UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarter ended July 31, 1999
Commission File No. 0-29164
TRI-NATIONAL DEVELOPMENT CORP.
(Name of Small Business Issuer in its charter)
WYOMING 33-0741573
(State of Incorporation) (I.R.S. ID)
480 CAMINO DEL RIO S., SUITE 140
SAN DIEGO, CALIFORNIA 92108
(Address of registrant's principal executive officers)
(619) 718-6370
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, No Par Value Per Share
(Title of Class)
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-QSB. [x]
As of July 31, 1999, 30,111,978 shares of the registrant's common stock
were outstanding. The aggregate market value of the Registrants's free-
trading common stock, held by non-affiliates on July 31, 1999 was
approximately $23,985,000, based on the closing price of the stock on
July 31, 1999.
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TRI-NATIONAL DEVELOPMENT CORP.
FORM 10-QSB
FOR THE QUARTER ENDED JULY 31, 1999
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
a) Consolidated Balance Sheets as of July 31, 1998
and 1999. . . . . . . . . . . . . . . . . . . . . . . . .3
b) Consolidated Statements of Operations for
the three months ended July 31, 1998 and 1999 . . . . . .4
c) Consolidated Statements of Cash Flows for
the three months ended July 31, 1998 and 1999 . . . . . .5
d) Consolidated Statements of Stockholders' Equity for
the three months ended July 31, 1998 and 1999 . . . . . .6
e) Notes to the Financial Statements . . . . . . . . . . . .7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 15
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . 19
ITEM 2. Changes in Securities and Use of Proceeds . . . . . . . 19
ITEM 3. Default of Senior Securities. . . . . . . . . . . . . . 19
ITEM 4. Submission of Matters to a Vote of Security Holders . . 19
ITEM 5. Other information . . . . . . . . . . . . . . . . . . . 19
ITEM 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 19
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRI-NATIONAL DEVELOPMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS: JUL 31, 1999 JUL 31, 1998
- ------- ------------ ------------
Current assets:
- ----------------
Cash and cash equivalents $ 808,857 $ 222,409
Accounts receivable, net 442,517 388,286
Citizens Business Bank Judgment
Receivable (Note 2) 5,645,670 5,154,125
----------- -----------
Total current assets 6,897,043 5,764,820
----------- -----------
Investments:
- ------------
NetRom, Inc. convertible preferred
stock (Note 3) 3,000,000 3,000,000
NetRom, Inc. common stock (Note 4) - 4,200,000
Taig convertible preferred stock (Note 5) 3,000,000
MRI medical diagnostics, Inc. (Note 6) 26,638 20,050
Hills of bajamar (Note 7) 4,341,126 3,785,290
Plaza resort timeshares (Note 8) 13,634,052 13,079,055
Bajamar las perlas condominiums (Note 9) 6,505,681
Activity link, Inc. ( Note 10) - 165,801
Assisted living-Youngtown (Note 11) 4,007,970 4,002,300
Assisted living-Carlsbad and San Marcos
(Note 12) 152,500 32,500
Plaza rosarito (Note 14) 9,626,456
Portal del mar condominiums (Note 15) 750,594
Hall of fame fitness center (Note 16) 50,558
Alpine gardens east (Note 13) 280,500
International health network (Note 17) 18,862
----------- -----------
Total investments 45,394,936 28,284,996
----------- -----------
Other assets:
- -------------
Capitalized equipment lease 467,409
Property, furniture, and equipment,
net (Note 18) 155,044 637,062
----------- -----------
Total other assets 622,453 637,062
----------- -----------
Total Assets $52,914,433 $34,686,878
=========== ===========
Liabilities and stockholders' equity:
- -------------------------------------
Current liabilities:
- --------------------
Accounts payable and accrued liabilities $ 709,965 $ 379,445
Citizens Business Bank Judgment legal
expenses (Note 2) 1,975,984 1,803,944
Deferred revenue-Citizens Business Bank
Judgment (Note 2) 3,669,685 3,350,181
Loans payable-short term-1 year or less
(Note 19) 2,112,042 1,385,192
----------- -----------
Total current liabilities 8,467,677 6,918,762
Notes payable-net of current portion
(Note 20) 30,565,037 9,786,961
----------- -----------
Total Liabilities 39,032,714 16,705,723
----------- -----------
Stockholders' equity:
- ---------------------
Common stock 16,404,247 9,235,722
Treasury stock (3,879,824)
Convertible preferred stock 9,458,000 9,458,000
Accumulated deficit (8,100,705) (712,567)
----------- -----------
Total stockholders' equity 13,881,719 17,981,155
----------- -----------
Total liabilities and stockholders' equity $52,914,433 $34,686,878
=========== ===========
See accompanying notes.
