creation and excellent quality of
life, Utah continues to generate national attention. Such rapid economic
growth gives rise to continued real estate development and growth. Demand
for commercial, residential, and recreation property continues to outpace
supply, despite record breaking new construction and development.
The real estate market presents numerous opportunities. The Company has
positioned itself in such a way as to be able to take advantage of the
expected continued growth throughout the next decade, keeping in mind
environmental issues and concerns, as well as community needs and desires.
In the past decade, a large number of new high-technology companies have
commenced and prospered in the Salt Lake City - Provo - Ogden, Utah areas.
With these new endeavors has come a well-educated work force. Numerous
construction and service businesses have converted the area into a metro-plex
of nearly 2 million people. Utah's growth over the past several years has
been extensive. There are many indications that the growth will continue
over the next five years.
Employment. Utah's current employment boom is unprecedented in terms of the
number of years of continued growth and the rates of increase. In 1996,
Utah's job growth rate was 5.3 percent, ranking second among all states.
Utah's job growth rate has now equaled or exceeded 3.0% for nine (9)
consecutive years and exceeded 5.0% in four straight years. Never before in
Utah's post World War II economic history has employment increased at rates
this high for such a sustained period.
The expansion of private sector jobs has fueled Utah's recent economic
prosperity. Since 1986, Utah added 321,700 jobs, with 92% of the growth
occurring in the private sector. Private sector employment increased from
78% of total employment to 83%. The fastest growing segments have been in
the construction (6.6%), and services (6.4%) industries.
4
<PAGE>
Outlook. Utah's current economic prosperity is expected to continue through
1999 and beyond. Utah's young and educated work force, strong work ethic,
and low business costs help businesses succeed in Utah. The State government
has also successfully kept business taxes low and fostered a reasonable
regulatory environment. The substantial infrastructure investments slated
to occur during the next year, and subsequent years, will continue to
benefit the State's economy.
Perhaps the most important feature of the 1998 forecast has been the
prognosis for Utah's current construction boom, which is in its seventh year
of double-digit employment growth rates. The State Economic Coordinating
Committee expects construction to remain at historically high levels in 1999.
Construction projects of $25 million or more will proceed through 1999 which
includes such large projects as the reconstruction of Interstate 15,
completion of the Bangerter Highway, Light Rail, Snowbasin Ski Resort,
Kennecott Tailings Project the State Courts Complex, Huntsman Cancer
Institute, Orem Medical Center, the Central Utah Project, Micron's computer
Chip Factory, State of Utah Justice Center, American Towers and Gateway
buildings in downtown Salt Lake City, Thanksgiving Point, Orem Medical
Center, Weber Center, West Valley Hockey Arena, Salt Lake County Jail, Provo
One Freedom Center, Murray Corporate Center, Central Utah Project, Lake Park
Corporate Center, Proswood-Pegass Luxury Apartments, Geneva's Air Separation
plant, Danon's Yogurt Plant, and continuation of the I-15 Interstate
Expansions project.
The State Economic Coordinating Committee expects employment to grow at
about 4.2% in 1999. Population is forecast to increase at 2.1%, total wages,
8.5%, and personal income, 7.8%. Average wages are expected to grow faster
than inflation for the third consecutive year.
Utah's Long-Term Projections. The demographic attributes that have
characterized Utah in the past (the youthful and rapidly growing population)
are projected to continue well into the next century. The relative strength
of the economy is expected to continue as well, although there will be some
convergence with national demographic and economic trends. Utah's population
and employment growth rates are projected to continue to out-pace those of
the nation for the 1998 through 2020 period. Utah's population is projected
to reach 3.3 million by the year 2020. This rate of population growth will
be sustained by a rapid rate of natural increase and a strong and diversified
economy.
The majority of the new Utahns will reside along the Wasatch Front Range.
The most rapid rates of growth are expected in the counties in southwestern
Utah, Grand County, Summit County and Wasatch County.
Construction and Housing. Construction and Housing. In 1998 the combined value
of both residential and non-residential construction rose to 3.8 billion which
represented an approximate 2.1% increase over the previous year. In 1997, the
total construction value was approximately 3.72 billion, which represented an
8.1% increase over 1996.
In 1998, there were 21,743 new dwelling permits and in 1997, there were a total
of 20,687 new dwelling permits. In 1996, the value of construction rose 13.5%
to $3.5 billion in 1996 compared to $3.1 billion in 1995. Both residential and
nonresidential construction reached record levels during
5
<PAGE>
1996 with $2.1 billion in residential construction value and $1 billion non-
residential construction value being permitted. New dwelling share permits
reached a record level of 23,500. Population growth enhanced by net in-
migration, strong economic and job growth, low vacancy rates, and low mortgage
interest rates, all have contributed to this record year. Several large
projects contributed to the record year in nonresidential construction. These
include projects such as the $34.8 million library at Brigham Young University,
the $27 million Prime Option office building, and the $65 million Court Complex.
Housing prices in Utah over the past five years and in the most recent
12-month period have increased faster than any other State. From 1991 to
1997, Utah's house price index, as published by the Office of Federal
Housing Enterprise Oversight, increased by 72.7%. The house price index is
derived from repeat mortgage transactions on single-family homes whose
mortgages have been purchased by the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation. The median sales price of
an existing single family home in the third quarter of 1996 was $123,100 in
Utah and $120,500 for the national average. Home ownership in Utah in 1995
ranked seventh highest in the nation at 73.1%.
The economic statistics cited in this section were derived from the following
sources:
* National Geographic, January 1996 issue.
* Salt Lake City Chamber of Commerce annual issue of "Life In the Valley"
from 1996, 1997, and 1998.
* Ogden Chamber of Commerce 1997 magazine entitled "Ogden, Awaiting Your
Discovery," 1996 and 1997 "The Ogden Area and Weber County Community and
Business Profile" and 1996 "Ogden, This Is The Place."
* "Financial World Magazine" February 1997 issue.
* The State of Utah, Governor's Office of Planning and Budget, Demographic
and Economic Analysis---August 1994 "Estimated Economic and Fiscal Impacts
on Utah of the 2002 Winter Olympic Games."
In some instances the Company will seek to option land, obtain all the
necessary approvals to subdivide these properties, pre-sell lots, exercise
purchase options on land, construct the infrastructure (roads, water, sewer,
etc.) and pay all the development costs in the expectation of realizing a
profit. The Company may elect to sell projects at any time during the
approval and development stage to another purchaser if profits warrant an
early sale. In other instances, the Company may elect to finance other
developers for an equity participation and eventual profits. The Company may
also elect to participate in joint ventures with existing landowners rather than
an option or outright purchase of the properties. On selected projects, the
Company may elect to offer financing and participate in real estate and mortgage
lending. The Company proposes to be a fully integrated Real Estate and Business
Development Company with in-house experience in development, construction,
acquisition, marketing, legal, financing and management.
6
<PAGE>
PROJECTS
I. OlymPeak Estates
* Location: Ogden Valley, Utah, is four miles the from Snow Basin Ski
Resort which will be the site of the 2002 Olympic down hill events and
one (1) hour from the Salt Lake City International Airport.
* Use: Phase One-65 acres zoned for building lots subdivided into 22
view lots. The lots are priced from $155,000 to $358,000. As of the
date of this Registration Statement, twelve (12) lots have been
reserved at a sale price of between $155,000 to $358,000 per lot for
a total market value of approximately $995,000. The Company has
received deposits on these reserved lots in the amount of $176,000 and
the balances will be due upon closing, which is estimated to be mid
year, 2000.
* Phase Two-365 acres that will have an 18 hole destination golf course
and planned Residential Unit Development (PRUD) 135 single family
lots, 35 condominiums, commercial space.
* Financing Required: Phase one-$ 1.0 million - Phase Two, golf course
construction $4.0 to $6.0 million - Construct infrastructure - $5.0 to
8.0 million.
* Potential profit estimate: Phase one-$ 1.5 million ; Phase two - $10
to $15 million.
Phase One:
The OlymPeak Estate project consists of 22 view lots located in Ogden Valley
approximately four (4) miles from the Snow Basin Ski Resort.
Preliminary approval was obtained from Weber County on March 14, 1996. The
final approval will be subject to the State of Utah Engineer and Weber County
approval of the water and sewer system by the County.
The Company anticipates that final approval will be granted within three (3)
to six (6) months from the date of this Registration Statement. Upon
receiving the final approval construction on the roads, water and sewer
system will commence and will take approximately three (3) to six (6) months
to complete.
Twelve (12) of the lots have been reserved at a sale price between $155,000 to
$358,000 per lot.
The Company has prepared the necessary documentation to form a not for profit
Water and Sewer District to service the area. The documentation will be
submitted to the State of Utah Engineer for approval within the next ninety
(90) days.
The Company exercised its option to purchase the OlymPeak Estate property on
October 31, 1996 and entered into a five (5) year purchase agreement with
the Maughan Family Partnership.
7
<PAGE>
The Company executed a Trust Deed and Note for the balance of the purchase
price of $725,000. The original purchase price was $975,000. The terms of
the note are as follows: A five (5) year note, twenty (20) year amortization
schedule, with annual payments of $75,000 and a balloon payment at the end of
the five (5) year period for the balance. The Company is current with its
$75,221 payments due to the Maughan Family Partnership. There are two years
remaining on the five (5) year Agreement with a balance of $634,147 due in the
year 2001.
The Company proposes to spend approximately $1,000,000 in the construction of
roads, water and sewer system for Phase One.
Phase Two:
The OlymPeak Village project is a Planned Residential Unit Development (PRUD)
located on approximately 365 acres in Weber County, Utah. The current zoning
for the property is FR-3.
OlymPeak Village, is a destination resort, consisting of an 18 hole golf
course with clubhouse, commercial space, 145 single family view lots, and 35
condominium units.
The project will include two ski lifts and facilities to teach beginning skiers.
This project will cost approximately $ 15,000,000 to complete.
OlymPeak Village is located approximately four (4) miles from the Snow Basin
Ski Resort and three (3) miles from Pineview Reservoir. The site has views
of Mt. Ogden to the west, and Pineview Reservoir to the east.
The project will be serviced by water from the OlymPeak Estates water system
and by an aerated lagoon sewer system located on the property. The PRUD is a
cluster development which includes commercial development, single-family lots
and homes, golf and ski area plus open space. The costs for infrastructure will
be greatly reduced by clustering and can be further reduced by allowing
connections to third party lot owners along Snow Basin Road.
The Company proposes to identify a joint venture partner or seek financing
from conventional sources in order to finance Phase One and Phase Two of the
project.
II. Shupe-Williams Plaza
Location. Shupe-Williams Plaza at 26th Street and Wall Avenue near Historic
25th Street in downtown Ogden, Utah.
Description. The Shupe-Williams Plaza Building is a four-story building of
approximately 62,500 feet located on an 85,000 square foot building lot.
The building was built in 1902 and
8
<PAGE>
was used as a warehouse and candy manufacturing facility. The building has been
abandoned for 15 years.
Current Zoning. With the assistance of the City of Ogden, the property and
building have been zoned to accommodate both residential and commercial use.
Proposed Use. The Company is currently rehabbing the building and vacant lot.
The main floor will be converted into a restaurant, office and retail use.
The upper floors will be converted to Live/Work lofts. Six (6) penthouse
lofts will be constructed on top of the building.
Status. The Shupe-Williams Plaza property was conveyed to the Company by the
Ogden City Corporation and the Ogden City Developmental Agency on May 27,
1998. The total purchase price was $100.00. The City has also agreed to
rebate $250,000 in taxes, over a five-year period.
Estimated Revenue Phase One. $6,000,000 to $7,500,000.
Financing. The Company is in the process of financing the construction phase
and has made application with several financial brokers and institutions. The
first phase of construction was started in September of 1998. The Company
expects construction to be completed within twelve (12) to eighteen (18)
months after financing has been approved. The Company has started to pre-
sell and market the lofts. Currently 20 of the units have been reserved. A
trust account has been set up to hold reservation deposits until construction
of the building is complete. In addition, several Letters of Intent to lease
space have been received.
Recent and Significant Developments (Shupe-Williams Plaza)
The Company entered into a Real Estate Purchase Contract on October 8, 1997,
with the City of Ogden, Utah, and Ogden City Neighborhood Development Agency,
to purchase the Shupe-Williams Building located at 2605 Wall Avenue,
including the abandoned portion of 26th Street. The total purchase price was
one hundred dollars ($100.00). The City has also agreed to tax increment
rebates totaling $250,000. The rebate will be made to the Company over a five
(5) year period. The closing date on the building was May 27, 1998 at which
time fee simple title was conveyed to the Company.
An Agreement was entered into with the Land Development Group of Provo, Utah
to act as developer/consultants for the conversion of the old Shupe-Williams
candy manufacturing building. The building will be converted into a 45
Live/Work loft-condominium complex plus commercial and retail space. The
building was built in 1902, has four floors (approximately 62,500-sq. ft.)
on a two (2) acre lot. The proposed sale of the lofts is expected to
generate approximately $6,000,000 to $7,500,000 in revenue. The Land
Development Group has in the past, successfully converted buildings in
Houston, Texas; San Diego, California and Salt Lake City, Utah.
In February of 1999, negotiations were initiated with WADMAN INVESTMENTS L.L.C.
to form a joint venture development to construct a four seasons golf and ski
resort on property
9
<PAGE>
owned by both parties. In addition, an application has been applied for with
the Utah State Engineer to form a Water and Sewer District to be jointly managed
by WADMAN INVESTMENTS L.L.C. and the Company.
Project Funding
OlymPeak Estates:
The Company intends to fund the OlymPeak Estates Project by initially funding
the sale of the lots to qualified purchasers in-house. The Company will offer
to potential purchasers two financing options: 1) Requires a twenty-five
percent (25%) down payment, interest rate will be 3 points over prime with a 3
year balloon payment, a 20 year amortization schedule with a loan origination
fee of two (2) points. 2) Requires a fifty percent (50%) down payment, an
interest rate of two (2) points over prime, five (5) year balloon payment, 30
year amortization schedule with a loan origination fee of 1 1/2 points. Neither
option will carry a pre-payment penalty and they will be transferable upon
credit approval and a $300.00 fee. Total sales are estimated to be $4,848,000.
The anticipated costs will be $975,000 for land cost, $1,300,000 infrastructure
and $485,000 marketing for a net profit of $2,090,000. Twelve of the twenty-two
lots have been reserved.
Shupe-Williams Plaza:
The Company has made an application, and as of the Date of this Registration
Statement, is in negotiations for a $4 million construction loan for the Shupe-
Williams Project, through US Bank's Commercial Real Estate Division. The terms
are, prime + 1 1/2 points and the fees are 1 1/2 points for 24 months. The
advance rate is 75% of the appraisal or 85% of the cost.
Additionally, a loan submittal for an equity financing credit- line of
$5,000,000 - $5,500,000 has been pre-qualified by Kilpatrick & Hart, LTD., Inc.,
Financial Specialists. The Company is currently in negotiations to close this
credit-line under the following terms and conditions: 1) Purpose of Loan:
Renovations of property and building, construction, advertising, marketing, and
working/operating capital. 2) Interest Rate: 10% per annum. Fixed rate.
Interest only and may accrue. 3) Term: Five years, no prepayment penalty.
4) Investor's Fee: 2%-3% from proceeds at closing. "Due-diligence costs" to
be credited against fee payable upon funding; expenditures to be pre-approved
by borrower. 5) Collateral: If applicable, pledging of to-be-determined
percent of available company stock. 6) Equity Participation/Investor Internal
Rate of Return: To be determined upon completion of formal due-diligence and
mutually agreed upon by both parties prior to issuance of Firm Commitment to
funding. Subsequent to repayment of all principal and interest minimum Internal
Rate of Return 25% per annum, including 10% preferred return.
Business Opportunities
On May 15, 1996, the Company entered into a Letter of Understanding with VR
Utah, Inc., dba Business Resource Center. The Letter of Understanding sets
forth the terms whereby the parties can assist and co-operate with each other
from time to time in identifying business opportunities
10
<PAGE>
that may be of beneficial and financial interest to each party. VR Utah Inc.
was founded in Ogden, Utah in September, 1981, by William J. Tabar, who is
currently a director of the Company. VR Utah, Inc.'s purpose, as a business
broker, is to assist business owners in the sale and/or valuation of its
clients' businesses. It provides expertise in the valuation and marketing of
businesses. VR Utah, Inc. also provides guidance in the selection and purchase
for those clients desiring ownership of a business.
VR Utah, Inc. expanded in 1983 to include offices in downtown Salt Lake City
and Murray, Utah. In 1990, an additional location was opened in St. George,
Utah. Business Resource Center is a member of International Business Brokers
Association, which has over 800 members. Since its founding, VR Utah, Inc.
has brokered the sale of approximately one thousand businesses.
In many instances, VR Utah's clients and customers require consulting services.
The consultation may include financing options for equity, debt or a
combination of both. The Company may seek to assist businesses which have
recently commenced operations, development stage companies in need of
additional capital for expansion into new markets, businesses seeking to
develop a new product or service, and established businesses which may be
experiencing financial or operating difficulties and are in need of additional
capital. In addition to those businesses that VR Utah, Inc. may refer to the
Company, the Company believes that there are numerous other business entities
which will benefit from the infusion of capital. Thus, the Company believes
ample business opportunities exist outside the real estate area; however, as of
the date of this Registration Statement, the Company has not generated any
revenues from the VR Utah Business opportunity.
The Company proposes to charge a fee for business consulting services. The
compensation may be in the form of a consultation fee, an equity position in
the business or a combination of both.
Real Estate Investment and Proposed Project
Ski Inn at Powder Mountain
Location. The Ski Inn at Powder Mountain property is located in Northern Utah,
Cache County, and is adjacent to the main parking lot at Powder Mountain Ski
Resort, eight miles from Eden, Utah. The property is located one hour from the
Salt Lake City International Airport, and thirty minutes from Ogden, Utah.