3
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TRI-NATIONAL DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTERS ENDED
----------------------------
JUL 31, 1999 JUL 31, 1998
------------ ------------
Revenues:
- ---------
Revenues $ 76,200 $ 249,618
Gain on sale of assets - -
----------- -----------
Total Revenues 76,200 249,618
----------- -----------
Operating Expenses:
- -------------------
Corporate note expense (Excluding
interest) 979,894 40,919
Consulting fees 44,320 50,655
Sales and marketing 132,044 14,830
Legal, accounting and insurance 26,348 41,472
Interest expense 287,473 148,566
General and administrative 290,323 261,663
----------- -----------
Total operating expenses 1,760,402 558,105
----------- -----------
Loss from Operations (1,684,202) (308,487)
Write-down of investments - -
----------- -----------
Net income before taxes (1,684,202) (308,487)
Provision for income taxes - -
----------- -----------
Net income (loss) $(1,684,202) $ (308,487)
=========== ===========
Earnings per share-fully diluted $ (0.050) $ 0.001
See accompanying notes.
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TRI-NATIONAL DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDED
----------------------------
31-JUL-99 31-JUL-98
--------- ---------
Cash from Operating activities
- ------------------------------
Net cash loss from operations $(1,345,945) $ (299,331)
Accounts receivable & notes receivable 2,579 (81,207)
Accounts Payable (222,525) 24,982
----------- -----------
Net Cash from Operating activities (1,565,891) (355,556)
----------- -----------
Cash used in Investments
- ------------------------
Furniture and Equipment 8,604
Alpine Gardens East (10,000)
MRI Medical Diagnostics (2,000)
Activity Link, Inc. (55,537)
Assisted Living-Youngtown (5,670) (434,300)
Assisted Living-Carlsbad and San Marcos (48,000)
Hills of Bajamar (150,017) (61,627)
Plaza Rosarito (6,719,718)
Portal Del Mar (650,594)
Hall of Fame Fitness Center Building
International Health Network (362)
Capitalized equipment lease
Bajamar Las Perlas Condominiums (505,681)
Plaza Resort Timeshares (279,508)
----------- -----------
Net Cash used in Investments (8,362,946) (551,464)
----------- -----------
Cash provided by financing
- --------------------------
Notes and Loans Payable 10,329,308 744,950
Common Stock Private Placements &
Warrants (52,636) 165,000
----------- -----------
Net Cash provided by financing
activities 10,276,672 909,950
----------- -----------
Net change in cash and equivalents 347,835 2,930
Cash and equivalents, beginning of
quarter 461,023 219,481
----------- -----------
Cash and equivalents, end of quarter $ 808,857 $ 222,411
=========== ===========
See accompanying notes.
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TRI-NATIONAL DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED COMMON TREASURY MINORITY ACCUM. TOTAL
STOCK STOCK STOCK INTEREST DEFICIT EQUITY
----- ----- ----- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balances at April 30, 1998 $9,458,000 $9,235,722 $ - $ - $ (712,567) $17,981,155
Preferred stock issued - -
Common stock issued 3,692,511 3,692,511
Common stock repurchased (2,181,174) (2,181,174)
Minority intrest - -
Net change in accumulated
deficit (5,703,935) (5,703,935)
---------- ---------- ---------- --------- ----------- -----------
Balances at April 30, 1999 9,458,000 12,928,323 (2,181,174) - (6,416,502) $13,788,557
Preferred stock issued
Common stock issued 3,476,014 3,476,014
Common stock repurchased (1,698,650) (1,698,650)
Net change in accumulated
deficit (1,684,203) (1,684,203)
---------- ---------- ---------- --------- ----------- -----------
Balances at July 31, 1999 $9,458,000 $16,404,247 $(3,879,824) $ - $(8,100,705) $13,881,718
========== ========== ========== ========= =========== ===========
</TABLE>
See accompany notes.
6
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TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
ORGANIZATION AND BUSINESS ACTIVITY
Tri-National Development Corp. ("TND" or the "Company") is a multi-faceted
international real estate development, sales and management company,
publicly traded under the symbol, "TNAV" on the NASDAQ OTC BB. The
Company's development efforts are focused in four major areas: residential
development, resort properties, commercial development and assisted living
facilities.
The Company was incorporated on July 31, 1979 as Rocket Energy Resources
Ltd. under the laws of the Province of British Columbia, Canada by
registration of its Memorandum and Articles. The Company changed its name
to MRI Medical Technologies, Inc. in April of 1989. On December 7, 1992,
the Company changed its name to Tri-National Development Corp. and
recapitalized on the basis of five (5) common shares of MRI Medical
Technologies, Inc. for one (1) common share of Tri-National Development
Corp. In January of 1997, the Shareholders approved a special resolution
to change the corporate domicile from Vancouver, B.C. to the state of
Wyoming. On February 24, 1997, the Company's Articles of Continuation were
accepted by the state of Wyoming and it is now incorporated in good
standing under the laws of the State of Wyoming. The Company maintains its
executive offices in San Diego, California at 480 Camino Del Rio S. in
Suite 140 and its telephone number is 619-718-6370.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Greater San
Diego Imaging Center, a 100% owned subsidiary and Activity Link, Inc.,
owned 100% by the Company. All material intercompany accounts and
transactions have been eliminated in the consolidation.
EARNINGS PER SHARE
Primary earnings per share have been computed based on the weighted average
number of shares and equivalent shares outstanding during each period. The
dilutive effect of stock options and warrants has been considered in the
computation of equivalent shares and is included from the respective dates
of issuance.
The fully diluted computation is based on the number of shares for the
three months ended July 31, 1999 and 1999. The computation contemplates
the dilutive effects of common stock equivalent shares as well as
conversion of the convertible preferred stock.
Since the date of issuance of the warrants and options, both primary and
fully diluted earnings per share computations limit the assumption of the
repurchase of treasury shares to a maximum of 20% of the outstanding shares
of the Company.
FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost and depreciated over the
estimated useful lives of the assets (five to seven years) using the
straight line method.
NOTE 2. CITIZENS BUSINESS BANK AWARD RECEIVABLE
In March 1992, the Company advanced $383,064 to MRI Medical Diagnostics,
Inc. for a joint venture interest in its subsidiary, MRI Grand Terrace,
Inc., a California corporation, to enable it to acquire a retirement hotel
located in Grand Terrace, California. In addition to the joint venture
interest, the loan was evidenced by a 15% note receivable from MRI Medical
Diagnostics, Inc. and a second trust deed and an
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assignment of rents from MRI Grand Terrace, Inc.. On March 22, 1993, MRI
Grand Terrace, Inc. filed a complaint against Chino Valley Bank, now known
as Citizens Business Bank (AMEX:CVB), as a result of the purchase of the
residential retirement hotel in Grand Terrace from the Chino Valley Bank.
MRI Grand Terrace, Inc. claimed that the sellers of the property (Chino
Valley Bank) had failed to disclose that the property's parking lot
encroached on the property of the adjacent parcel of land. Contrary to the
bank's representations, the Conditional Use Permit (CUP) under which the
hotel was operating was in violation, which restricted the ability of TND
and MRI Grand Terrace, Inc. to operate, refinance or sell the facility.