Description. The proposed Ski Inn at Powder Mountain project is located on a
two (2) acre parcel of mountainous unimproved land with access through the
Powder Mountain Resort parking lot. The ski lifts and trails can be skied
directly to and from the property.
Current Use. The property is currently zoned FR-40 (conditional use permit).
Proposed Use. The Company proposes to construct a Hotel/Condominium consisting
of 48 units for sale or rent.
11
<PAGE>
The Company exercised its option on December 31, 1996 and in an arms length
transaction, acquired the property from the Ski Inn at Powder Mountain Limited
Partnership. The Ski Inn at Powder Mountain Limited Partnership, purchased the
property in April of 1978 for $10,000. Mr. Larry Walker, an Officer and
Director of the Company was the General Partner of the Limited Partnership.
The Limited Partnership received 60,000 shares of the Company's $.001 par value
Common Stock in consideration for the properties valued at $120,000. The
Company proposes to allocate approximately $50,000 for the necessary entitlement
work which includes the submittal to the local, county or state regulatory
authority the geological data, surveys, conceptual plans and drawing in order to
obtain a construction building permit.
Competition
The Company may face direct competition from other business and real estate
development projects in the area, and it is possible that additional
competitors will enter the Company's market. The real estate industry is
highly competitive and consists of several medium and large companies who are
better financed than the Company. These competitive properties may be priced
lower than the price at which the property will be sold, and in some instances,
may have amenities superior to those of the Company's property. In addition,
there may be other real estate sales offices that may have more real estate
sales people and have a better marketing plan. There can be no assurance that
the Company will be able to compete successfully with present or future
competitors.
Regulation
The Company is not subject to any governmental regulations other than those
generally applicable to all businesses. However, the Company is regulated
to the extent it deals with Federal, State and local governments regarding
entitlements, such as, water, sewer, zoning and other utilities.
Employees
The Company presently has four (4) full-time employees and four (4) real estate
agents. The Company does not currently employ a mortgage loan originator, but
additional employees will be hired as necessary to provide the Company's
services and carry on its operations as the Company expands.
Risk Factors Relating to the Business of the Company
1. Limited 0perating History. The Company was organized on March 5, 1996, in
the State of Utah, and has limited operating history and is still in the
Development Stage. The Company is, in essence, a new venture and no assurance
can be given that the Company will be successful. Accordingly, the Company's
limited operating history, prohibits an effective evaluation of the potential
success of the Company.
12
<PAGE>
The Company's viability and continued operations are dependent upon future
profitability, its ability to generate cash flow from uncertainties related to
the real estate industry, and other business opportunities. (See "Competition"
and "Management".)
The Company's operations are subject to all of the risks inherent in the
establishment of a new business enterprise. The likelihood of success for the
Company must be considered in light of the problems, expenses, complications
and delays frequently encountered in connection with the development of a new
business and the competitive environment in which the Company operates. The
Company since inception, has incurred an accumulated deficit of $1,069,763.
There can be no assurance that the Company will be able to operate profitably
in the future. Its financial objectives must therefore be considered very
speculative. (See "FINANCIAL STATEMENTS".)
2. Need for Additional Financing. The Company will require additional working
capital or other funds at a later date for the expansion of its operations.
There is no assurance that the Company will be successful in obtaining
additional financing or that such financing will be available upon acceptable
terms to the Company.
3. Conflicts of Interest - General. The Company's Directors and Officers, are
or may become, in their individual capacities, officers, directors, controlling
shareholders and/or partners of other entities engaged in a variety of
businesses. Thus, there exists potential conflicts of interest including,
among other things, time, effort and corporate opportunity, involved in
participation with other business entities. (See "MANAGEMENT - - Directors
and Officers").
4. Lack of Market Study. The Company has not requisitioned a formal state or
regional wide marketing study by an independent marketing organization for its
own purposes, however, the Company has, through independent sources, assembled
numerous statistical data to support its assessment of the real estate market.
Additionally, there can be no assurance that there is sufficient demand to
support real estate acquisitions, real estate development, real estate mortgages
and real estate sales in the State of Utah.
5. Reliance Upon Officers and Consultants. The ability of the Company to
operate successfully depends to a substantial degree upon its management and
consultants. The assembly of a strong management team is critical to the
success of the business.
6. Keyman Insurance. While the Company has obtained key-man insurance on its
CEO and COO in the sum of $250,000 for each, the insurance may not be enough
in the event of the loss of either or both. The loss of either party would
have an adverse affect on the Company.
7. No Assurance of Properties' Appreciation. There is no assurance that the
real properties will appreciate in value or upon the completed development,
that they can be sold at a profit. The marketability and value will depend
upon many factors beyond the control of the Company, and there is no assurance
that there will be a ready market for the properties at the time the Company
desires to sell the properties. The future value of the properties may be
dependent upon developer demand for the properties, and there can be no
assurance that demand currently exists or that it will exist in the future.
The value of the properties may also be dependent upon the
13
<PAGE>
ability of the Company or a developer or ultimate user to obtain the required
entitlements (zoning, utilities, roads, etc.), necessary to realize the highest
and best use of the properties and generate a profit. There can be no assurance
that all the entitlements can be obtained.
8. Real Property Investment. The Company will be subject to all of the risks
inherent in the ownership of real estate, including changes in the general or
local economic conditions, decreased demand for property, or similar matters
that will affect the ability of the Company to realize its goals. Such changes
can result from decreases in employment in the surrounding communities, changes
in supply and demand in the real estate market, fluctuating interest rates,
changes in zoning, and competing properties in the locality.
9. Competition. The Company may face direct competition from other
developer's projects in the area and it is possible that additional competitors
will enter the same markets as the Company's. The competitive properties may
be priced lower than the price at which the properties will be sold, and in
some instances, may have amenities superior to those properties under the
Company's control. There can be no assurance that the Company will be able
to compete successfully with present or future competitors.
10. Environmental Risks. The ownership and development of real property may
subject the Company to potential liability relating to hazardous materials
stored, used, or discharged on the properties and other matters relating to
environmental protection, which could adversely affect the Company. In
connection with the recent acquisition of the properties, the Company has
performed limited, informal environmental inquiries and found no material
environmental non-compliance or cleanup liabilities.
11. Dependence upon Utah Market and Economy. The Company's real estate
projects are all currently located within Weber and Cache Counties in the
State of Utah. The properties currently are undeveloped and are in most cases
in the raw land stage or, as in one case, an old abandoned building which is
in the process of being renovated and converted into live/work condominiums.
The Company's performance is linked to the economic conditions in the State
of Utah. A decline in the expanding economy of the State of Utah, generally,
may have a materially adverse affect on the financial condition of the Company.
12. Mortgage Loan Origination and Processing. Changes in interest rates can
have a variety of affects on the Company's mortgage loan origination
business. The market value of fixed-rate mortgage loans has a greater
sensitivity to changes in market interest rates than adjustable-rate mortgage
loans. To the extent an interest rate is established for a mortgage loan in
process prior to the time such mortgage loan is funded (a "locked pipeline
loan"), a gain or loss on the sale of such mortgage loan may result from
changes in interest rates during the period between the time the interest
rate is established and the time the mortgage loan is committed for sale.
13. Dependence on Wholesale Brokers. The Company may, for a time, depend on
independent mortgage brokers, and to a lesser extent, on correspondent lenders,
for the origination and purchase of its mortgage loans. These independent
mortgage brokers deal with multiple lenders for each prospective borrower.
The Company competes with these lenders for the independent brokers' business
on the basis of price, service, loan fees, costs and other factors. The
14
<PAGE>
Company's competitors also seek to establish relationships with such brokers,
who are not obligated by contract or otherwise to do business with the Company.
14. Real Estate Market Conditions. The Company's business may be adversely
affected by periods of economic slowdown or recession, which may be accompanied
by declining property values. Any material decline in property values reduces
the ability of borrowers to use equity in the property to support any
borrowings and increases the loan-to-value ratios of mortgage loans
previously made, thereby weakening collateral coverage and increasing the
possibility of a loss in the event of default. In addition, delinquencies,
foreclosures and losses generally increase during economic slowdowns and
recessions.
15. Options to Purchase Real Property. In most instances the Company
proposes to obtain control over properties by negotiating options. However,
if the Company is not able to complete the entitlement process through the
Federal, State, County or City Governments in time to be able to exercise its
options, the Company may lose its option monies and the monies expended for
the entitlement work. The Company not only would lose the option and
entitlement monies, which could be as little as $10,000 to upwards of
$100,000, but the lost opportunity to continue the development could
adversely affect the business of the Company.
16. Lack of Geographic Diversification. Since the Company's inception, the
Company has been involved in real estate projects primarily in the State of
Utah. Thus, the Company could be subject to adverse economic, political or
business developments and natural hazard risks that may effect the region.
If the regions real estate market should experience an overall decline in
property values, rates of delinquency, foreclosure, bankruptcy and loss of
mortgage business may be expected to increase substantially, as compared to
such rates in a stable or improving real estate market.
17. Limited Endeavors. While the Company may have access to other business
opportunities, the Company's financial resources are limited and, thus, may
not be able to generate sufficient revenues to make those endeavors
profitable. Therefore, the risks may out weigh any profits.
18. Year 2000 Compliance. The company does not anticipate any problems with
Year 2000 Compliance. The Company, however, has been in contact with its
accountant, bankers, title companies and transfer agent and has been assured
that all are in Year 2000 Compliance. However, if these entities are not in
compliance, the Company may experience limited business interruptions.
Should noncompliance be an issue, the Company will change its accountant,
banking relationship, title companies or transfer agent.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company as of the date of this Registration Statement had several projects
in varying degrees of development.
15
<PAGE>
I. The OlymPeak Estates Subdivision Project is currently in the final plan
phase and the projected schedule for obtaining permits are: 1) Public culinary
water system to include State Division of Drinking Water approval, well
development and the formation of a water company. These tasks are all currently
being addressed, and approval is expected on or before May 1, 2000. 2) Sewer
system plans and approvals - The Company is currently working with State and
County officials on an aerated lagoon sewage treatment facility. Conceptual
design has been completed, and final construction design and approvals is
anticipated to be completed by May 1, 2000. 3) Construction drawings are
currently being finalized by the engineers. Final plans are anticipated to be
completed on or before April 1, 2000 4) Final plat is anticipated be completed
on or before May 1, 2000. 5) Application survey for final plan approval from
the County will be submitted on or near May 1, 2000, and final approval is
expected on or near June 1, 2000. 6) Construction of subdivision roads and
infrastructure should begin on or before July 1, 2000, or as weather permits.
The Company has made application and is in the process of negotiating for a $4
million construction loan for the Shupe-Williams Project through US Bank's
Commercial Real Estate Division; and a loan submittal for an equity financing
credit line of $5,000,000 -$5,500,000 has been pre-qualified by Kilpatrick &
Hart, LTD., Inc., Financial Specialists.
II. Powder Mountain: The Company proposes to construct a Hotel/Condominium
consisting of 48 units for sale or rent. However, the Company has not, as yet,
begun development and it is still in the review stage. The lot may either be
sold or developed in the future.
III. The Sanpete Development project has been abandoned.
IV. Shupe-Williams Plaza is currently in the early stages of construction.
The first floor has been partially renovated with one unit completed and a
second unit is under construction on the second floor.
While the Company has taken options and deposits on sales of OlymPeak lots
and Shupe-Williams Live/Work loft units, final sales will not be realized
until completion, which may not take place until the following year.
Revenues are not expected to be significant until that time.
The financial statements for the six months ended June 30,1999 reflect an
increase in sales commissions of $5,700 due to the sale of one parcel of real
estate to an unrelated party. Operating expenses increased by $81,211. The
largest expense was wages $61,350. There was a $15,000 expense for writing off
the San Pete project. The balance of expenses of $4,861 was for various office
and operating expenses.
In 1998, the Company was funding development of 3 projects:
1. Olympeak Estates-Snowbasin Land: $66,429 was spent on planning, land design,
permits and fees, and water and sewer development.
2. Sanpete development: $4,275 was spent on planning and land design.
16
<PAGE>
3. Shupe-Williams Plaza: $131,405 was spent on planning, architectural design,
paint and asbestos removal, fire system, and building a model unit.
In addition the Company had overhead expenses of $341,171. This included
salaries of $171,919, travel $26,763, professional fees $27,147, and other
expenses of $115,342. These expenses were incurred in promoting and operating
the Company.
As of December 31, 1998, the Company had cash totaling approximately $214,442.
During the fiscal years ending December 31, 1998 and 1997, the Company expended
$377,099 and $441,517 respectively to fund operations. In addition the Company
has expended $714,728 on land purchases and development.
The Company, over a twelve-month period, between April 1, 1999 to March 31,
2000, anticipates incurring operation expenses of approximately $425,000 and
$18,000 in debt service which is the principal reduction on the Maughan Note.
This expenditure was incurred by the Company in September of 1999. The Maughan
Note had an initial term consisting of a five (5) year repayment schedule. The
Company is in year four (4) of this repayment schedule. Annual payments of
principal and interest of $75,221 are due in October of each year. The Company
is current on payments. There are two (2) remaining payments, $75,221 in
October 2000 and the balance of $634,147 due in October of 2001. It is
expected that the Company's current cash position will be sufficient to satisfy
its cash requirements for the next six months. Additional cash will be
required to sustain operations.
The Company will be required to raise substantial additional financing in
future years. There can be no assurance that such funds will be sufficient
in the near term or that conditions and circumstances described herein may
not result in subsequent cash requirements by the Company in the immediate
future just to sustain operations. In the event of such developments,
attaining financing under such conditions may not be possible, or even if
additional capital may be otherwise available, the terms on which such
capital may be available may not be commercially feasible or advantageous.
During the next twelve months, the Company does not expect to make any
significant purchases of plant or equipment. Investments in development
projects will continue as cash availability permits.
The Company does not anticipate any significant changes in its number of
employees during the next twelve (12) months.
The Company has reviewed the primary operations of its core business and does
not anticipate any problems with Year 2000 Compliance. The Company's operation
is not reliant upon the proper functionality of any computer system other than
those used by third party vendors. The Company believes that its banking
relationships, transfer agent and title companies are Year 2000 Compliant.
Should any of these third party vendors not be Year 2000 Compliant, the Company
will experience little to no adverse material impact on its cash flow or
prohibit its ability to continue operations.
17
<PAGE>
ITEM 3. PROPERTIES
The Company's corporate office is located in Ogden, Utah along with associates
located in San Francisco, California; Denver, Colorado; Boston, Massachusetts;
Lake Tahoe, Nevada; England and Scotland.
Currently the Company maintains its corporate office at 2605 Wall Avenue, Ogden,
Utah. The office space is approximately 1,500-sq. ft. in the Shupe-Williams
Plaza Building. The Company owns the Shupe-Williams Plaza property and pays no
rent for the office space it utilizes.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth information as of the date hereof, based on
information obtained from the persons named below, with respect to the
beneficial ownership of the Common Stock by (i) each person known by the Company
to own beneficially 5% or more of the Common Stock, (ii) each director and
officer of the Company and (iii) all directors and officers as a group:
<CAPTION>
Name and Address Shares owned
of Beneficial Owner Beneficially (1) % Owned
<S> <C> <C>
Larry R. & Jean P. Walker 1,240,000 32%
195 Alhambra #3
San Francisco, CA 94123
Richard V. & Carolyn C. Murray 1,207,500 31%
3748 Divisadero Street
San Francisco, CA 94123
Sheila Kelly 281,333 7%
4775 Summit Ridge Drive
Reno, NV 89503
Sherren O'Toole 500 .013%
1120 Canyon Rd., #44
Ogden, UT 84404
William J. Tabar 37,500 1%
4185 Beus Dr.
Ogden, UT 84403
Russell C. Maughan 37,500 1%
1690 Shoshone Dr.
Ogden, UT 84403
Kevin Molinari 196,667 5.1%
2375 Bay Street
San Francisco, CA 94123
Jon R. Blanchard 37,500 1%
PO Box 3763
Park City, Utah 84060
Officers, Directors and 5% 3,038,500 78.2%
shareholders as a group
(7 in number)
18
<PAGE>
<FN>
<F1>
(1) The number of shares of Common Stock owned are those "beneficially owned"
as determined under the rules of the Securities and Exchange Commission,
including any shares of Common Stock as to which a person has sole or shared
voting or investment power and any shares of Common Stock which the person
has the right to acquire within 60 days through the exercise of any option,
warrant or right.
<F2>
(2) No officer, director or security holder listed above owns any warrants,
options or rights, with the exception of Kevin Molinari, who has options to
purchase an additional 600,000 shares of the Company's common stock. (See
"Certain Relationships and Related Transactions.")
</FN>
</TABLE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
The Directors and Officers of the Company are as follows:
<CAPTION>
Name Age Position
<S> <C> <C>
Larry R. Walker* 63 Director, President, CEO
Richard V. Murray* 47 Director, COO/Treasurer
Sherren O'Toole 59 Secretary
Sheila Kelly* 61 Director
William J. Tabar 68 Director
Russell C. Maughan 45 Director Chairman of Board
Jon R. Blanchard 36 Vice President of Development
Services
<FN>
<F*>
*These persons may be deemed "promoters" of the Company as that term is
defined under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
</FN>
</TABLE>
All Directors of the Company will hold office for one (1) year or until the next
annual meeting of shareholders of the Company and their successors are duly
elected and qualified.
The Officers of the Company are elected by the Board of Directors at the first
meeting after each annual meeting of the Company's shareholders, and hold
office until their death, or until they shall resign or have been removed.
Officers and Directors
Larry R. Walker/CEO. Mr. Walker has been President/CEO and Director since
the inception of the Company. He is the principal broker for Marina Capital
and Managing Member for the Shupe-Williams Plaza LLC. Mr. Walker has been a
developer and manager of a major ski resort in the State of Utah. He
established and managed a regional office for a national brokerage firm. Mr.