MRI Grand Terrace, Inc. stopped making mortgage payments to the mortgage
holder (the same Chino Valley Bank), which then filed a Notice of Default
as an initial step to foreclosure on the property. MRI Grand Terrace, Inc.
then sought Bankruptcy protection in July of 1993, and was ultimately
dismissed from Bankruptcy in May of 1995. The Chino Valley Bank
subsequently sold the property in foreclosure to itself. TND filed it's
own action against the Chino Valley Bank in early 1995, claiming that it
was defrauded and misrepresented when it advanced the $383,064 for the
closing in 1992. The Company purchased the stock of MRI Grand Terrace,
Inc., as described in Note 4 to these financial statements, in an effort to
control both lawsuits. As a result of the uncertainty of the final results
of the lawsuits, the Company previously wrote off the investment. In May
of 1998, TND and MRI Grand Terrace, Inc. received judgements in their favor
for fraud, intentional misrepresentation and deceit/negligent
misrepresentation in the Superior Court of San Bernardino, California. TND
and MRI Grand Terrace, Inc. received judgements totaling almost $5 million
dollars, including punitive and compensatory damages, plus pre-trial
interest. Beginning May 7th, 1998 the $5 million judgement began accruing,
post judgement interest of 10% or $1,400 per day until the full award is
paid. A 35% portion of the award is due to the Company's attorney. The
attorneys, however, filed for recovery of those fees as an additional award
that was heard and approved September 25, 1998. On December 3, 1998, the
court awarded the Company an additional $185,000 in legal fees.
The bank has filed its appeal on June 16, 1999. This now gives Tri-National
the right to cross appeal on the basis of the additional damages
we believed we could show. However, we decided not exercise this right and
possibly open the door for the Appellate Court to return us to court to
evaluate those damages. Instead, we will merely file our answer their
appeal by September 16, 1999 and let the Appellate Court proceed.
NOTE 3. NETROM, INC. CONVERTIBLE PREFERRED STOCK
In January of 1998, the Company, on behalf of its wholly-owned Mexican
subsidiary, Planificacion y Desarrollo Regional Jatay, S.A. de C.V., sold
50 acres of its Hills of Bajamar property to NetRom, Inc., a California
publicly traded corporation for $60,000 per acre, for a total purchase
price of $3,000,000, plus construction and management contracts on said 50
acres.
NetRom, Inc. delivered to Tri-National Development Corp. at closing,
1,000,000 shares of its Preferred Convertible stock at a value of $3.00 per
share for a total value of $3,000,000. The preferred stock accumulates
interest at a rate of 15% per annum and will be convertible into common
stock at $3.00 per share or market price for the 10 day average prior to
the date of conversion, which ever is less, but in no event less than $1.50
per share. The conversion date is at the option of Tri-National
Development Corp., however, no sooner than 12 months from the date of
closing and in no case later than 15 days after the common stock of NetRom,
Inc. trades at or above $4.00 per share for a period of thirty consecutive
days.
Additionally, NetRom, Inc. provided TND warrants to purchase 1,000,000
common shares at a price of $1.25 per share, presuming that NetRom, Inc.
achieves its stated projection of $.31 per share in earnings for the year
ending December 31, 1998. In the event that NetRom, Inc. falls below the
$.31 per share earnings projection, but no lower than $.21 in earnings for
that period, then the warrant price will fall to $1.00 per share. Further,
if the earnings fall to between $.11 and $.21, then the option price will
be reduced to $.75 per share and in the event the earnings fall below $.11
per share, the option price will be reduced to $.50 per share. The price
and terms for the property are based on arms length negotiations between
the parties and was approved by the Board of Directors of TND and the
shareholders of NetRom, Inc. at their Annual Meeting of Shareholders, held
on January 19, 1998.
In April of 1999, the Company converted the 1,000,000 shares of Netrom,
Inc. preferred shares to 2,320,345 shares of restricted common shares and
released for sale 850,000 shares within the volume limitations
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pursuant to Rule 144. As of July 31, 1999, the Company had sold 450,000
shares at an average price of $.75 per share.
NOTE 4. NETROM, INC. COMMON STOCK
In June of 1998, NetRom, Inc. exercised an option to acquire an additional
200 acres of the Company's Hills of Bajamar property for $4.2 million. The
$4.2 million was paid with 4.2 million restricted shares of NetRom, Inc.
common stock. By exercising its option to acquire the 200 acres, NetRom,
Inc. increases their total holdings to 250 acres. The combined parcel will
be utilized via a joint venture arrangement with Tri-National to develop an
extreme sports destination resort on a 500-acre total parcel. This
investment of 4.2 million common shares of NetRom, Inc. represents
approximately 30% of the total shares outstanding of NetRom, Inc.
In April of 1999, this transaction was mutually undone. Neither company
was best served by maintaining the inventory of either the stock or the
land. Consequently, the sale was annulled resulting in the cancellation
of the 4,200,000 restricted common shares of Netrom, Inc. and return of the
200 acres of the Company's Hills of Bajamar.
NOTE 5. TAIG VENTURES, INC. PREFERRED CONVERTIBLE STOCK
In June of 1998, the Company, on behalf of its wholly-owned Mexican
subsidiary, Planificacion y Desarrollo Regional Jatay, S.A. de C.V., a
Mexican corporation, sold 50 acres of its Hills of Bajamar property to Taig
Ventures, Inc., a Utah telecommunications corporation for $60,000 per acre,
for a total purchase price of $3,000,000, plus construction and management
contracts on said 50 acres (see "Business").
Taig Ventures, Inc delivered to Tri-National Development Corp. at closing,
3,000,000 shares of its Convertible Preferred Non-Voting Class B shares at
a value of $1.00 per share for a total value of $3,000,000. The preferred
stock accumulates interest at a rate of 15% per annum and will be
convertible into common stock at $1.00 per share or market price for the 10
day average prior to the date of conversion, which ever is less, but in no
event less than $.75 per share. The conversion date is at the option of
Tri-National Development Corp., however, no sooner than 12 months from the
date of closing and in no case later than 15 days after the common stock of
Taig Ventures, Inc. trades at or above $2.00 per share for a period of
thirty consecutive days.
Additionally, Taig Ventures, Inc. provided TND warrants to purchase
1,000,000 common shares at a price of $3.00 per share, presuming that
Taig's common shares are trading at $4.00 or higher; $2.00 per shares if
Taig's common shares are trading between $3.00 and $4.00 per share; $1.25
per share if Taig's common shares are trading between $2.00 and $3.00; and
in no event less than $.75. The price and terms for the property are based
on arms length negotiations between the parties and was approved by the
Board of Directors of TND and the shareholders of Taig Ventures, Inc. at
their Annual Meeting of Shareholders, held on April 30, 1999.
NOTE 6. INVESTMENT IN MRI MEDICAL DIAGNOSTICS, INC., A COLORADO
CORPORATION
In 1992 the Company sold its wholly owned subsidiary, MRI Medical
Diagnostics Inc., a California corporation to Petro-Global, Inc., a
Colorado publicly traded corporation. In return the Company received
6,000,000 restricted common shares of the purchaser, Petro-Global, Inc.,
plus certain mineral properties and leases. In 1992, the mineral
properties were written down to a nil value in the records and the name was
changed from Petro-Global, Inc. to MRI Medical Diagnostics, Inc.(MRI-Med).
MRI-Med filed for Chapter 11 bankruptcy protection in July 1993 in
conjunction with the Chino Valley Bank action (see Note 2). After
dividends in kind totaling 2,000,000 shares in 1992 and 1993 to TND
shareholders, and due to uncertainty in the underlying value of the
remaining 4,000,000 MRI-Med shares held by the Company, the carrying cost
of these shares was written-off in 1994. Tri-National Development Corp.
filed a reorganization plan on behalf of MRI-Med in August 1995 and, in
settlement of the litigation described in Note (2), the Company received
5,900,000 shares of MRI-Med at a deemed value of $0.50 per share, ordered
by the U.S. Federal Bankruptcy Court, plus 1,400,000 shares for
reimbursement of current expenses. In July of 1997, MRI-
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Med recapitalized on a 1 for 5 basis. The investment is recorded in the
books at a cost of $496,994. The Company declared and paid a stock
dividend of 750,000 shares of MRI-Med to TND shareholders of record August
31, 1997 and declared a second stock dividend of an additional 750,000 to
TND shareholders of record January 27, 1998. After the stock dividends paid
to TND shareholders in 1992, 1993, 1997 and 1998, and shares sold to
finance the reorganization the Company retains approximately 415,000 post-
split shares of MRI-Med. MRI-Med is currently traded on the Over the
Counter Bulletin Board under the symbol "MMDI" and trades in the $.05 to
$.10 range.