Walker has owned and managed a business and financial services consulting
company for small to medium sized businesses. Mr. Walker has been an executive
with an investment banking firm and president of Equitable Business & Financial
Services Inc., a business consulting firm, and SCOR Financial Associates, Inc.,
a securities consulting company. Mr. Walker also has had extensive business
management, real estate development, securities and financial planning
experience. He is a licensed Real Estate Broker and obtained his Real Estate
Brokers License from the State of Utah in 1982. He obtained a California
Real Estate Sales License in 1986. He also was an airline pilot for ten years.
19
<PAGE>
Richard V. Murray/COO-Treasurer. Mr. Murray has been a Vice President and
Director since the inception of the Company. Mr. Murray has been engaged in
real estate as an investor, broker and developer since 1978. Mr. Murray has
been a featured speaker for several real estate investment and brokerage firms
specializing in commercial investment and development. Mr. Murray has also
been a consultant for corporate CEO's and other corporate executives engaged in
acquisition negotiations. Mr. Murray graduated Cum Laude from Holy Cross in
1973 with a Bachelor of Arts Degree in History. Mr. Murray obtained his
California Real Estate Brokers License in 1980. He is currently the Chief
Operating Officer and Principal Broker for the San Francisco Real Estate &
Investment office.
Sherren O'Toole/Secretary. Ms. O'Toole was selected by the Board of Directors
to fill the remaining term of office of Secretary upon the resignation of
Sheila Kelly in April of 1999. Ms. O'Toole has been involved in real estate
as an investor, sales agent, property manager and real estate office manager
for fifteen (15) years. Prior to that time, Ms. O'Toole was a Tax Technician
and Supervisory Manager for the Internal Revenue Service for fifteen (15)
years. Ms. O'Toole attended Weber State University in Ogden, Utah.
Sheila Kelly/Director. Ms. Kelly has been a Director of the Company since its
inceptioin and the Corporate Secretary through March of 1999. Ms. Kelly has
been involved in real estate as an investor, consultant and sales agent for
fifteen (15) years. Ms. Kelly has also consulted with clients in the
acquisition of residential and commercial real estate properties and has also
been involved in several condominium conversion projects. Ms. Kelly attended
Mon Fertiles Finishing School in Morges, Switzerland and obtained a Degree in
French Literature. Ms. Kelly obtained her Real Estate Sales License from the
State of California in 1973.
William J. Tabar/Business Development/Director. Mr. Tabar has been a Director
of the Company since May of 1997. Mr. Tabar was co-founder of VR Utah, Inc.
VR Utah, Inc. opened its first business brokerage office twenty (20) years ago
in Ogden, Utah. Mr. Tabar currently owns and manages four business brokerage
offices located throughout the State of Utah. Mr. Tabar is a member of the
International Business Broker Association, the M & A Source, and a Certified
Business Intermediary. Before co-founding VR Utah, Inc., Mr. Tabar was Chief
Operating Officer and Executive Vice President of Scott USA, a privately owned
company, which manufactured ski and motorcycle products domestically and
internationally. Mr. Tabar holds a M.S. Degree in Chemical Engineering from
West Virginia University.
Russell C. Maughan/Director. Mr. Maughan has been a Director of the Company
since May of 1997 and is currently Chairman of the Board. Mr. Maughan
presently serves as Vice President of Home Abstract & Title Co. in Ogden,
Utah, and has been an officer and director for the past twenty (20) years.
He is also a trustee, stockholder and trust officer of Home Abstract & Title
Co. Mr. Maughan is designated as a Utah Registered Abstractor and Licensed
Title Agent. Mr. Maughan is a General Partner of Wolf Creek Country Club
Associates. He is a member of the Ogden Chamber of Commerce, Utah
Homebuilders Legislative Affairs Committee and Ogden Board of Realtors. Mr.
Maughan has also been a Utah State Republican Party Delegate.
Jon R. Blanchard/Development Services. Mr. Blanchard is currently Vice
President of Marina Capital Development Services. Mr. Blanchard has been
involved in land planning and landscape
20
<PAGE>
architectural design since graduating from Kansas State University's College
of Architecture and Design in 1988. He has extensive experience in land
planning, landscape architectural design and consultation for various resort,
hotel, skiing, golf course, light industrial, retail commercial and residential
projects. Mr. Blanchard has prepared design construction documents, cost
estimates, specifications and bid documents of several parks throughout New York
City and has worked on high-end projects in 14 states. Mr. Blanchard is the
owner and president of 13 Design Studio in Park City, Utah. Mr. Blanchard has
done extensive work and consultation on Utah's Winter Sports Park, which will
be the site of all ski jumping, bobsled and luge events during the 2002 Winter
Olympics.
ITEM 6. EXECUTIVE COMPENSATION
<TABLE>
EXECUTIVE COMPENSATION TABLE
Annual Compensation
<CAPTION>
Name and Principal Other Total
Position Year Salary Compensation Compensation
<S> <C> <C> <C> <C>
Larry R. Walker(1) 1999 $75,000 $9,600(2) $84,600
President/CEO
Richard V. Murray(1) 1999 $75,000 $9,600(2) $84,600
Treasurer/COO
Jon R. Blanchard(1) 1999 $62,400 $9,600(2) $72,000
Vice President/
Development Services
Sherren O'Toole 1999 $26,400 0 $26,400
Corporate Secretary
<FN>
<F1>
(1) Mr. Larry Walker spends approximately 100% of his time on the Company's
business. Mr. Rick Murray spends approximately 100% of his time on the
Company's business. Mr. Jon Blanchard spends approximately 100% of his
time on the Company's business. Ms. Sherren O'Toole spends
approximately 100% of her time on the Company's business.
<F2>
(2) The $9,600.00 annual Other Compensation represents, $800.00 per month
for expenses and travel allowances.
</FN>
</TABLE>
The Company has entered into a seven (7) year Employment Agreement with its
CEO, Larry R. Walker and COO, Richard L. Murray. The Company pays both its
CEO and COO, $6,250 per month, and $800 per month expense/travel allowance.
The Company has entered into a three (3) year Employment Agreement with its
Vice President, Jon R. Blanchard. The Company will pay its Vice President of
Development Services, $62,400 per year and $800.00 per month miscellaneous
expense allowance.
Each outside Director receives $100.00 for attending meetings of the Board
of Directors and all Directors are reimbursed for out-of-pocket expenses
incurred in connection with the Company's business.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has not entered into any transactions during the last two fiscal
years with any
21
<PAGE>
director, executive officer, director nominee, or shareholder
of 5% or more, with the exception of Kevin Molinari. The Company on October
20, 1998, issued to Kevin Molinari 300,000 options to be exercised on or
before October 20, 2004, at an exercise price of $2.50 per share. Additionally,
the Company issued to Kevin Molinari 200,000 options to be exercised on or
before December 14, 2004, at an exercise price of $2.50 per share and 100,000
options to be exercised on or before May 15, 1999 at an exercise price of $2.00
per share.
The Company has not entered into transactions with any member of the immediate
families of the foregoing persons (includes spouse, children, siblings, and in-
laws), nor is any such transaction proposed.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock
The authorized capital stock of the Company consists of 30,000,000 shares of
$.001 par value Common Stock. All shares have equal voting rights and are
non-assessable. Voting rights are not cumulative, and therefore, the holders
of more than fifty percent (50%) of the Common Stock of the Company could,
if they chose to do so, elect all the Directors.
Upon liquidation, dissolution or winding up of the Company, the assets of the
Company, after the payment of liabilities, will be distributed pro rata to the
holders of the Common Stock. The holders of the Common Stock do not have
preemptive rights to subscribe for any securities of the Company and have no
right to require the Company to redeem or purchase their shares. The shares
of Common Stock presently outstanding are fully paid and non-assessable.
Holders of Common Stock are entitled to share equally in dividends when, and
if declared by the Board of Directors of the Company, out of funds legally
available thereof. The Company has not paid any cash dividends on its Common
Stock, and it is unlikely that any such dividends will be declared in the
foreseeable future.
As of the date hereof, the Company had outstanding 3,881,184 shares of common
stock.
Preferred Stock
The Company is authorized to issue 5,000,000 shares of Preferred Stock, no
par value, of which 84,259 shares have been issued and outstanding or
subscribed for as of May 15, 1999 the date hereof.
In general, any of the Company's Preferred Stock may be issued in series from
time to time with such designation, rights, preferences and limitations as
the Board of Directors of the Company may determine by resolution. The rights,
preferences and limitations of separate series of Preferred Stock may differ
with respect to such matters as may be determined by the Board of Directors.
This is to include, without limitation, the rate of dividends, method and
nature of payment of dividends, terms of redemption, amounts payable on
liquidation, sinking fund provisions (if any), conversion rights (if any),
and voting rights. The potential exists therefore,
22
<PAGE>
that additional preferred stock might be issued which would grant additional
dividend preferences and liquidation preferences to preferred shareholders.
Unless the nature of a particular transaction and applicable statutes require
such approval, the Board of Directors has the authority to issue these shares
without shareholder approval. The issuance of Preferred Stock may have the
effect of delaying or preventing change in control of the Company without any
further action by shareholders.
Dividends
The Company has never paid a cash dividend on its Common Stock nor does the
Company anticipate paying cash dividends on its Common Stock in the near
future. It is the present policy of the Company not to pay cash dividends
on the Common Stock but to retain earnings, if any, to fund growth and
expansion. Under Utah law, a company is prohibited from paying dividends if
the company, as a result of paying such dividends, would not be able to pay
its debts as they come due, or if the company's total liabilities and
preferences to preferred shareholders exceed total assets. Any payment of
cash dividends of the Common Stock in the future will be dependent upon the
Company's financial condition, results of operations, current and anticipated
cash requirements, plans for expansion, as well as other factors the Board of
Directors deems relevant.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not party to any pending litigation and none is contemplated
nor has been threatened.
ITEM 2. MARKET PRICE OF SECURITIES AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
Market For Common Stock and Related Stockholder Matters:
There is no public trading market for the Company's Common Stock. The
Company intends to apply to have the Common Stock traded on the OTC Bulletin
Board. No assurance can be given that such application will be approved and,
if approved, that an active trading market for the Common Stock will be
established or maintained.
There are no outstanding options or warrants to purchase, or securities
convertible into, shares of Common Stock.
As of the date hereof, there are 3,701,284 shares of Common Stock that could
be sold pursuant to Rule 144 under the Securities Act of 1933, as amended
(the "Securities Act").
Holders of Record:
23
<PAGE>
As of May 15, 1999, there were 76 holders of record of the Company's Common
Stock, and the number of beneficial holders was approximately 66.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There has been no change in principal independent accountants or reported
disagreements on any matter of accounting principles or procedures or
financial statement disclosures during the Company's two most recent fiscal
years.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
As of May 15, 1999 the Company had 3,881,184 shares of its $.001 par value
common stock issued and outstanding of which 3,701,284 shares were issued
in transactions exempt by reason of Section 4(2) of the Securities Act of
1933, as amended, and 179,900 shares were issued in transactions exempt by
reasons of Rule 504 of Regulation D promulgated pursuant to Section 3(b) of
the Securities Act of 1933, as amended.
Between February 20, 1996 and May 15, 1996, in connection with its formation,
the Company issued a total 2,703,000 common shares to each of its three (3)
founders, Larry Walker received 1,230,000 shares for $2,000 cash and services
valued at $10,300, Rick Murray received 1,230,000 shares for $2,000 cash and
services valued at $10,300 and Sheila Kelly received 243,000 shares for $44,688
cash. The issuance was exempt by virtue of Section 4(2) of the Securities Act
of 1933, as amended.
Between May of 1996 through March of 1999, the Company issued to twenty-seven
(27) individuals an aggregate of 784,481 shares of its common stock by virtue
of Section 4(2) of the Securities Act of 1933, as amended, for a total
consideration of $699,473 in cash, exchange for properties and services.
On April 28, 1997, the Company completed the issuance of 138,255 shares in a
transaction exempt by reason of Rule 506 of Regulation D and pursuant to
Section 4(6) of the Securities Act of 1933, as amended, at $2.00 per share
for a total consideration of $276,510.
Between August 8, 1997, and April 30, 1998, the Company issued 84,259 shares of
its no par value preferred stock to seven (7) people in transactions exempt by
reason of Section 4(2) of the Securities Act of 1933, as amended in
consideration of $220,778.
From February of 1998 to August of 1998, the Company issued 77,215 shares of its
common stock in transactions exempt by reason of Rule 505 of Regulation D
promulgated pursuant to Section 4(6) of the Securities Act of 1933, as amended,
at $3.25 per share for a total consideration of $250,949.
On April 14, 1999, the Company completed an exempt offering by virtue of a
504 of Regulation D and Section 3(b) of the Securities Act of 1933, as amended,
at $3.75 per share issued 179,900 shares for total proceeds of $674,625.
24
<PAGE>
The Company exercised an option on December 31, 1996 and in an arms length
transaction, acquired property from Ski Inn at Powder Mountain, a Limited
Partnership in which Mr. Larry R. Walker, a Director and President of the
Company was the General Partner. The Limited Partnership received 60,000 shares
of the Company's $.001 par value Common Stock in consideration for the
properties valued at $120,000.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, (other
than an action by or in the right of the corporation) by reason of the fact that
he is or was a director, officer, employee, fiduciary or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorney fees), judgments, fines, and amounts paid in settlement
actually and reasonably believed to be in the best interests of the corporation
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit,
or proceeding by judgment, order, settlement, or conviction or upon a pleas
of nolo contenders or its equivalent shall not of itself create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in the best interests of the corporation and, with respect to
any criminal action or proceeding, had reasonable cause to believe his conduct
was unlawful.
The corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorney fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in the best interests of
the corporation; but no indemnification shall be made in respect of any claim,
issue, or matter as to which such person has been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the court in which such action or suit was
brought determines upon application that, despite the adjudication of liability,
but in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnification for such expenses which such court deems
proper.
To the extent that a director, officer, employee, fiduciary or agent of a
corporation has been successful on the merits in defense of any action, suit,
or proceeding referred to in (a) or (b) of this Article VII or in defense of
any claim, issue, or matter therein, he shall be indemnified against expenses
(including attorney fees) actually and reasonably incurred by him in connection
therewith.
Any indemnification under (a) or (b) of this Article VII (unless ordered by a
court) and as distinguished from (c) of this Article shall be made by the
corporation only as authorized in the
25
<PAGE>
specific case upon a determination that indemnification of the director,
officer, employee, fiduciary or agent is proper in the circumstances because
he has meet the applicable standard of conduct set forth in (a) or (b)) above.
Such determination shall be made by the board of directors by a majority vote
of a quorum consisting of directors who were not parties to such action, suit,
or proceeding, or, if such a quorum is not obtainable, or, even if obtainable,
a quorum of disinterested directors so directs.
Expenses (including attorney's fees) incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding as authorized in Section
(d) of this Article, upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount, unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
The board of directors may exercise the corporation's power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under this Article.
The indemnification provided by this Article shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
these Articles of Incorporation, the Bylaws, agreements, vote of the
shareholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs and
personal representatives of such a person.
PART III
ITEM 1. INDEX TO EXHIBITS
The following list describes the exhibits filed as part of this Registration
Statement on Form 10-SB:
Exhibit No. Description of Document
3.1 Articles of Incorporation of Marina Capital, Incorporated.
3.2 Bylaws of Marina Capital, Incorporated.
4.0 Specimen form of Registrant's common stock.
10.1 Employment Agreement dated November 1, 1996 between Marina
Capital, Inc., and Larry R. Walker.
26
<PAGE>
10.2 Employment Agreement dated November 1, 1996 between Marina
Capital, Inc., and Richard V. Murray.
10.3 Employment Agreement dated April 1, 1999, between Marina
Capital Inc., and John R. Blanchard.
10.4 Option Agreements dated, October 20, 1998, between Kevin
Molinari and Marina Capital, Inc. for 300,000 options.
10.5 Option Agreement dated, December 14, 1998, between Kevin
Molinari and Marina Capital, Inc. for 200,000 options.
10.6 Subscription/Option Agreement dated March 15, 1999, between
Kevin Molinari and Marina Capital, Inc. for 100,000 options.
10.7 Consent of Accountants.
10.8 Letter of Intent and Understanding between VR Utah and Marina
Capital, Inc.
10.9 Financing Terms OlymPeak Estates Subdivision
10.10 Real Estate Purchase Contract Shupe Williams Plaza (the Company)
and Ogden City Corporation and Ogden City Neighborhood
Development Agency.
23.0 Loan Agreement dated, October 31, 1996, between the Maughn
Family Trust and Marina Capital, Inc.
ITEM 2. DESCRIPTION OF EXHIBITS
The required exhibits are attached hereto, as noted in Item 1 above.
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Marina Capital, Inc.
/s/ Larry Walker
____________________
by: Larry Walker
President
Date: March 20, 2000
PART IV
ITEM 1. FINANCIAL STATEMENTS
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999, DECEMBER 31, 1998 AND 1997
F-1
<PAGE>
INDEX
Page
Independent Auditor's Report 1
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Operations 4 - 5
Consolidated Statements of Cash Flows 6 - 7
Consolidated Statements of Stockholders' Equity 8
Consolidated Notes to Financial Statements 9 - 23
F-2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
Marina Capital, Incorporated
We have audited the accompanying consolidated balance sheets of Marina Capital,
Incorporated, (a development stage enterprise), a Utah corporation, as of March
31, 1999, December 31, 1998 and 1997 and the related consolidated statements of
operations, stockholders' equity, and cash flows for the three months and years
then ended. 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 conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Marina Capital, Incorporated as
of March 31, 1999, December 31, 1998 and 1997 and the results of its operations
and its cash flows for the three months and years then ended in conformity with
generally accepted accounting principles.