NOTE 7. REAL ESTATE DEVELOPMENT PROPERTY: HILLS OF BAJAMAR
The Hills of Bajamar (formerly the Santa Fe Ranch) consists of
approximately 2,470 acres (divided into ten 247 acres parcels) of
undeveloped land located fifty miles south of San Diego, California on the
Pacific Coast side of the State of Baja California, Mexico, in the
Municipality of Ensenada. The Company originally had a right to acquire a
100% interest in the property pursuant to a series of agreements requiring
ongoing payments, for each 247 acres parcel released by the vendor.
In an effort to accommodate the Vancouver Stock Exchange, which the Company
was trading on at the time, the Company entered into an agreement with
Pacific Medical International, Inc. (PMI) whereby, subject to TND
shareholder approval, TND divested itself of all of its rights in
consideration for: retention of 86.45 acres of the first parcel of the
Santa Fe Ranch to be released by the original vendor; and the greater of
(1) a one percent royalty on the gross proceeds from the sale of any land
that is part of the said Santa Fe Ranch, or (2) $150,000 for each 247 acres
parcel released by the vendor, beginning with the release of the fourth
parcel and continuing with each release thereafter.
Prior to receiving shareholder approval, the Board renegotiated the
agreement and, on June 23, 1995, the Company held an Extraordinary General
Shareholder Meeting that approved the renegotiated agreement. Under the
renegotiated agreement, the Company was granted 51% of the issued and
outstanding shares of PMI with any dilution of stock to raise further
funding to come from the shareholdings of the minority shareholders of PMI
and not their treasury. PMI also agreed to assume a convertible promissory
note to a Mr. Yates on renegotiated terms and Yates agreed to such
assumption by PMI. The Yates note was originally secured by the Company's
rights to its 86.45 acres of the Santa Fe Ranch. The renegotiated note
with PMI provided for Yates to receive the greater of $2,000 or 50% of the
sale price for each acre of the Santa Fe Ranch sold until all funds due to
him were paid, with Yates also to receive a lien against the first 250
acres of the Santa Fe Ranch as security.
The Company then entered into a new agreement in November of 1996 with PMI
to acquire all right and title to the 237 acres then fully paid and in
escrow, as well as, the balance of the contract for the remaining 2,233
acres for a $700,000 promissory note payable, 500,000 shares of TND Class
B Series B Preferred Stock at a value of $4.00 per share and the return of
its 51% interest in PMI. In January of 1998, the Company converted the
$700,000 promissory note into 1,000,000 common shares of the Company. The
Company's basis in the Hills of Bajamar taking into account cash invested,
stock issued and notes given, totals $4,159,159. PMI remains responsible
for its own debts, including Mr. Yates.
In September of 1998, the Company, in accordance with its contract, took
title to an additional 257 acres, for a total of 494 acres, and placed the
balance of 2,000 acres of Hills of Bajamar in trust with Banco Ixe. Title
to the 2,000 acres will be released to the Company as annual payments are
made to the seller.
NOTE 8. PLAZAS RESORT TIMESHARES AND COMMERCIAL PROPERTY
In December of 1996, the Company entered into an acquisition agreement with
Valcas Internacional, S.A., to acquire 100% of the stock of Inmobilaria
Plaza Baja California, S.A., a Mexican corporation, including its existing
assets, which include 16+ developed acres of ocean front land within the
Bajamar resort with plans for 328 vacation ownership (timeshare) units,
plus a 26,000 square-foot adjacent commercial building under construction
for $13,079,055, payable with notes for $9,079,055 and 1,000,000 Class B
Series B Convertible Preferred shares with a value of $4.00 per share. See
details for Notes Payable. During the Company's third quarter, the Company
paid $200,000 additional as it modified the original contract.
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NOTE 9. LA PERLA CONDOMINIUMS
In January of 1999, the Company entered into an acquisition agreement with
Valcas Internacional, S.A. to acquire 2+ developed acres of ocean front
land within the Bajamar resort, with plans for a 32-unit condominium
complex for $6,000,000. The Company paid $1,000,000 in accordance with the
new contract for the 32-unit La Perla condominiums to be built and signed
notes for an additional $5,000,000, pursuant to a construction contract
executed simultaneously.
NOTE 10. ACTIVITY LINK, INC.
In January of 1998, TND, through its wholly owned subsidiary, Tri-National
Resorts Management, Inc., acquired 85% of Activity Link, Inc., a Nevada
corporation, for a combination of $228,000 in cash and 75,000 shares of
restricted Common Stock in TND and a quarterly distribution of profits in
the amount of 15%, once Activity Link, Inc. achieved $300,000 in net
profits. Activity Link, Inc. owned the proprietary rights to "Activity
Link", a reservation system for many different types of tourist activities
that was planned to access directly the concierge desks of major hotels and
resorts. The hotels and resorts were to be billed for each ticket or
reservation paid through Activity Link. Three beta sites for Activity Link
were being prepared for a vacation ownership developer in Hawaii, starting
in late 1998.
As previously announced, the Company reduced its position in Activity Link
to allow the pursuit of outside financing to successfully launch the
project. When raising sufficient amounts of outside capital proved more
difficult than originally planned, it became apparent that the Company's
capital would still be required to move the project forward. Management
made the decision that its time, effort and resources could better serve
the shareholders in its real estate projects, choosing to stay tightly
focused.
As of Julyl 30, 1999, no restricted Common Stock in TND had been issued and
a total of $110,000 had been invested in connection with this acquisition.
The Company has written this investment off to $0.
NOTE 11. ASSISTED LIVING - YOUNGTOWN
In January of 1998, TND finalized negotiations and executed agreements to
purchase its first assisted living facility to be built and delivered, for
a combination of $110,000 in cash, 864,500 shares of the Company Class B
Series B Convertible Preferred Stock and a new mortgage for a total of
$8,140,000. Tri-National, through its majority owned subsidiary, Alpine
Gardens East, intends to own and operate this 126-bed assisted living
facility in Youngtown, Arizona. This facility is planned to include 40
two-bedroom units, 50 one-bedroom units and 36 units reserved for Alzheimer
and Dementia residents. In June of 1998, the Company closed on this
property. In July of 1999, a formal ground breaking took place with the
Mayor of Youngtown and the Company just recently finished construction on
two models. The Company has received a commitment for $10,500,000 in
construction financing from Del Mar Mortgage for the buildout of the rest
of the project.
NOTE 12. ASSISTED LIVING - CARLSBAD
In October of 1998, the Company entered into a purchase agreement to
acquire 3.66 acres of undeveloped property overlooking the Pacific Ocean in
Carlsbad, California for $2,900,000, with a $40,000 down payment at
signing. The Company, through its majority owned subsidiary, Alpine
Gardens East, intends to develop and operate this 180-bed assisted living
facility, with an Alzheimer's care component. As of July 31, 1999, the
Company had paid a total of $104,500 in connection with this acquisition.
NOTE 13. ALPINE GARDENS EAST
Alpine Gardens East is a Nevada corporate formed to own and operate
assisted living facilities in the southwest United States. As of July 31,
1999, the Company has paid $280,500 in cash and the issuance of 864,500
shares of Class B Series B preferred stock, which was converted during year
end April 30, 1999 to 864,500 common shares.