Davis, James, & Chase-Kraaima
Certified Public Accountants
Ogden, Utah
F-3
October 5, 1999
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999, DECEMBER 31, 1998 AND 1997
ASSETS
March 31, December 31, December 31,
1999 1998 1997
CURRENT ASSETS
Cash - unrestricted $ 274,299 $ 166,342 $ 15,277
Escrow deposits 45,100 51,100 2,100
Accounts receivable 0 15,000 15,000
Deposits 220 220 0
TOTAL CURRENT ASSETS 319,619 232,662 32,377
OTHER ASSETS
Office equipment (net) 3,989 4,101 1,840
OlymPeak Estates land 1,241,311 1,242,190 1,175,761
Powder Mountain land 96,000 96,000 120,000
Sanpete development 10,402 10,402 6,127
Shupe-Williams Plaza 190,009 151,417 20,012
TOTAL OTHER ASSETS 1,541,711 1,504,110 1,323,740
TOTAL ASSETS $1,861,330 $1,736,772 $1,356,117
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft $ 0 $ 0 $ 6,535
Accrued interest 66,399 54,631 63,038
Accounts payable 918 16,576 36,882
Payroll taxes payable 9,043 1,001 4,473
Note payable - Maughan 17,951 17,951 10,819
Note payable - Hovey 0 0 54,000
Trust deposits 45,100 51,100 2,100
TOTAL CURRENT LIABILITIES 139,411 141,259 177,847
LONG-TERM LIABILITIES:
Note payable 694,181 694,181 759,000
Less current portion (17,951) (17,951) (64,819)
TOTAL LONG-TERM LIABILITIES 676,230 676,230 694,181
TOTAL LIABILITIES 815,641 817,489 872,028
F-4
See accompanying notes and accountants' report.
Fwd ...(2)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS (CONTINUED)
MARCH 31, 1999, DECEMBER 31, 1998 AND 1997
March 31, December 31, December 31,
1999 1998 1997
STOCKHOLDERS' EQUITY
Common stock - 30,000,000 shares
$.001 par value authorized
3,935,184 shares issued 1,874,674
3,863,205 shares issued 1,634,101
3,531,768 shares issued 859,112
Preferred stock - 5,000,000 shares
no par value authorized
84,259 shares issued 240,778 240,778
74,259 shares issued 210,778
Deficit accumulated in the
development stage (1,069,763) (955,596) (585,801)
TOTAL STOCKHOLDERS' EQUITY 1,045,689 919,283 484,089
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,861,330 $1,736,772 $1,356,117
F-5
See accompanying notes and accountants' report.
(3)
<PAGE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND THE YEARS DECEMBER 31, 1998 AND 1997
<CAPTION>
Three Months Year Year Memo Only
Ended Ended Ended March 5, 1996
March 31, December 31, December 31, (inception) to
1999 1998 1997 March 31, 1999
<S> <C> <C> <C> <C>
REVENUE
Real estate sales
commissions $ 7,975 $ 3,642 $ 56,530 $ 68,147
Rent - land 0 2,100 0 2,100
Gain on sale of
Ski Inn land 0 15,000 0 15,000
TOTAL REVENUE 7,975 20,742 56,530 85,247
OPERATING EXPENSES
Abandoned projects 15,000 1,781 0 16,781
Accounting 1,182 8,767 9,519 24,004
Advertising and
promotion 110 9,679 1,559 12,876
Commissions 3,578 9,307 29,134 54,345
Consulting 0 5,765 71,332 188,832
Dues and registrations 716 1,082 1,319 6,367
Supplies 0 0 0 4,736
Legal 5,125 12,615 19,313 53,586
Office expenses 5,913 18,298 7,923 35,400
Miscellaneous 197 2,336 3,968 7,980
Rent 225 10,084 14,196 28,124
Taxes 5,993 20,778 17,350 44,665
Travel & entertainment 5,406 26,763 15,623 64,307
Telephone 2,013 15,460 8,266 31,184
Salaries 60,075 171,919 185,559 429,803
Insurance 3,588 5,645 8,415 17,648
Auto 6,954 20,436 17,820 45,210
Depreciation 114 456 0 570
TOTAL OPERATING
EXPENSES 116,189 341,171 411,296 1,066,418
NET LOSS FROM
OPERATIONS (108,214) (320,429) (354,766) (981,171)
OTHER INCOME AND (EXPENSES)
Interest income 1,270 2,874 515 5,722
Interest expense (7,223) (52,240) (34,851) (94,314)
TOTAL OTHER INCOME
AND (EXPENSE) (5,953) (49,366) (34,336) (88,542)
F-6
See accompanying notes and accountants' report.
Fwd ...(4)
</TABLE>
<PAGE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND THE YEARS DECEMBER 31, 1998 AND 1997
<CAPTION>
Three Months Year Year Memo Only
Ended Ended Ended March 5, 1996
March 31, December 31, December 31, (inception) to
1999 1998 1997 March 31, 1999
<S> <C> <C> <C> <C>
NET LOSS $ (114,167) $(369,795) $(389,102) $(1,069,763)
BASIS LOSS PER SHARE $(.03) $(.10) $(.12)
WEIGHTED AVERAGE
COMMON SHARES 3,899,195 3,697,487 3,372,437
F-7
See accompanying notes and accountants' report.
(5)
</TABLE>
<PAGE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND THE YEARS DECEMBER 31, 1998 AND 1997
<CAPTION>
Three Months Year Year Memo Only
Ended Ended Ended March 5, 1996
March 31, December 31, December 31, (inception) to
1999 1998 1997 March 31, 1999
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (114,167) $(369,795) $(389,102) $(1,069,763)
Adjustments to reconcile
net (loss) to net cash
provided by operating
activities:
Changes in operating
assets and liabilities
Accounts receivable 15,000 (220) (9,554) (220)
Accounts payable and
accrued expenses 4,150 (38,719) 110,927 76,360
Depreciation 114 456 0 570
Net cash provided (used)
in operating activities (94,903) (408,278) (287,729) (993,053)
INVESTING ACTIVITIES
Sale of land 0 24,000 0 24,000
Purchase of real estate (37,713) (202,109) (310,885) (1,561,722)
Purchase of equipment 0 (2,718) (1,830) (4,558)
Net cash provided (used)
in investing activities (37,713) (180,827) (312,715) (1,542,280)
FINANCING ACTIVITIES
Proceeds from debt 0 0 54,000 1,162,000
Principle payments on debt 0 (64,819) (403,000) (467,820)
Proceeds from sale of
common stock 240,573 774,989 725,978 1,874,674
Proceeds from sale of
preferred stock 0 30,000 210,778 240,778
Net cash provided in
financing activities 240,573 740,170 587,756 2,809,632
Change in cash 107,957 151,065 (12,688) 274,299
Cash at beginning of
period 166,342 15,277 27,965 0
Cash at end of period $ 274,299 $ 166,342 $ 15,277 $ 274,299
F-8
See accompanying notes and accountants' report.
Fwd...(6)
</TABLE>
<PAGE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND THE YEARS DECEMBER 31, 1998 AND 1997
<CAPTION>
Three Months Year Year Memo Only
Ended Ended Ended March 5, 1996
March 31, December 31, December 31, (inception) to
1999 1998 1997 March 31, 1999
<S> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES
Non-cash investing activities - None
Operating activities reflect
Interest $ 5,953 $ 49,366 $ 34,851
Taxes $ 0 $ 0 $ 0
</TABLE>
For purposes of the statements of cash flows, the Company considers all short
term instruments purchased with a maturity of three months or less to be cash
equivalents. There were no cash equivalents at March 31, 1999, December 31,
1998 and 1997.
F-9
See accompanying notes and accountants' report.
(7)
<PAGE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND THE YEARS DECEMBER 31, 1998 AND 1997
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK PREFERRED STOCK IN THE
NO. OF NO. OF DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT STAGE
<S> <C> <C> <C> <C> <C>
Balance January 1, 1997 3,213,105 $ 133,134 $ 0 $ (196,699)
Stock issued 318,663 725,978 74,259 210,778 0
Net loss (389,102)
Balance December 31, 1997 3,531,768 859,112 74,259 210,778 (585,801)
Stock issued 331,437 774,989 10,000 30,000 0
Net loss (369,795)
Balance December 31, 1998 3,863,205 1,634,101 84,259 240,778 (955,596)
Stock issued 71,979 240,573 0 0 0
Net loss (114,167)
Balance March 31, 1999 3,935,184 $1,874,674 84,259 $240,778 $(1,069,763)
See accompanying notes and accountants' report.
(8)
F-10
</TABLE>
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
A. Nature of Business
The company was incorporated in Utah on March 5, 1996. The purpose of
the company is to invest in and develop various real estate and other
business opportunities. The company has several projects in various
stages of development. Marina Capital, Incorporated has formed two
Limited Liability Companies to own and manage the Shupe-Williams
building project. The Shupe-Williams building was purchased by Shupe-
Williams Plaza, LLC for $100 and is its' only asset. Shupe-Williams
Plaza, LLC is 100% owned by Marina Holding, LLC which has no other
assets. Marina Holding, LLC is 100% owned by Marina Capital,
Incorporated. All three companies have been consolidated into these
financials and any intercompany transactions have been eliminated.
B. Income Taxes
The company elected subchapter-S status at inception. This election has
been terminated as of January 1, 1997. There are no tax liabilities at
this time, as the company has loss carryovers of $807,936 as of December
31, 1999. The Company has adopted SFAS No. 109 (See Note 8).
C. Accounting Methods
The company uses the accrual method of accounting. Development and
organization costs are capitalized and amortized or expensed according
to generally accepted accounting principles. Commission revenue and
gains on sales of real estate are recognized as sales are closed.
D. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
NOTE 2 - RELATED PARTY TRANSACTIONS
The Company was organized by Richard V. Murray and Larry R. Walker. Salaries
and expense allowance have been paid to these individuals. They are currently
working to develop the company with compensation of $6,250 each month.
F-11
Fwd...(9)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - RELATED PARTY TRANSACTIONS (CONTINUED)
Three Months Year ended Year ended
Ended March 31, December 31, December 31,
1999 1998 1997
Salaries and expense
allowance paid to
related parties $50,000 $169,200 $169,200
The Company purchased 65 acres of land called the Snowbasin land from the
Maughan Family Partnership for $975,000 on October 31, 1996 (See Note 15).
Russell Maughan, who is a 1% shareholder and chairman of the Board of Marina
Capital is also a partner in the Maughan Family Partnership. The Company feels
it was an arms-length transaction.
The Company purchased a two acre lot at Powder Mountain from Ski Inn, a company
in which Larry Walker was an owner. The purchase price was $120,000 in stock
(See Note 15).
NOTE 3 - TRUST ACCOUNTS
The Company has four trust accounts maintained at the Bank of Utah. The
Investor's Trust Account is where new investor moneys are deposited. Stock is
issued to investors. The Real Estate Trust Account holds deposits and proceeds
of real estate brokerage transactions. The Shupe Williams Trust holds 19 $1,000
refundable deposits for investors interested in purchasing condo units. The
OlymPeak Trust holds money deposited on OlymPeak lot sales. A liability account
has been set up for all but the investor deposits.
NOTE 4 - NOTES PAYABLE
The Company has the following notes outstanding:
March 31, December 31, December 31,
1999 1998 1997
Maughan Family Partnership -
8.25% secured by Snowbasin
land-first position $694,181 $694,181 $705,000
Hovey 0 0 54,000
Total 694,181 694,181 759,000
Less current maturities 17,951 17,951 64,819
Long-term portion $676,230 $676,230 $694,181
F-12
Fwd...(10)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - NOTES PAYABLE (CONTINUED)
5 year repayment schedule
1999 $ 17,951
2000 19,451
2001 656,779
$694,181
NOTE 5 - DEVELOPMENT COSTS
The Company has incurred development costs on various development projects.
These costs have been capitalized and will be expended when the related projects
are sold or abandoned. Total costs as of March 31, 1999 are $1,537,722. This
includes costs directly associated with the development of the project such as
materials, labor, subcontractors, licensing fees, building permits, surveys,
insurance, taxes, interest and any other costs directly associated with the
development. As of this date, all costs have been directly associated with
individual projects and no overhead allocation has been necessary.
NOTE 6 - STOCK
The Company has the following shares of stock outstanding:
Restricted Unrestricted Total
Common 3,701,284 233,900 3,935,184
Preferred 84,259 - 84,259
The preferred stock bears interest at 10 to 12% per annum. Purchaser may elect
to receive cash or additional preferred stock at $2.75 to $3.25 per share.
After 2 years the stockholder may elect to redeem their stock at a price of
$3.00 to $3.50. Four stockholders also have an option to redeem their stock
towards the purchase of a lot in the OlymPeak Estates Subdivision No. 1. No
interest has been paid nor has any additional stock been issued. Interest owed
was $7,398 at December 31, 1997, $35,483 at December 31, 1998, and $42,706 at
March 31, 1999. The preferred stock has no voting rights. No stockholder has
exercised their conversion rights.
NOTE 7 - EARNINGS PER COMMON SHARE
Earnings per common share are calculated by dividing net income by the weighted
average number of common shares outstanding during the period as required by
SFAS 128. Under the new requirements for calculating primary net income per
share (basis earnings per share), the dilutive effect of stock options will be
excluded.
F-13
Fwd...(11)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - INCOME TAXES
The Company has adopted SFAS No. 109, "Accounting for Income Taxes". Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. No deferred tax assets or
liabilities have been reflected in the financial statements. There are no
differences between the carrying values of assets and liabilities for book
verses tax basis. The Company has operated at a loss since inception. The
Company feels that any tax benefit from these operating losses is uncertain and
would be reduced to zero under the valuation allowance rules. The Company has
net operating losses of $873,064 as of March 31, 1999. They begin to expire in
the year 2017.
NOTE 9 - CONTINGENT LIABILITIES
Ogden City Corporation and the Ogden City Redevelopment Agency each hold a
$250,000 trust deed note on the Shupe-Williams Building and adjacent lot. Said
notes will be deemed satisfied upon sufficient completion of the project as
specified in the purchase agreement. The Company is also subject to
restrictions on transfer of the building (See the agreement for complete
details). Management has not reported this obligation in the financial
statements due to its contingent nature. They feel it will never be paid as it
will be satisfied on completion of the project or canceled if the building is
returned to the sellers. (See FAS 105.)
NOTE 10 - ESCROW DEPOSITS
The Company has established bank trust accounts to hold money restricted for
specified uses.
REAL ESTATE TRUST - This is a trust account to hold real estate customer
deposits.
SHUPE-WILLIAMS TRUST - This is a trust account to hold deposits from
individuals who are interested in purchasing Shupe-Williams Building
condo units when completed. The funds are refundable if not completed.
F-14
Fwd...(12)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 - ESCROW DEPOSITS (CONTINUED)
OLYMPEAK TRUST - This is a trust account to hold deposits from
individuals interested in purchasing lots in the OlymPeak subdivision
when completed. The funds are refundable if not completed.
March 31, December 31, December 31,
1999 1998 1997
Real Estate Trust $ 100 $ 8,100 $ 0
Shupe Williams Trust 19,000 17,000 2,100
OlymPeak Trust 26,000 26,000 0
$45,100 $51,100 $2,100
NOTE 11 - ACCOUNTS RECEIVABLE
Marina Capital contracted with Mr. Joseph Graves to do consulting and due
diligence work on development of the Rincon Golf and Country Club Community.
The project was abandoned in March 1999.
NOTE 12 - REAL ESTATE SALES COMMISSIONS
The Company operates a real estate sales division. It currently has only one
agent. The Company generally receives a 6% commission on real estate sales
transactions.
NOTE 13 - SALE OF SKI INN LAND
In 1998 the Company sold an approximate .40 acre of the Ski Inn land at Powder
Mountain. It was sold for $40,000 with a cost basis of $24,000 showing a
profit of $15,000. The property was sold to an unrelated party.
NOTE 14 - REAL ESTATE VALUATION
All real estate and land are recorded at cost. This includes the actual cost
of the land plus improvements made. All real estate projects are still in the
early development stages. The Company feels the net realizable value of each
project is more than the costs recorded on the books.
F-15
Fwd...(13)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE
I. OLYMPEAK ESTATE:
The OlymPeak Estate project consists of 65 acres of raw land located in Ogden
Valley approximately four (4) miles from the Snow Basin Ski Resort. It is being
developed into 22 residential lots. Preliminary approval was obtained from Weber
County on March 14, 1996. The final approval will be subject to the State of
Utah Engineer and Weber County approval of the water and sewer system by the
County. The Company anticipates that final approval will be granted within
three (3) to six (6) months from the date of this Registration Statement. Upon
receiving the final approval, construction on the roads, water and sewer system
will commence and will take approximately three (3) to six (6) months to
complete. Six (6) of the lots have been reserved at a sale price between
$155,000 to $226,000 per lot. The Company has prepared the necessary
documentation to form a not-for- profit Water and Sewer District to service the
area. The documentation will be submitted to the State of Utah Engineer for
approval within the next ninety (90) days. The Company exercised its option to
purchase the OlymPeak Estate property on October 31, 1996 and entered into a
five (5) year purchase agreement with the Maughan Family Partnership. The
Company executed a Trust Deed and Note for the balance of the purchase price of
$725,000. The original purchase price was $975,000. The terms of the note are
as follows: A five (5) year note, twenty (20) year amortization schedule, with
annual payments of $75,221 and a balloon payment at the end of the five (5) year
period for the balance. The Company proposes to spend approximately $1,000,000
in the construction of roads, water and sewer system.
Capitalized Costs Expensed Costs
Balance December 31, 1996 $1,008,124 $ 0
1997 costs 167,637 0
Balance December 31, 1997 1,175,761 0
1998 costs 66,429 0
Balance December 31, 1998 1,242,190 0
1999 costs to date (879) 0
Balance March 31, 1999 $1,241,311 $ 0
F-16
Fwd...(14)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE (CONTINUED)
Capitalized Costs
Summary of costs:
Land costs $ 975,000
Development costs - roads,
water & sewer, environmental
studies, etc. 266,311
$1,241,311
II. POWDER MOUNTAIN LAND:
Location. The Ski Inn at Powder Mountain property is located in Northern Utah,
Cache County, and is adjacent to the main parking lot at Powder Mountain Ski
Resort, eight miles from Eden, Utah. The property is located one hour from the
Salt Lake City International Airport, and thirty minutes from Ogden, Utah.
Description. The proposed Ski Inn at Powder Mountain project is located on a
1.6 acre parcel of mountainous unimproved land with access through the Powder
Mountain Resort parking lot. The ski lifts and trails can be skied directly to
and from the property.
Current Use. The property is currently zoned FR-40 (conditional use permit).
Proposed Use. The Company proposes to construct a Hotel/Condominium consisting
of 48 units for sale or rent.
The Company exercised its option on December 31, 1996 and in an arms-length
transaction, acquired the property from Ski Inn at Powder Mountain, a Limited
Partnership in which Mr. Larry R. Walker, a director and president of the
Company was the General Partner. The Limited Partnership received 60,000 shares
of the Company's $.001 par value Common Stock in consideration for the
properties valued at $120,000. The Company proposes to allocate approximately
$50,000 for
F-17
Fwd...(15)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE (CONTINUED)
the necessary entitlement work in order to obtain development approval from the
county.
Capitalized Costs Expensed Costs
Balance December 31, 1996 $120,000 $ 0
1997 costs 0 0
Balance December 31, 1997 120,000 0
1998 costs (24,000) 0
Balance December 31, 1998 96,000 0
1999 costs to date 0 0
Balance March 31, 1999 $ 96,000 $ 0
Summary of costs:
Land costs $ 96,000
III. SHUPE-WILLIAMS PLAZA
Location. Shupe-Williams Plaza at 26th Street and Wall Avenue near Historic
25th Street in downtown Ogden, Utah.
Description. The Shupe-Williams Plaza Building is a four-story building of
approximately 62,500 feet located on an 85,000 square foot building lot. The
building was built in 1902 and was used as a warehouse and candy manufacturing
facility. The building has been abandoned for 15 years.
Current Zoning. With the assistance of the City of Ogden, the property and
building have been zoned to accommodate both residential and commercial use.
Proposed Use. The Company is currently rehabbing the building and vacant lot.
The main floor will be converted into a restaurant, office and retail use. The
upper floors will be converted to Live/Work lofts. Six (6) penthouse lofts will
be constructed on top of the building.
F-18
Fwd...(16)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE (CONTINUED)
Status. The Shupe-Williams Plaza property was conveyed to the Company by the
Ogden City Corporation and the Ogden City Developmental Agency on May 27, 1998.
The total purchase price was $100.00. The sellers have also retained a
$250,000 Trust Deed on the property which will be considered satisfied upon
sufficient development of the property. The City has also agreed to rebate
$250,000 in taxes, over a five-year period.
Estimated Revenue Phase One. $6,000,000 to $7,500,000.
Financing. The Company is in the process of financing the construction phase
and has made application with several financial brokers and institutions. The
first phase of construction was started in September of 1998. The Company
expects construction to be completed within twelve (12) to eighteen (18) months
after financing has been approved. The Company has started to pre-sell and
market the lofts. Currently 20 of the units have been reserved. A trust
account has been set up to hold reservation deposits until construction of the
building is complete. In addition, several Letters of Intent to lease space
have been received.
Recent and Significant Developments (Shupe-Williams Plaza). The Company entered
into a Real Estate Purchase Contract on October 8, 1997, with the City of Ogden,
Utah, and Ogden City Neighborhood Development Agency, to purchase the Shupe-
Williams Building located at 2605 Wall Avenue, including the abandoned portion
of 26th Street. The total purchase price was $100.00. The City has also agreed
to tax increment rebates totaling $250,000. The rebate will be made to the
Company over a five (5) year period. The closing date on the building was May
27, 1998 at which time fee simple title was conveyed to the Company.
An agreement was entered into with the Land Development Group of Provo, Utah to
act as developer/consultants for the conversion of the old Shupe-Williams candy
manufacturing building. The building will be converted into a 45 Live/Work
loft-condominium complex plus commercial and retail space. The building was
built in 1902, has four floors (approximately 62,500 sq. ft.) on a two (2) acre
lot. The proposed sale of the lofts is expected to generate approximately
$6,000,000 to $7,500,000 in revenue. The Land Development Group has in the
past, successfully converted buildings in Houston, Texas; San Diego, California
and Salt Lake City, Utah.
F-19
Fwd...(17)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE (CONTINUED)
Capitalized Costs Expensed Costs
Balance December 31, 1996 $ 0 $ 0
1997 costs 20,012 0
Balance December 31, 1997 20,012 0
1998 costs 131,405 0
Balance December 31, 1998 151,417 0
1999 costs to date 38,592 0
Balance March 31, 1999 $190,009 $ 0
Summary of costs:
Land costs $ 100
Development costs 189,909
$190,009
Carrying Value of Real Estate. FAS 121 requires that real estate development
projects be valued at lower of cost or market value. The projects on the
Company's balance sheet are valued at cost as management feels the value of each
project exceeds costs.
OLYMPEAK LAND - The land was originally purchased in 1996 for $15,000
per acre. Subsequent costs incurred amount to $4,328 per acre for a
total cost of $19,438 per acre. Land costs in the Ogden Valley area
have increased dramatically over the last three (3) years. It is
estimated that the land could now be sold for $30,000 per acre as is.
POWDER MOUNTAIN LAND - The Company owns 1.6 acres of land at a cost of
$60,000 per acre. One acre lots adjacent to the land are selling for
$75,000 per acre.
SHUPE-WILLIAMS PLAZA - The Company has $190,009 invested in the project.
The Company has done substantial improvements to the property such as
clean up, paint removal, mechanical system repairs, and two (2)
completed units. Based on these improvements management feels the fair
market value significantly exceeds the costs put in.
F-20
Fwd...(18)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE (CONTINUED)
SAN PETE DEVELOPMENT - The Company has invested $10,402 in attempting to
develop a parcel of land in San Pete County, Utah. The Company does not
have any contracts or written agreements with the land owners, however
they feel they will recover the investment if the project is completed.
The future of the project is unknown as of this date.
NOTE 16 - STOCK OPTION AGREEMENTS
On October 20, 1998 the Company entered into a stock option agreement in which
the Company grants the option to a stockholder to purchase up to 300,000 shares
of voting common stock for an exercise price of $2.50 per share at any time from
October 20, 1999 through October 20, 2004, with a 90 day extension period.
On December 14, 1998, an option to purchase a second group of 200,000 shares of
voting common stock at the same exercise price was granted and fully exercisable
from December 14, 1999 through December 14, 2004 with a 90 day extension period.
Special provisions apply in the event of death, disability or termination of the
stockholder.
Richard Murray and Larry Walker also have employment agreements which gives them
the right to purchase additional stock up to 5% of the then issued and
outstanding common stock at a price equal to 75% of the book value. No stock
has been issued under these agreements.
First Group Second Group
of Options of Options
Number of options outstanding on
January 1, 1998 - -
Number of options granted in 1998 300,000 200,000
Number of options outstanding on
December 31, 1998 and March 31, 1999 300,000 200,000
Number of options exercisable at
December 31, 1998 and March 31, 1999 0 0
Weighted average exercise price per share
outstanding and per share exercisable $ 2.50 $ 2.50
Total compensation cost recognized in 1998
and 1999 for stock based compensation awards $ - $ -
Grant date fair value of options granted in 1998 $ 0 $ 0
Weighted average grant date fair value of
options granted in 1998 $ 0 $ 0
Weighted average remaining contractual life of
options outstanding and exercisable 6 years 6 years
F-21
Fwd...(19)
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 16 - STOCK OPTION AGREEMENTS (CONTINUED)
No options were exercised, were forfeited or expired in 1998 or 1999.
The calculation of the fair values of the options, under the minimum value
method, assumes that no corporate dividends will be issued prior to exercise
of the options, and that the options will be exercised immediately prior to the
exercise expiration date. The Company deems the options to have minimal value
as there is no publicly traded market for the shares.
The Company has accounted for the stock options under APB Opinion 25, an
accounting standard under which no related compensation expense was recognized
in 1998, the year of the grant. Under an alternative accounting standard, FAS
123, compensation expense of $-0- would have been recognized related to the
grant, resulting in net loss of $(341,710).
NOTE 17 - STOCKHOLDERS
See Exhibit I.
F-22
<PAGE>
<TABLE>
Exhibit I
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development State Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
LIST OF STOCKHOLDERS:
Preferred Stock: SHARES $
<S> <C> <C> <C> <C>
6-5-97 VERA MILLARD TRUST 10,000 30,000
7-12-97 RODERICK ORINGER 21,926 65,778
8-28-97 BRYCE JORGENSON 12,000 30,000
9-23-97 SCOTT KELLY 12,000 30,000
11-28-97 CLIFF JENNINGS 10,000 30,000
12-15-97 PETER NEUBAUER TRUST 8,333 25,000
TOTAL DECEMBER 31, 1997 74,259 210,778
4-16-98 EDWARD GRAZIANI 10,000 30,000
TOTAL DECEMBER 31, 1998 &
March 31, 1999 84,259 $240,778
Common Stock: SHARES $
1-5-96 SUSAN MONTGOMERY 9,583 14,375
1-5-96 BROOKWOOD TRUST 9,583 14,375
3-4-96 SHEILA KELLY 281,33 102,188
5-20-96 RICHARD ROSALES 16,125 16,125
5-30-96 BILL TABAR 37,500 6,946
6-3-96 CHARLES PARTRIDGE 5,733 8,600
6-3-96 KEN KLAGES 17,916 26,875
6-6-96 LEE MARKRACK 17,916 26,875
6-22-96 STUART BRIGGS 17,916 26,875
7-1-96 LARRY WALKER 1,240,000 2,000 SERVICES
7-1-96 RICHARD MURRAY 1,207,500 2,000 SERVICES
7-14-96 JON BLANCHARD 37,500 500 SERVICES
7-16-96 TODD ANDERSEN 37,500 500 SERVICES
10-23-96 STUART BRIGGS 40,000 80,000
10-23-96 JOHN DAHLBERG 15,000 30,000
12-30-96 MARK ARCHER 37,500 SERVICES
11-20-96 RUSS MAUGHAN 37,500 SERVICES
8-15-96 RAUL RODRIGUEZ 147,000 SERVICES
STOCK SUBSCRIBED (225,100)
TOTAL DECEMBER 3, 1996 3,213,105 133,134
STOCK SUBSCRIBED 225,100
1-16-97 CHARLES PRIEST 22,500 45,000
1-16-97 BRIDGET PRIEST 10,000 20,000
2-4-97 THOMAS LYONS 37,500 SERVICES
4-2-97 PETER NEUBAUER 12,500 25,000
4-11-97 COLIN BRIGGS 12,500 25,000
4-11-97 RONALD CANDRY 4,000 20,000
</TABLE>
F-23
<PAGE>
<TABLE>
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development State Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
LIST OF STOCKHOLDERS:
SHARES $
<S> <C> <C> <C> <C>
4-11-97 SAM MENDES 20,000 40,000
5-1-97 LAURI ANDERSON 3,500 11,935
5-1-97 MARVIN INGLET 10,000 43,250 SALE OF POWDER MT. LOT
5-1-97 VICKI MUNN 3,500 11,935
5-1-97 GERALD NAYLOR 5,000 17,050 SALE OF POWDER MT. LOT
5-1-97 LO'D WALKER 3,500 11,935
5-1-97 TRAVIS WEAVER 5,000 17,050
5-1-97 BONNIE PERKINS 1,000 3,410
5-1-97 TROY WALKER 3,500 11,935
7-6-97 R. RENNA 11,000 22,000
8-20-97 CHARLES PRIEST 10,000 20,000
8-25-97 RONALD CANDRAY 4,000 8,000
8-26-97 PETER NEUBAUER 5,480 10,960
9-1-97 GERALD CRAWFORD 50,000 16,667 SERVICES
9-1-97 SCOTT KELLY 50,000 50,000 SERVICES
9-4-97 D. WALTON 6,375 12,750
12-10-97 THOMAS REILLY 2,500 GIFT FROM RICHARD MURRAY
12-10-97 LAWRENCE LITWACK 5,000 GIFT FROM RICHARD MURRAY
12-22-97 DIANE MANGANARO 308 1,001
12-28-97 RICHARD & BILLIE GEIST 20,000 65,000
TOTAL DECEMBER 31, 1997 3,531,768 859,112
1-7-09 ARNOLD CANDRAY 1,400 SERVICES
3-5-98 RICHARD GIALLONGO 2,000 6,500
3-25-98 CHRISTINE VALLAS 1,550 5,038
4-16-98 FLOCO REAL ESTATE 1,540 5,005
4-16-98 BRENT LARSIN 1,540 5,005
4-21-98 CAROL CORRENTI 3,200 10,400
4-21-98 ROBERT MOSS JR. 615 2,000
4-30-98 DAVID KNOWLES 37,500 SERVICES
5-4-98 CLIFF JENNINGS 462 SERVICES
5-7-98 PACIF CST. PART-CHRUCH DAVIS 7,690 24,993
5-19-98 MICHAEL WAGNER 1,539 5,000
6-15-98 PETER NEUBAUER 615 2,000
6-18-98 GERARD O'ROUKE 6,154 20,000
7-7-98 RODERICK ORINGER 7,500 15,000
7-27-98 DAVID GIRARD 7,692 25,000
7-27-98 PETER NEUBAUER 12,308 40,000
8-20-98 EDWARD SANDERS 7,692 25,000
9-2-98 JOHN LEWIS 10,000 SERVICES
9-2-98 SHARRON O'TOOLE 500 SERVICES
9-30-98 DANIEL MASLIAH 2,667 10,000
10-8-98 ROBERT PLIMPTON 6,000 22,500
10-19-98 KEVIN MOLINAIRI 196,667 625,00
1-19-98 RONALD CANDRAY 2,500 9,375
</TABLE>
F-24
<PAGE>
<TABLE>
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development State Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
LIST OF STOCKHOLDERS:
SHARES $
<S> <C> <C> <C> <C>
10-21-98 RODERICK ORINGER 480 SERVICES
10-23-98 GERALD O'ROURKE 1,000 3,750
10-23-98 PAUL CHAFFEE 1,000 3,750
10-30-98 VERA MILLARD 5,500 20,625
11-16-98 PAL JAUREGUI 1,300 4,875
11-21-98 RODERICK ORINGER 2,193 SERVICES
12-1-98 CHARLES PRIEST 37,000 SERVICES
12-17-98 KEITH GUETSCHOW 1,346 SERVICES
12-22-98 JOHN ASHER 2,700 10,125
12-22-98 RONALD CANDRAY 2,500 9,375
12-28-98 GREAGORY D'AURIA 2,000 7,500
12-31-98 KEVIN MOLINARI SUBSCRIBED (44,913) (142,826)
TOTAL DECEMBER 31, 1998 3,531,768 859,112
12-31-98 KEVIN MOLINAI SUBSCRIBED 44,913 142,826
1-6-99 MARILYN SPENCER\HELEN SCHOE 1,000 3,750
1-6-99 RICHARD LUSBY 3,934 14,750
2-16-99 CHARLES PRIEST 5,333 20,000
2-16-99 RODRIC ROBINSON 1,000 3,750
3-10-99 IAN MACDONALD 1,000 SERVICES
3-11-99 SHARON SKYLOR 3,467 13,000
3-30-99 GARY DOUGAN 2,666 9,997
3-31-99 JOHN MANGANARO 2,666 10,000
3-31-99 ROGERT PLIMPTON 6,000 22,500
8-2-99 JON BLANCHARD 15,605 SERVICES
6-2-99 DOROTHY CARTON 1,667 GIFT
6-2-99 DONALD CONNOLLY 1,000 GIFT
6-2-99 CREGORY AURIA 2,000 GIFT
6-2-99 RICHARD HIGGINS 3,334 GIFT
6-2-99 ANTHONY LOMONACO 2,000 GIFT
6-2-99 LEE MCCANN 3,559 SERVICES
6-2-99 KEVIN MOLINARI 10,000 20,000
6-2-99 KEVIN MOLINARI 15,000 30,000
6-2-99 KEVIN MOLINARI 27,500 55,000
6-2-99 KEVIN MOLINARI 30,000 60,000
6-2-99 FRANCIS SANDANATO 5,000 GIFT
6-2-99 JOHN TRETTER 5,258 GIFT
6-2-99 JOHN WARD 1,667 SERVICES
12-21-99 CHARLES PRIEST 25,000
TOTAL DECEMBER 31, 1999 4,058,774 2,064,674
F-25
ITEM 2. FINANCIAL STATEMENTS
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
F-1
<PAGE>
INDEX
Page
Independent Auditor's Report 1
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Operations 4 - 5
Consolidated Statements of Cash Flows 6 - 7
Consolidated Statements of Stockholders' Equity 8
Consolidated Notes to Financial Statements 9 - 23
F-2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
Marina Capital, Incorporated
We have audited the accompanying consolidated balance sheets of Marina Capital,
Incorporated, (a development stage enterprise), a Utah corporation, as of
December 31, 1999 and 1998 and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years then ended.
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 conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Marina Capital, Incorporated as
of December 31, 1999 and 1998 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Davis, James, & Chase-Kraaima
Certified Public Accountants
Ogden, Utah
February 15, 2000
F-3
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
December 31, December 31,
1999 1998
CURRENT ASSETS
Cash - unrestricted $ 15,714 $ 166,342
Escrow deposits 45,100 51,100
Accounts receivable 0 15,000
Deposits 220 220
TOTAL CURRENT ASSETS 61,034 232,662
OTHER ASSETS
Office equipment (net) 4,897 4,101
OlymPeak Estates land 1,284,242 1,242,190
Powder Mountain land 96,000 96,000
Sanpete development 0 10,402
Shupe-Williams Plaza 287,986 151,417
TOTAL OTHER ASSETS 1,673,125 1,504,110
TOTAL ASSETS $1,734,159 $1,736,772
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued interest $ 50,614 54,631
Accounts payable 8,926 16,576
Payroll taxes payable 2,200 1,001
Note payable - Maughan 19,546 17,951
Note payable - Coombs 30,000 0
Trust deposits 45,100 51,100
TOTAL CURRENT LIABILITIES 156,386 141,259
See accompanying notes and accountants' report.
Fwd ...(2)
F-4
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 31, 1999 AND 1998
December 31, December 31,
1999 1998
LONG-TERM LIABILITIES:
Note payable $ 674,853 $ 694,181
Less current portion (19,546) (17,951)
TOTAL LONG-TERM LIABILITIES 655,307 676,230
TOTAL LIABILITIES 811,693 817,489
STOCKHOLDERS' EQUITY
Common stock - 30,000,000 shares $.001
par value authorized 4,058,774 shares
issued 2,064,674
3,863,205 shares issued 1,634,101
Preferred stock - 5,000,000 shares no
par value authorized 84,259 shares
issued 240,778 240,778
Deficit accumulated in the
development stage (1,382,986) (955,596)
TOTAL STOCKHOLDERS' EQUITY 922,466 919,283
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,734,159 $1,736,772
See accompanying notes and accountants' report.
(3)
F-5
<PAGE>
</TABLE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<CAPTION>
Year Year Memo Only
Ended Ended March 5, 1996
December 31, December 31, (inception) to
1999 1998 December 31, 1999
<S> <C> <C> <C>
REVENUE
Real estate sales commissions $ 34,134 $ 3,642 $ 94,306
Rent - land 1,200 2,100 3,300
Gain on sale of Ski Inn land 0 15,000 15,000
TOTAL REVENUE 35,334 20,742 112,606
OPERATING EXPENSES
Abandoned projects 25,402 1,781 27,184
Accounting 13,697 8,767 36,519
Advertising and promotion 946 9,679 13,712
Commissions 19,772 9,307 70,539
Consulting 9,714 5,765 198,546
Dues and registrations 2,599 1,082 8,250
Legal 19,659 12,615 68,120
Office expenses 16,360 18,298 50,583
Miscellaneous 10,039 2,336 17,822
Rent 999 10,084 28,898
Taxes 17,361 20,778 56,033
Travel & entertainment 16,554 26,763 75,455
Telephone 9,116 15,460 38,287
Salaries 232,906 171,919 602,634
Insurance 18,477 5,645 32,537
Auto 27,819 20,436 66,075
Depreciation 1,101 456 1,557
TOTAL OPERATING EXPENSES 442,521 341,171 1,392,751
NET LOSS FROM OPERATIONS (407,187) (320,429) (1,280,145)
OTHER INCOME AND (EXPENSES)
Interest income 7,291 2,874 11,743
Interest expense (27,494) (52,240) (114,584)
TOTAL OTHER INCOME AND (EXPENSE) (20,203) (49,366) (102,841)
</TABLE>
See accompanying notes and accountants' report.
Fwd ...(4)
F-6
<PAGE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<CAPTION>
Year Year Memo Only
Ended Ended March 5, 1996
December 31, December 31, (inception) to
1999 1998 December 31, 1999
<S> <C> <C> <C>
NET LOSS $(427,390) $(369,795) $(1,382,986)
BASIS LOSS PER SHARE $(.11) $(.10)
WEIGHTED AVERAGE COMMON SHARES 3,960,990 3,697,487
</TABLE>
See accompanying notes and accountants' report.
(5)
F-7
<PAGE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<CAPTION>
Year Year Memo Only
Ended Ended March 5, 1996
December 31, December 31, (inception) to
1999 1998 December 31, 1999
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(427,390) $(369,795) $(1,382,986)
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Changes in operating assets and liabilities
Accounts receivable 15,000 (220) (220)
Accounts payable and accrued expenses (10,468) (38,719) 61,740
Depreciation 1,101 456 1,557
Net cash provided (used) in operating activities (421,757) (408,278) (1,319,909)
INVESTING ACTIVITIES
Sale of land 0 24,000 24,000
Real estate development (168,219) (202,109) (1,692,228)
Purchase of equipment (1,897) (2,718) (6,454)
Net cash provided (used) in investing activities (170,116) (180,827) (1,674,682)
FINANCING ACTIVITIES
Proceeds from debt 30,000 0 1,192,000
Principle payments on debt (19,328) (64,819) (487,147)
Proceeds from sale of common stock 430,573 774,989 2,064,674
Proceeds from sale of preferred stock 0 30,000 240,778
Net cash provided in financing activities 441,245 740,170 3,010,305
Change in cash (150,628) 151,065 15,714
Cash at beginning of period 166,342 15,277 0
Cash at end of period $ 15,714 $ 166,342 $ 15,714
</TABLE>
See accompanying notes and accountants' report.
Fwd...(6)
F-8
<PAGE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<CAPTION>
Year Year Memo Only
Ended Ended March 5, 1996
December 31, December 31, (inception) to
1999 1998 December 31, 1999
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES
Non-cash investing activities - None
Operating activities reflect
Interest $ 31,510 $ 49,366
Taxes $ 0 $ 0
</TABLE>
For purposes of the statements of cash flows, the Company considers all short
term instruments purchased with a maturity of three months or less to be cash
equivalents. There were no cash equivalents at December 31, 1999 and 1998.
See accompanying notes and accountants' report.
(7)
F-9
<PAGE>
<TABLE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK PREFERRED STOCK IN THE
NO. OF NO. OF DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT STAGE
<S> <C> <C> <C> <C> <C>
Balance December 31, 1997 3,531,768 $ 859,112 74,259 $210,778 $ (585,801)
Stock issued 331,437 774,989 10,000 30,000 0
Net loss (369,795)
Balance December 31, 1998 3,863,205 1,634,101 84,259 240,778 (955,596)
Stock issued 195,569 430,573 0 0 0
Net loss (427,390)
Balance December 31, 1999 4,058,774 $2,064,674 84,259 $240,778 $(1,382,986)
</TABLE>
See accompanying notes and accountants' report.
(8)
F-10
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
A. Nature of Business
The company was incorporated in Utah on March 5, 1996. The purpose of
the company is to invest in and develop various real estate and other
business opportunities. The company has several projects in various
stages of development. Marina Capital, Incorporated has formed two
Limited Liability Companies to own and manage the Shupe-Williams
building project. The Shupe-Williams building was purchased by Shupe-
Williams Plaza, LLC for $100 and is its' only asset. Shupe-Williams
Plaza, LLC is 100% owned by Marina Holding, LLC which has no other
assets. Marina Holding, LLC is 100% owned by Marina Capital,
Incorporated. All three companies have been consolidated into these
financials and any intercompany transactions have been eliminated.
B. Income Taxes
The company elected subchapter-S status at inception. This election has
been terminated as of January 1, 1997. There are no tax liabilities at
this time, as the company has loss carryovers of $1,235,326 as of
December 31, 1999. The Company has adopted SFAS No. 109 (See Note 8).
C. Accounting Methods
The company uses the accrual method of accounting. Development and
organization costs are capitalized and amortized or expensed according
to generally accepted accounting principles. Commission revenue and
gains on sales of real estate are recognized as sales are closed.
D. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
NOTE 2 - RELATED PARTY TRANSACTIONS
The Company was organized by Richard V. Murray and Larry R. Walker. Salaries
and expense allowance have been paid to these individuals. They are currently
working to develop the company with compensation of $6,875 each month.
Fwd...(9)
F-11
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - RELATED PARTY TRANSACTIONS (CONTINUED)
Year ended Year ended
December 31, December 31,
1999 1998
Salaries and expense allowance paid to
related parties $175,450 $169,200
The Company purchased 65 acres of land called the Snowbasin land from the
Maughan Family Partnership for $975,000 on October 31, 1996 (See Note 15).
Russell Maughan, who is a 1% shareholder and chairman of the Board of Marina
Capital is also a partner in the Maughan Family Partnership. The Company feels
it was an arms-length transaction.
The Company purchased a two acre lot at Powder Mountain from Ski Inn, a company
in which Larry Walker was an owner. The purchase price was $120,000 in stock
(See Note 15).
NOTE 3 - TRUST ACCOUNTS
The Company has four trust accounts maintained at the Bank of Utah. The
Investor's Trust Account is where new investor moneys are deposited. Stock is
issued to investors. The Real Estate Trust Account holds deposits and proceeds
of real estate brokerage transactions. The Shupe Williams Trust holds 19 $1,000
refundable deposits for investors interested in purchasing condo units. The
OlymPeak Trust holds money deposited on OlymPeak lot sales. A liability account
has been set up for all but the investor deposits.
NOTE 4 - NOTES PAYABLE
The Company has the following notes outstanding:
December 31, December 31,
1999 1998
Maughan Family Partnership - 8.25% secured by
Snowbasin land-first position $674,853 $694,181
Coombs 30,000 0
Total 704,853 694,181
Less current maturities 49,546 17,951
Long-term portion $655,307 $676,230
Fwd...(10)
F-12
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - NOTES PAYABLE (CONTINUED)
5 year repayment schedule
2000 $ 49,546
2001 655,307
$704,853
NOTE 5 - DEVELOPMENT COSTS
The Company has incurred development costs on various development projects.
These costs have been capitalized and will be expended when the related projects
are sold or abandoned. Total costs as of December 31, 1999 are $1,668,228.
This includes costs directly associated with the development of the project such
as materials, labor, subcontractors, licensing fees, building permits, surveys,
insurance, taxes, interest and any other costs directly associated with the
development. As of this date, all costs have been directly associated with
individual projects and no overhead allocation has been necessary.
NOTE 6 - STOCK
The Company has the following shares of stock outstanding:
Restricted Unrestricted Total
Common 3,878,874 179,900 4,058,774
Preferred 84,259 - 84,259
The preferred stock bears interest at 10 to 12% per annum. Purchaser may elect
to receive cash or additional preferred stock at $2.75 to $3.25 per share.
After 2 years the stockholder may elect to redeem their stock at a price of
$3.00 to $3.50. Four stockholders also have an option to redeem their stock
towards the purchase of a lot in the OlymPeak Estates Subdivision No. 1. No
additional stock has been issued. Interest owed was $35,483 at December 31,
1998, and $40,335 at December 31, 1999. Interest of $7,200 was been paid.
The preferred stock has no voting rights. No stockholder has exercised their
conversion rights.
NOTE 7 - EARNINGS PER COMMON SHARE
Earnings per common share are calculated by dividing net income by the weighted
average number of common shares outstanding during the period as required by
SFAS 128. Under the new requirements for calculating primary net income per
share (basis earnings per share), the dilutive effect of stock options will be
excluded.
Fwd...(11)
F-13
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - INCOME TAXES
The Company has adopted SFAS No. 109, "Accounting for Income Taxes". Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. No deferred tax assets or liabilities
have been reflected in the financial statements. There are no differences
between the carrying values of assets and liabilities for book verses tax basis.
The Company has operated at a loss since inception. The Company feels that any
tax benefit from these operating losses is uncertain and would be reduced to
zero under the valuation allowance rules. The Company has net operating losses
of $1,235,326 as of December 31, 1999. They begin to expire in the year 2017.
NOTE 9 - CONTINGENT LIABILITIES
Ogden City Corporation and the Ogden City Redevelopment Agency each hold a
$250,000 trust deed note on the Shupe-Williams Building and adjacent lot. Said
notes will be deemed satisfied upon sufficient completion of the project as
specified in the purchase agreement. The Company is also subject to
restrictions on transfer of the building (See the agreement for complete
details). Management has not reported this obligation in the financial
statements due to its contingent nature. They feel it will never be paid as
it will be satisfied on completion of the project or canceled if the building
is returned to the sellers. (See FAS 105.)
NOTE 10 - ESCROW DEPOSITS
The Company has established bank trust accounts to hold money restricted for
specified uses.
REAL ESTATE TRUST - This is a trust account to hold real estate customer
deposits.
SHUPE-WILLIAMS TRUST - This is a trust account to hold deposits from
individuals who are interested in purchasing Shupe-Williams Building
condo units when completed. The funds are refundable if not completed.
Fwd...(12)
F-14
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 - ESCROW DEPOSITS (CONTINUED)
OLYMPEAK TRUST - This is a trust account to hold deposits from
individuals interested in purchasing lots in the OlymPeak subdivision
when completed. The funds are refundable if not completed.
December 31, December 31,
1999 1998
Real Estate Trust $ 100 $ 8,100
Shupe Williams Trust 19,000 17,000
OlymPeak Trust 26,000 26,000
$45,100 $51,100
NOTE 11 - ACCOUNTS RECEIVABLE
Marina Capital contracted to do consulting and due diligence work for Mr. Joseph
Graves on development of the Rincon Golf and Country Club Community.
The project was abandoned in March 1999.
NOTE 12 - REAL ESTATE SALES COMMISSIONS
The Company operates a real estate sales division. It currently has only three
agents. The Company generally receives a 6% commission on real estate sales
transactions.
NOTE 13 - SALE OF SKI INN LAND
In 1998 the Company sold an approximate .40 acre of the Ski Inn land at Powder
Mountain. It was sold for $40,000 with a cost basis of $24,000 showing a profit
of $15,000. The property was sold to an unrelated party.
NOTE 14 - REAL ESTATE VALUATION
All real estate and land are recorded at cost. This includes the actual cost of
the land plus improvements made. All real estate projects are still in the
early development stages. The Company feels the net realizable value of each
project is more than the costs recorded on the books.
Fwd...(13)
F-15
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE
I. SNOWBASIN LAND
The OlymPeak Estate project consists of 65 acres of raw land located in Ogden
Valley approximately four (4) miles from the Snow Basin Ski Resort. It is being
developed into 22 residential lots. Preliminary approval was obtained from Weber
County on March 14, 1996. The final approval will be subject to the State of
Utah Engineer and Weber County approval of the water and sewer system by the
County. The Company anticipates that final approval will be granted within
three (3) to six (6) months from the date of this Registration Statement. Upon
receiving the final approval, construction on the roads, water and sewer system
will commence and will take approximately three (3) to six (6) months to
complete. Six (6) of the lots have been reserved at a sale price between
$155,000 to $226,000 per lot. The Company has prepared the necessary
documentation to form a not-for-profit Water and Sewer District to service the
area. The documentation will be submitted to the State of Utah Engineer for
approval within the next ninety (90) days. The Company exercised its option to
purchase the OlymPeak Estate property on October 31, 1996 and entered into a
five (5) year purchase agreement with the Maughan Family Partnership. The
Company executed a Trust Deed and Note for the balance of the purchase price of
$725,000. The original purchase price was $975,000. The terms of the note are
as follows: A five (5) year note, twenty (20) year amortization schedule, with
annual payments of $75,221 and a balloon payment at the end of the five (5) year
period for the balance. The Company proposes to spend approximately $1,000,000
in the construction of roads, water and sewer system.
Capitalized Costs Expensed Costs
Balance December 31, 1997 $1,175,761 $ 0
1998 costs 66,429 0
Balance December 31, 1998 1,242,190 0
1999 costs 42,052 0
Balance December 31, 1999 $1,284,242 $ 0
Fwd...(14)
F-16
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE (CONTINUED)
Capitalized Costs
Summary of costs:
Land costs $ 975,000
Development costs - roads, water &
sewer, environmental studies, etc. 309,242
$1,284,242
II. POWDER MOUNTAIN LAND:
Location. The Ski Inn at Powder Mountain property is located in Northern Utah,
Cache County, and is adjacent to the main parking lot at Powder Mountain Ski
Resort, eight miles from Eden, Utah. The property is located one hour from the
Salt Lake City International Airport, and thirty minutes from Ogden, Utah.
Description. The proposed Ski Inn at Powder Mountain project is located on a
1.6 acre parcel of mountainous unimproved land with access through the Powder
Mountain Resort parking lot. The ski lifts and trails can be skied directly to
and from the property.
Current Use. The property is currently zoned FR-40 (conditional use permit).
Proposed Use. The Company proposes to construct a Hotel/Condominium consisting
of 48 units for sale or rent.
The Company exercised its option on December 31, 1996 and in an arms-length
transaction, acquired the property from Ski Inn at Powder Mountain, a Limited
Partnership in which Mr. Larry R. Walker, a director and president of the
Company was the General Partner. The Limited Partnership received 60,000 shares
of the Company's $.001 par value Common Stock in consideration for the
properties valued at $120,000. The Company proposes to allocate approximately
$50,000 for the necessary
Fwd...(15)
F-17
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE (CONTINUED)
entitlement work in order to obtain development approval from the county.
Capitalized Costs Expensed Costs
Balance December 31, 1997 $120,000 $ 0
1998 costs (24,000) 0
Balance December 31, 1998 96,000 0
1999 costs 0 0
Balance December 31, 1999 $ 96,000 $ 0
Summary of costs:
Land costs $ 96,000
III. SHUPE-WILLIAMS PLAZA
Location. Shupe-Williams Plaza at 26th Street and Wall Avenue near Historic
25th Street in downtown Ogden, Utah.
Description. The Shupe-Williams Plaza Building is a four-story building of
approximately 62,500 feet located on an 85,000 square foot building lot. The
building was built in 1902 and was used as a warehouse and candy manufacturing
facility. The building has been abandoned for 15 years.
Current Zoning. With the assistance of the City of Ogden, the property and
building have been zoned to accommodate both residential and commercial use.
Proposed Use. The Company is currently rehabbing the building and vacant lot.
The main floor will be converted into a restaurant, office and retail use. The
upper floors will be converted to Live/Work lofts. Six (6) penthouse lofts will
be constructed on top of the building.
Fwd...(16)
F-18
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE (CONTINUED)
Status. The Shupe-Williams Plaza property was conveyed to the Company by the
Ogden City Corporation and the Ogden City Developmental Agency on May 27, 1998.
The total purchase price was $100.00. The sellers have also retained a $250,000
Trust Deed on the property which will be considered satisfied upon sufficient
development of the property. The City has also agreed to rebate $250,000 in
taxes, over a five-year period.
Estimated Revenue Phase One. $6,000,000 to $7,500,000.
Financing. The Company is in the process of financing the construction phase
and has made application with several financial brokers and institutions. The
first phase of construction was started in September of 1998. The Company
expects construction to be completed within twelve (12) to eighteen (18) months
after financing has been approved. The Company has started to pre-sell and
market the lofts. Currently 20 of the units have been reserved. A trust
account has been set up to hold reservation deposits until construction of the
building is complete. In addition, several Letters of Intent to lease space
have been received.
Recent and Significant Developments (Shupe-Williams Plaza). The Company entered
into a Real Estate Purchase Contract on October 8, 1997, with the City of Ogden,
Utah, and Ogden City Neighborhood Development Agency, to purchase the Shupe-
Williams Building located at 2605 Wall Avenue, including the abandoned portion
of 26th Street. The total purchase price was $100.00. The City has also agreed
to tax increment rebates totaling $250,000. The rebate will be made to the
Company over a five (5) year period. The closing date on the building was May
27, 1998 at which time fee simple title was conveyed to the Company.
An agreement was entered into with the Land Development Group of Provo, Utah to
act as developer/consultants for the conversion of the old Shupe-Williams candy
manufacturing building. The building will be converted into a 45 Live/Work
loft-condominium complex plus commercial and retail space. The building was
built in 1902, has four floors (approximately 62,500 sq. ft.) on a two (2) acre
lot. The proposed sale of the lofts is expected to generate approximately
$6,000,000 to $7,500,000 in revenue. The Land Development Group has in the
past, successfully converted buildings in Houston, Texas, San Diego, California
and Salt Lake City, Utah.
Fwd...(17)
F-19
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - REAL ESTATE (CONTINUED)
Capitalized Costs Expensed Costs
Balance December 31, 1997 $ 20,012 0
1998 costs 131,405 0
Balance December 31, 1998 151,417 0
1999 costs 136,569 0
Balance March 31, 1999 $287,986 $ 0
Summary of costs:
Land costs $ 100
Development costs 287,886
$287,986
Carrying Value of Real Estate. FAS 121 requires that real estate development
projects be valued at lower of cost or market value. The projects on the
Company's balance sheet are valued at cost as management feels the value of each
project exceeds costs.
SNOWBASIN LAND - The land was originally purchased in 1996 for $15,000
per acre for 65 acres. Subsequent costs incurred amount to $4,438 per
acre for a total cost of $19,757 per acre. Land costs in the Ogden
Valley area have increased dramatically over the last three (3) years.
It is estimated that the land could now be sold for $30,000 per acre
as is.
POWDER MOUNTAIN LAND - The Company owns 1.6 acres of land at a cost of
$60,000 per acre. One acre lots adjacent to the land are selling for
$75,000 per acre.
SHUPE-WILLIAMS PLAZA - The Company has $287,886 invested in the project.
The Company has done substantial improvements to the property such as
clean up, paint removal, mechanical system repairs, and two (2)
completed units. Based on these improvements management feels the fair
market value significantly exceeds the costs put in.
SAN PETE DEVELOPMENT - The Company has invested $10,402 in attempting to
develop a parcel of land in San Pete County, Utah. The project has been
abandoned.
Fwd...(18)
F-20
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 16 - STOCK OPTION AGREEMENTS
On October 20, 1998 the Company entered into a stock option agreement in which
the Company grants the option to a stockholder to purchase up to 300,000 shares
of voting common stock for an exercise price of $2.50 per share at any time from
October 20, 1999 through October 20, 2004, with a 90 day extension period.
On December 14, 1998, an option to purchase a second group of 200,000 shares of
voting common stock at the same exercise price was granted and fully exercisable
from December 14, 1999 through December 14, 2004 with a 90 day extension period.
Special provisions apply in the event of death, disability or termination of the
stockholder.
Richard Murray and Larry Walker also have employment agreements which gives them
the right to purchase additional stock up to 5% of the then issued and
outstanding common stock at a price equal to 75% of the book value. No stock
has been issued under these agreements.
First Group Second Group
of Options of Options
Number of options outstanding on
January 1, 1998 - -
Number of options granted in 1998 300,000 200,000
Number of options outstanding on
December 31, 1998 and December 31, 1999 300,000 200,000
Number of options exercisable at
December 31, 1998 and December 31, 1999 0 0
Weighted average exercise price per share
outstanding and per share exercisable $ 2.50 $ 2.50
Total compensation cost recognized in 1998
and 1999 for stock based compensation awards $ - $ -
Grant date fair value of options granted in 1998 $ 0 $ 0
Weighted average grant date fair value of
options granted in 1998 $ 0 $ 0
Weighted average remaining contractual life of
options outstanding and exercisable 6 years 6 years
Fwd...(19)
F-21
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 16 - STOCK OPTION AGREEMENTS (CONTINUED)
No options were exercised, were forfeited or expired in 1998 or 1999.
The calculation of the fair values of the options, under the minimum value
method, assumes that no corporate dividends will be issued prior to exercise
of the options, and that the options will be exercised immediately prior to the
exercise expiration date. The Company deems the options to have minimal value
as there is no publicly traded market for the shares.
The Company has accounted for the stock options under APB Opinion 25, an
accounting standard under which no related compensation expense was recognized
in 1998, the year of the grant. Under an alternative accounting standard, FAS
123, compensation expense of $-0- would have been recognized related to the
grant, resulting in net loss of $(341,710).
NOTE 17 - STOCKHOLDERS
See Exhibit I.
(20)
F-22
<PAGE>
<TABLE>
Exhibit I
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development State Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
LIST OF STOCKHOLDERS:
Preferred Stock: SHARES $
<S> <C> <C> <C> <C>
6-5-97 VERA MILLARD TRUST 10,000 30,000
7-12-97 RODERICK ORINGER 21,926 65,778
8-28-97 BRYCE JORGENSON 12,000 30,000
9-23-97 SCOTT KELLY 12,000 30,000
11-28-97 CLIFF JENNINGS 10,000 30,000
12-15-97 PETER NEUBAUER TRUST 8,333 25,000
TOTAL DECEMBER 31, 1997 74,259 210,778
4-16-98 EDWARD GRAZIANI 10,000 30,000
TOTAL DECEMBER 31, 1998 &
March 31, 1999 84,259 $240,778
Common Stock: SHARES $
1-5-96 SUSAN MONTGOMERY 9,583 14,375
1-5-96 BROOKWOOD TRUST 9,583 14,375
3-4-96 SHEILA KELLY 281,33 102,188
5-20-96 RICHARD ROSALES 16,125 16,125
5-30-96 BILL TABAR 37,500 6,946
6-3-96 CHARLES PARTRIDGE 5,733 8,600
6-3-96 KEN KLAGES 17,916 26,875
6-6-96 LEE MARKRACK 17,916 26,875
6-22-96 STUART BRIGGS 17,916 26,875
7-1-96 LARRY WALKER 1,240,000 2,000 SERVICES
7-1-96 RICHARD MURRAY 1,207,500 2,000 SERVICES
7-14-96 JON BLANCHARD 37,500 500 SERVICES
7-16-96 TODD ANDERSEN 37,500 500 SERVICES
10-23-96 STUART BRIGGS 40,000 80,000
10-23-96 JOHN DAHLBERG 15,000 30,000
12-30-96 MARK ARCHER 37,500 SERVICES
11-20-96 RUSS MAUGHAN 37,500 SERVICES
8-15-96 RAUL RODRIGUEZ 147,000 SERVICES
STOCK SUBSCRIBED (225,100)
TOTAL DECEMBER 3, 1996 3,213,105 133,134
STOCK SUBSCRIBED 225,100
1-16-97 CHARLES PRIEST 22,500 45,000
1-16-97 BRIDGET PRIEST 10,000 20,000
2-4-97 THOMAS LYONS 37,500 SERVICES
4-2-97 PETER NEUBAUER 12,500 25,000
4-11-97 COLIN BRIGGS 12,500 25,000
4-11-97 RONALD CANDRY 4,000 20,000
</TABLE>
F-23
<PAGE>
<TABLE>
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development State Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
LIST OF STOCKHOLDERS:
SHARES $
<S> <C> <C> <C> <C>
4-11-97 SAM MENDES 20,000 40,000
5-1-97 LAURI ANDERSON 3,500 11,935
5-1-97 MARVIN INGLET 10,000 43,250 SALE OF POWDER MT. LOT
5-1-97 VICKI MUNN 3,500 11,935
5-1-97 GERALD NAYLOR 5,000 17,050 SALE OF POWDER MT. LOT
5-1-97 LO'D WALKER 3,500 11,935
5-1-97 TRAVIS WEAVER 5,000 17,050
5-1-97 BONNIE PERKINS 1,000 3,410
5-1-97 TROY WALKER 3,500 11,935
7-6-97 R. RENNA 11,000 22,000
8-20-97 CHARLES PRIEST 10,000 20,000
8-25-97 RONALD CANDRAY 4,000 8,000
8-26-97 PETER NEUBAUER 5,480 10,960
9-1-97 GERALD CRAWFORD 50,000 16,667 SERVICES
9-1-97 SCOTT KELLY 50,000 50,000 SERVICES
9-4-97 D. WALTON 6,375 12,750
12-10-97 THOMAS REILLY 2,500 GIFT FROM RICHARD MURRAY
12-10-97 LAWRENCE LITWACK 5,000 GIFT FROM RICHARD MURRAY
12-22-97 DIANE MANGANARO 308 1,001
12-28-97 RICHARD & BILLIE GEIST 20,000 65,000
TOTAL DECEMBER 31, 1997 3,531,768 859,112
1-7-09 ARNOLD CANDRAY 1,400 SERVICES
3-5-98 RICHARD GIALLONGO 2,000 6,500
3-25-98 CHRISTINE VALLAS 1,550 5,038
4-16-98 FLOCO REAL ESTATE 1,540 5,005
4-16-98 BRENT LARSIN 1,540 5,005
4-21-98 CAROL CORRENTI 3,200 10,400
4-21-98 ROBERT MOSS JR. 615 2,000
4-30-98 DAVID KNOWLES 37,500 SERVICES
5-4-98 CLIFF JENNINGS 462 SERVICES
5-7-98 PACIF CST. PART-CHRUCH DAVIS 7,690 24,993
5-19-98 MICHAEL WAGNER 1,539 5,000
6-15-98 PETER NEUBAUER 615 2,000
6-18-98 GERARD O'ROUKE 6,154 20,000
7-7-98 RODERICK ORINGER 7,500 15,000
7-27-98 DAVID GIRARD 7,692 25,000
7-27-98 PETER NEUBAUER 12,308 40,000
8-20-98 EDWARD SANDERS 7,692 25,000
9-2-98 JOHN LEWIS 10,000 SERVICES
9-2-98 SHARRON O'TOOLE 500 SERVICES
9-30-98 DANIEL MASLIAH 2,667 10,000
10-8-98 ROBERT PLIMPTON 6,000 22,500
10-19-98 KEVIN MOLINAIRI 196,667 625,00
1-19-98 RONALD CANDRAY 2,500 9,375
</TABLE>
F-24
<PAGE>
<TABLE>
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development State Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
LIST OF STOCKHOLDERS:
SHARES $
<S> <C> <C> <C> <C>
10-21-98 RODERICK ORINGER 480 SERVICES
10-23-98 GERALD O'ROURKE 1,000 3,750
10-23-98 PAUL CHAFFEE 1,000 3,750
10-30-98 VERA MILLARD 5,500 20,625
11-16-98 PAL JAUREGUI 1,300 4,875
11-21-98 RODERICK ORINGER 2,193 SERVICES
12-1-98 CHARLES PRIEST 37,000 SERVICES
12-17-98 KEITH GUETSCHOW 1,346 SERVICES
12-22-98 JOHN ASHER 2,700 10,125
12-22-98 RONALD CANDRAY 2,500 9,375
12-28-98 GREAGORY D'AURIA 2,000 7,500
12-31-98 KEVIN MOLINARI SUBSCRIBED (44,913) (142,826)
TOTAL DECEMBER 31, 1998 3,531,768 859,112
12-31-98 KEVIN MOLINAI SUBSCRIBED 44,913 142,826
1-6-99 MARILYN SPENCER\HELEN SCHOE 1,000 3,750
1-6-99 RICHARD LUSBY 3,934 14,750
2-16-99 CHARLES PRIEST 5,333 20,000
2-16-99 RODRIC ROBINSON 1,000 3,750
3-10-99 IAN MACDONALD 1,000 SERVICES
3-11-99 SHARON SKYLOR 3,467 13,000
3-30-99 GARY DOUGAN 2,666 9,997
3-31-99 JOHN MANGANARO 2,666 10,000
3-31-99 ROGERT PLIMPTON 6,000 22,500
8-2-99 JON BLANCHARD 15,605 SERVICES
6-2-99 DOROTHY CARTON 1,667 GIFT
6-2-99 DONALD CONNOLLY 1,000 GIFT
6-2-99 CREGORY AURIA 2,000 GIFT
6-2-99 RICHARD HIGGINS 3,334 GIFT
6-2-99 ANTHONY LOMONACO 2,000 GIFT
6-2-99 LEE MCCANN 3,559 SERVICES
6-2-99 KEVIN MOLINARI 10,000 20,000
6-2-99 KEVIN MOLINARI 15,000 30,000
6-2-99 KEVIN MOLINARI 27,500 55,000
6-2-99 KEVIN MOLINARI 30,000 60,000
6-2-99 FRANCIS SANDANATO 5,000 GIFT
6-2-99 JOHN TRETTER 5,258 GIFT
6-2-99 JOHN WARD 1,667 SERVICES
12-21-99 CHARLES PRIEST 25,000
TOTAL DECEMBER 31, 1999 4,058,774 2,064,674
F-25
ITEM 3. FINANCIAL STATEMENTS AND EXHIBITS
25
</TABLE>
MARINA CAPITAL, INC.
195 Alhambra, Suite 3 * San Francisco, CA 94123 * 415-441-9925/415-441-9924 fax
LETTER OF INTENT AND UNDERSTANDING:
This letter, dated May 15, 1996, is made by and between Marina Capital, Inc.
(MC) with its principal place of business at 349 South 200 East, Suite 370, Salt
Lake City, Utah 84111 and VR Utah, Inc., dba Business Resource Center, (VR) with
its principal place of business at 349 South 200 East, Suite 370, Salt Lake
City, Utah 84111.
MC is engaged in the business of marketing, sales, business consulting,
financing and real estate development.
VR is engaged in the business of business sales and consulting.
MC and VR desire to assist and cooperate with each other from time to time on
business opportunities that may be of beneficial interest to each party.
Each party shall be responsible for their own expenses that arise from each
project that they are a party to.
Each party shall agree to the compensation split on a project by project basis.
On certain projects a detailed agreement may be required.
The parties have agreed to this Letter of Intent and Understanding on the date
first written above.
Marina Capital, Inc. VR Utah, Inc.
By: /s/ Larry Walker By: /s/ William Tabor
President President
MARINA CAPITAL MORTGAGE
2605 Wall Avenue
Ogden, Utah 84401
(801) 394-2400 - Fax (801) 394-1004
Olympeak Estates Subdivision
Financing Terms
Twenty-five percent (25%) down payment:
Interest rate: 3 points over prime
3 years with balloon payment
20-year amortization schedule
Loan Origination Fee: 2 points
Fifty percent (50%) down payment:
Interest rate: 2 points over prime
5 years with balloon payment
30-year amortization schedule
Loan Origination Fee: 1 1/2 points
NO PRE-PAYMENT PENALTY
Transferable upon Credit Approval and $300 Fee
REAL ESTATE PURCHASE CONTRACT
COMMERCIAL
The Buyer, Shupe Williams Plaza, L.L.C., a Utah Limited Liability Company, to
be formed and wholly owned by Marina Capital Corporation (a Utah Corporation),
offers to purchase the Property described below and delivers as Earnest Money
Deposit $ 100.00 in the form of a check to Ogden City Corporation and Ogden City
Neighborhood Development Agency.
OFFER TO PURCHASE
1. The property which is the subject of this offer to purchase ("Property")
is located at 2605 Wall Avenue (multiple parcels), including # 03-003-000l and
# 03-003-0026 and including abandoned portion of 26th Street.
For legal description, see attached Addendum #1.
1.1 INCLUDED ITEMS: Unless excluded herein, this sale shall include all
fixtures presently attached to the Property. The following personal property
shall also be included in this sale and conveyed under separate Bill of Sale
with warranties as to title: All current contents in building to be identified
by Buyer within ten (10) days of acceptance. (Deleted text "remaining
personalty to be removed by Seller within thirty (30) days after acceptance.")
1.2 EXCLLTDED ITEMS: These items are excluded from this sale: None.
2. PURCHASE PRICE AND FINANCING. Buyer agrees to pay for the Property as
follows:
$100.00 Earnest Money Deposit
$ 0.00 Balance of Purchase Price in cash at closing
$100.00 TOTAL PURCHASE PRICE
3. CLOSING. This transaction shall be closed on or before 10 days after 1ast
contingency item removed (see Addendum #2. Closing shall occur when: (a) Buyer
and Seller have signed and delivered to each other (or to the escrow/title
company), all documents required by this Contract, by the Lender, by written
escrow instructions signed by the Buyer and the Seller, and by applicable law;
(b) the moneys required to be paid under these documents have been delivered to
the escrow/title company in the form of collected or cleared funds; and (c) the
deed which the Seller has agreed to deliver under Section 5 has been recorded.
Seller and Buyer shall each pay one-half of the escrow Closing fee, unless
otherwise agreed by the parties in writing. Taxes and assessments for the
current year, and interest on assumed obligations shall be prorated as set forth
in this Section. All deposits on tenancies shall be transferred to Buyer at
Closing. Proration set forth in this Section shall be made as of date of
possession. In no event shall closing occur after March 1, 1998.
4. POSSESSION. Seller shall deliver possession to Buyer within twenty-four
(24) hours after Closing.
1
<PAGE>
5. TITLE TO PRROPERTY AND TITLE INSURANCE. (a) Seller has, or shall have
at Closing, fee title to the Property and agrees to convey such title to Buyer
by special warranty deed, free of financial encumbrances as warranted; (b)
Seller agrees to pay for, and furnish Buyer at Closing with, a current standard
coverage owner's title insurance policy in the amount of the Total Purchase
Price; (c) the title policy shall conform with Seller's obligations under
subsections (a) and (b). Unless otherwise agreed under Section 7.2, the
commitment shall conform with the title insurance commitment provided under
Section 6.1.
6. SPECIFIC UNDERTAKINGS OF SELLER AND BUYER.
6.1 SELLER DISCLOSURES. The Seller will deliver to the Buyer the following
Seller Disclosures no later than the number of calendar days indicated below
which shall be days after Acceptance.
(days)
(a) a commitment for the policy of title insurance required under
Section 5, to be issued by Home Abstract & Title Co., including
copies of all documents listed as Exceptions on the Commitment: 20
(b) a copy of all loan documents relating to any loan now existing
which will encumber the Property after Closing: 20
(c) a copy of all leases and rental agreements now in effect with
regard to the Property together with a current rent roll: 20
(d) any easement or right-of-way agreements affecting the property: 20
Seller agrees to pay any charge for cancellation of the title commitment
provided under subsection (a).
If Seller does not provide any of the Seller Disclosures within the time periods
agreed above, the Buyer may either waive the particular Seller Disclosure
requirement by taking no timely action or the Buyer may notify the Seller in
writing prior to the closing that the Seller is in Default under this Contract
and that the remedies under Section 14 are at the Buyer's disposal. The holder
of the Earnest Money Deposit shall, upon a receipt of a copy of Buyer's written
notice, return to the Buyer the Earnest Money Deposit without the requirement of
further written authorization from the Seller.
6.2 BUYER UNDERTAKINGS. The Buyer agrees to do those requirements set
out in Addendum #2 attached.
6.3 ADDITIONAL DUE DILIGENCE. The Buyer may undertake any of the
following Additional Due Diligence elements at its own expense and for its own
benefit for the purpose of complying with the Contingencies under Section 7.
2
<PAGE>
(a) Ordering and obtaining an appraisal of the property if one is not
otherwise required under Section 6.2;
(b) Ordering and obtaining a survey of the Property if one is not otherwise
required under Section 5;
(c) Ordering and obtaining any environmentally related study of the
Property;
(d) Ordering and obtaining a physical inspection report regarding, and
completing a personal inspection of, the Property;
(e) Requesting and obtaining verification that the Property complies with
all applicable federal, state, and local laws, ordinances, and regulations
with regard to zoning and permissible use of the Property.
Seller agrees to cooperate fully with Buyer's completing these Due Diligence
matters and to make the Property available as reasonable and necessary for the
same.
7. CONTINGENCIES. THIS offer is subject to the Buyer's approving in its
sole discretion the Seller Disclosures, the Buyer Undertakings, and Additional
Due Diligence matters undertaken in Section 6, along with additional
contingencies set forth herein below and in Addendum No. 2.
7.1 If Buyer objects to any disclosure or undertaking item in Section 6,
Buyer and Seller shall have 30 calendar days after receipt of the objections to
resolve Buyer's objections. Seller may, but shall not be required to, resolve
Buyer's objections. Likewise, the Buyer is under no obligation to accept any
resolution proposed by the Seller. If Buyer's objections are not resolved
within the stated time, Buyer may void this Contract by providing written notice
to Seller within the same stated time. The holder of the Earnest Money Deposit
shall, upon receipt of a copy of Buyer's written notice, return to Buyer the
Earnest Money Deposit without the requirement of any further written
authorization from Seller. If this Contract is not voided by Buyer, Buyer's
objection is deemed to have been waived. However, this waiver does not affect
warranties under Section 9.
7.2 Resolution of Buyer's objections under Section 7.1 shall be in writing
and shall become part of this Contract.
7.3 Contingent upon (Deleted text "Seller's")Buyer's receipt of Phase 2
Environmental Assessment of the subject property to be provided by Seller, at
its expense, as soon as possible, but in no event , more than thirty (30) days
prior to closing or December 1, 1997, whichever occurs first. In the event that
Buyer does not approve of items contained in said environmental Assessment,
Seller shall have thirty (30) days notification in which to correct such
conditions as identified by Buyer
3
<PAGE>
in writing. In the event Seller fails to make adequate correction of such
conditions, Buyer may withdraw from this contract and shall not be obligated
thereon. (Text written in "Seller shall not be responsible to remove or pay to
remove or remediate asbestos or lead based paint determined to be present in the
building.")
7.4 Subject to Buyer's verification of existing-utilities. This includes
what utilities exist, their condition, the size of lines, where they exist in
the Property, and other such information regarding existing utilities.
7.5 Contingent upon Buyer being able to obtain adequate zoning changes as
required for its project, prior to closing.
7.6 Subject to the Property being delivered absent of any known structural
defects. In the event any structural defects are known to Seller, it shall
disclose the same to Buyer immediately.
8. OTHER CONTINGENCIES. This offer is made subject to: See Addendum #2.
The terms of attached Addendum #2 are incorporated into this Contract by this
reference.
9. SELLER'S WARRANTIES. Seller warrants to Buyer the following regarding the
property:
9.1 When Seller delivers possession of the Property to Buyer, it will be in
the "as is" condition. Seller shall not be responsible for removing personal
property nor sweeping the building.
9.2 Seller will deliver possession of the Property to Buyer with utility
lines and connections in the "as is" condition. (Deleted text "but Seller
warrants that it knows of no code violation.")
9.3 Buyer received the Property in "as-is" condition except as specified in
this contract or any part thereof or addendum thereto.
9.4 At Closing, Seller will bring current all financial obligations
encumbering the Property which are assumed in writing by Buyer and will
discharge all such obligations which Buyer has not so assumed.
10. VERIFICATION OF WARRANTED AND INCLUDED ITEMS. After all contingencies have
been removed and before, Closing, the Buyer may conduct a "walk-through"
inspection of the Property to determine whether or not items warranted by Seller
in (Deleted text "Section 9.1, 9.2, 9.3 and 9.4") Paragraph 9 are in the
warranted condition and to verify that items included in Section 1.1 are
presently on the Property. If any item is not in the warranted condition,
Seller will correct, repair or replace it as necessary or, with the consent of
Buyer and (if required) Lender, escrow an amount at Closing to provide for such
repair or replacement.
4
<PAGE>
11. CHANGES DURING TRANSACTION. Seller agrees that no changes in any
existing leases shall be made, no new leases entered into, and no substantial
alterations or improvements to the Property shall be undertaken without the
written consent of the Buyer.
12. AUTHORITY OF SIGINERS. If Buyer or Seller is a corporation,
partnership, trust, estate, or other entity, the person signing this Contract
on its behalf warrants his or her authority to do so and to bind Buyer or Seller
and the heirs or successors in interest to Buyer or Seller. If the Seller is
not the vested Owner of the Property but has control over the vested Owner's
disposition of the Property, the Seller agrees to exercise this control and
deliver title under this Contract as if it had been signed by the vested Owner.
13. COMPLETE CONTRACT. This instrument (together with its Addenda, any
attached Exhibits, and Seller Disclosures) constitutes the entire Contract
between the parties and supersedes all prior dealings between the parties. This
Contract cannot be changed except by written agreement of the parties.
14. (Deleted text "DEFAULT. If Buyer defaults, Seller may elect to
either retain the Earnest Money deposit as liquidated damages or to return the
Earnest Money Deposit and sue Buyer to enforce Seller's rights. If Seller
defaults, in addition to return of the Earnest Money Deposit, Buyer may elect to
either accept from Seller as liquidated damages a sum equal to the Earnest Money
Deposit or sue Seller for specific performance and/or damages. If Buyer elects
to accept the liquidated damages, Seller agrees to pay the liquidated damages to
Buyer upon demand. Where a Section of this Contract provides a specific remedy,
the parties intend that the remedy shall be exclusive regardless of rights which
might otherwise be available under common law.")
15. (Deleted text "ATTORNEY'S FEES. In any action arising out of this
Contract, the prevailing party shall be entitled to costs and reasonable
attorney's fees.")
16. DISPOSITION OF EARNEST MONEY. The Earnest Money Deposit shall not be
released unless it is authorized by: (a) Sections 6.1, 6.2 and 7.1; (b) separate
written agreement of the parties, or (e) court order.
17. RISK OF LOSS. All risk of loss or damage to the Property shall be borne
by Seller until Buyer takes possession of and occupies the Property.
18. TIME IS OF THE ESSENCE. Time is of the essence regarding the data set
forth in this transaction. Extensions must be agreed to in writing by all
parties. Performance under each Section of this Contract which references a
date shall be required absolutely by 5:00 P.M., Mountain Time on the stated
date.
19. COUNTERPARTS AND FACSIMILE (FAX) DOCUMENTS. This Contract may be signed in
counterparts, and each counterpart bearing an original signature shall be
considered a document with all others bearing original signature. Also,
facsimile transmission of any
5
<PAGE>
signed original document and re-transmission of any signed facsimile
transmission shall be the same as delivery of an original.
20. ACCEPTANCE. Acceptance occurs when Seller or Buyer, responding to an
offer or counteroffer of the other: (a) signs the offer or counteroffer where
noted to indicate acceptance; and (b) communicates to the other party or the
other party's agent that the offer or counteroffer has been signed as required.
21. OFFER AND TIME FOR ACCEPTANCE. Buyer offers to purchase the Property
on the above terms and conditions. If Seller does not accept this offer by 5:00
PM Mountain Time, Wednesday, October 15, 1997, this offer shall lapse; and the
holder of the Earnest Money Deposit shall return it to the Buyer.
/s/Larry Walker for Oct. 8, 1997
(Buyer's Signature) (Offer Reference Date)
/s/Shupe Williams Plaza, LLC.
Buyers Name (please print)
4723 Harrison #200
Ogden, UT 84403 801-394-2400 726-8750
(Notice Address) (Phone)
ACCEPTANCE/REJECTION/COUNTEROFFER
x Acceptance of Offer to Purchase: Seller Accepts the foregoing offer on the
terms and conditions specified above.
/s/ 20 Oct 97 1130
(Sellers Signature) (Date) (Time)
Ogden City Corporation and
Ogden City Neighborhood Development Agency
Seller's Name (please print)
2484 Washington Blvd., Suite 320
Ogden, Utah 84401 (801) 629-8910
(Notice, Address) (Phone)
6
<PAGE>
Rejection: Seller Rejects the foregoing offer
(Seller's initials) (Date) (Time)
Counter Offer: Seller presents for Buyer's Acceptance the terms of
Buyer's offer subject to the exceptions or modifications as specified in the
attached Counter Offer #
7
<PAGE>
ADDENDUM NO. 2
TO REAL ESTATE PURCHASE CONTRACT - COMMERCIAL
This Addendum No. 2 to the Real Estate Purchase Contract - Commercial ("Offer")
dated June 5, 1997, between Shupe Williams Plaza, L.L.C. as Buyer and Ogden City
Corporation and Ogden City Neighborhood Development Agency as Seller
("the REPC").
In addition to those contingencies set forth in the REPC, the Offer contained in
the REPC is further subject to the following contingencies and conditions:
1. The Offer must be accepted as to both properties which are the Subject of the
REPC.
2. Buyer intends to design and to renovate and/or provide new construction in
the development of condominium space for both residential, "live-work" (live and
work in the same unit), and commercial office/retail/light commercial use.
Seller shall use its best efforts, in which Buyer shall cooperate, in obtaining
new zoning or adequate variances under existing zoning from applicable and
appropriate governmental authorities, to allow the Buyer's proposed and intended
project, which approval shall be obtained prior to closing.
3. Seller (Ogden City) will issue building permits in a timely manner and in
accordance with City ordinances. (Note: Building is not currently listed on
local or national historic registers. Construction and preservation techniques
are at owner's discretion so long as they do not violate local ordinances.)
4. Seller shall obtain vacating of any and all easements or right-of-ways
through Property which Buyer may find objectionable, except for utility
easements.
5. Contingent upon Buyer obtaining sufficient construction financing for its
proposed project and improvements to the subject real Property.
6. Willingness of the City to accept this purchase price is based upon the
Buyer's pledge to develop a "warehouse conversion" project including development
of condominium space for both residential, "live-work" (live and work in the
same unit), and commercial office/retail light commercial use.
7. Seller has given Buyer full opportunity to inspect the building and premises
which are the subject of this offer. Buyer inspected the same and is satisfied
with their condition, and is relying solely on its own inspection and
investigation and not on any statement made by Seller. The building and
premises are being sold in the "as is" condition.
8
<PAGE>
8. Buyer shall enter into a Disposition and Development 'Agreement with Seller
providing for specific performance in accordance with an acceptable scope (not
financial scope) of development and schedule of performance to accomplish the
proposed warehouse conversion project.
9. (Deleted text "For a period of two (2) years following the date this
contract is executed by the parties, Seller shall notify Buyer of any and all
properties owned by Seller or any agency thereof which Seller intends to or
would consider selling to buyer or to any third party, including, but not
limited to notice of any such negotiations, notices of hearings for approvals,
notice of any property which may be available or might become available for
sale. In the event that a property becomes available and the parties agree to
its purchase for purposes of Buyer renovating such property in the manner
intended for the property which is the subject of this agreement, Seller shall
permit Buyer, at Buyer's option, to develop and complete any such other project
prior to completion of the project which is the subject of this agreement.")
10. The City shall conduct a Phase 2 Environmental Assessment of the property in
accordance with the schedule of performance. A copy of the assessment report
shall be provided to Buyer.
11. Seller, as owner of record, shall cooperate with Buyer efforts, if
necessary, to pursue new zoning or adequate variances to accommodate the Buyer's
proposed project, subject to applicable review and recommendation by the
Planning Commission, City Council review and consideration, including possible
rejection of any such proposal and applicable City ordinances and regulations.
12. Seller will work closely with Buyer to resolve any claims or notices of
record adversely impacting the property.
13. Seller in good faith shall initiate the requisite process to consider, the
establishment of a redevelopment area involving the property including proposed
tax increment financing up to $250,000.00 payable as available during a period
not to exceed five years from the date tax increment is initially received from
Weber County. Said tax increment shall be dedicated to exterior improvements
including, but not limited to building facade, parking, landscaping and
lighting. Buyer shall be required to demonstrate need and justification for any
and all tax increment assistance provided. No representation or assurance can
or is made with respect to any actual approval of a Redevelopment Project and
actual tax increment financing approvals which are subject to public hearings,
tax increment budget submission to the applicable taxing agency committee and
the requisite, City Council and Redevelopment Agency Board of Commissioners
approvals.
9
<PAGE>
14. The disposition and development of the subject property, and any proposed
assistance provided by the City or its agencies, is subject to and contingent
upon approval by the requisite public bodies following compliance with all
notice and hearing requirements.
/s/Larry R. Walker for /s/
Buyers Signature Seller's Signature
Shupe Williams Plaza, LCC
Oct 8, 1997 20 Oct 97
Date Date
10
<PAGE>
ADDENDUM NO. 1
DESCRIPTION OF PROPERTY SERIAL NUMBER 03-003-0001 TAXING UNIT
Owner Ogden City Corporation 161 S 2250 W 25
Ogden UT
% Maniacs Inc - DAVID M BODILY 84401
DESCRIPTION OF PROPERTY: 66 R/P ACRES: 0.00
PART OF LOT 8, BLOCK 1, OGDEN 5 ACRE PLAT A, OGDEN CITY
SURVEY, BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 8,
RUNNING THENCE SOUTH 186.4 FEET, RUNNING THENCE WEST 290 FEET
TO THE BOUNDARY LINE OF THE OGDEN UNION RAILWAY AND DEPOT
COMPANY PROPERTY, RUNNING THENCE NORTHEASTERLY TO A POINT
6 RODS SOUTN AND 16 RODS WEST OF THE NORTHEAST CORNER OF
SAID LOT 8, RUNNING THENCE EAST 66 FEET, THENCE NORTH 132
FEET TO THE SOUTH LINE OF 26TH STREET, RUNNING THENCE EAST
ALONG SAID SOUTH LINE 198 FEET TO THE PLACE OF BEGINNING.
COMMENTS:
**This description for taxation purposes only.**
11
<PAGE>
DESCRIPTION OF PROPERTY SERIAL NUMBER 03-003-0026 TAXING UNIT
Owner Ogden City NEIGHBORHOOD 2484 WASHINGTON BLVD 25
Ogden UT
84401
DESCRIPTION OF PROPERTY: 88 ORIG ACRES: 0.00
PART OF LOT 8, BLOCK 1, FIVE ACRE PLAT A, OGDEN CITY SURVEY,
BEGINNING AT A POINT ON THE EAST LINE OF SAID LOT 8, WHICH
IS 186.4 FEET, SOUTH OF THE NORTHEAST CORNER OF SAID LOT 8,
RUNNING THENCE SOUTH 147.50 FEET ALONG SAID EAST LINE TO THE
NORTH LIINE OF BINFORD STREET, THENCE WEST 805.25 FEET ALONG
SAID NORTH LINE, THENCE NORTH 115.50 FEET, THENCE
NORTHEASTERLY TO A POINT WEST OF BEGINNING. THENCE EAST 290
FEET, MORE OR LESS, TO THE POINT OF BEGINNING.
COMMENTS:
**This description for taxation purposes only.**
12