11
<PAGE>
NOTE 14. PLAZA ROSARITO
On November 20, 1998, Tri-National Holdings, S.A. de C.V., a wholly-owned
Mexican subsidiary, purchased the Plaza San Fernando from Banco Bital with
a $1 million cash down payment. In July of 1999, Capital Trust, Inc. of
New York, the Company Investment Banker, provided the remaining $8 million
necessary to close and complete the escrow and will maintain a
participation in the project. Plaza San Fernando's appraised value is in
excess of $33 million. Tri-National has renamed this property, Plaza
Rosarito. It is located in the heart of Rosarito Beach in Baja California,
Mexico, minutes from the 20th Century fox film studio where "Titanic" was
filmed and down the street from the famous Rosarito Beach Hotel. Plaza
Rosarito includes 15 acres of undeveloped oceanfront land zoned for a 450-
room hotel and convention center that is already approved for a $38 million
construction loan from Fonatur, the tourism arm of the Mexican government,
and 18 acres of developed land, including 187,500 square feet of existing
steel, concrete and marble commercial space, 52 developed residential lots
and a 80% complete 36-unit condominium complex.
NOTE 15. PORTAL DEL MAR CONDOMINIUMS
In February of 1999, Tri-National Portal, S.A. de C.V., a wholly-owned
Mexican subsidiary of Tri-National Development Corp., signed purchase
agreements and provided the $100,000 down payment to acquire Portal Del Mar
for $1,250,000. Portal Del Mar is a 126-unit, 2 and 3-bedroom condominium
development on 6 acres overlooking the Pacific Ocean in Baja California,
Mexico, just south of Rosarito Beach. The 126 ocean view condominiums are
in various stages of completion, with approximately 46 completed. The
Company plans to add a clubhouse, 3 tennis courts, 2 pools and a spa with
beach access and palapas. Each condo completed is intended to include
solid wood doors with electronic entry card, tile floors throughout, floor
to ceiling sliding glass door that give way to an oversize terrace with
ocean views, full kitchen cable TV, VCR, phone, fireplace and all fully
furnished. Comparable condominiums located across the road are selling in
the $250,000 range. The Company closed on this property in June of 1999
and intends to initially begin timeshare sales in late 1999 at $5,000 per week.
NOTE 16. FORMER BANCO ATLANTICO BUILDING
In February of 1999, Tri-National Tijuana, S.A. de C.V., a newly formed,
wholly-owned Mexican subsidiary, signed purchase agreements and provided
the $25,000 down payment to acquire Banco Atlantico for $950,000. Banco
Atlantico is a 20,000 square foot, 2-story commercial building in the heart
of the banking district in Tijuana, Mexico.
NOTE 17. INTERNATIONAL HEALTH NETWORKS, INC.
International Health Networks, (IHN) is Nevada corporation and a majority-
owned subsidiary of the Company. IHN is headed up by three prominent
physicians, all of whom are also shareholders of Tri-National, including
Dr. Jerry Parker, who is a director of the Company. IHN is a multitude of
U.S. medical services designed for Mexico that the Company has envisioned
for the past several years as the magnet for attracting the retiree market
in Baja California, Mexico.
The primary focus for IHN is a planned medical campus, to be built on Hills
of Bajamar property. The medical campus was originally contracted for by
IHN in 1997 in an agreement that called for 150 acres at the south end of
the property at a price of $25,000 per acre with an option for an
additional 100 acres at $60,000 per acre for 3 years. The Company retained
the construction rights to build all required facilities on the combined
250 acres and maintain a property management contract. The campus is to
include an acute care hospital associated with a recognized U.S. medical
provider, a medical school complete with dormitories, class rooms and
auditorium, medical exhibition center, R & D facilities for pharmaceutical
industry and facilities for long-term care combined with anti-aging and
wellness programs. This campus is important not only to the region, but to
the Company's desire to create a retirement mecca on its properties. With
IHN now a majority-owned subsidiary of TND, the original contract is being
revised.
12
<PAGE>
NOTE 18. FURNITURE AND EQUIPMENT
Furniture and equipment consists of the following:
Furniture and equipment $672,184
Less accumulated depreciation (49,731)
--------
$622,453
========
NOTE 19. LOANS PAYABLE SHORT-TERM
To implement its business strategy, the Company intends to initially fund
acquisitions, development and general working capital by issuing a Private
Placement of nine-month Corporate Notes at 10% interest per annum to
institutional and accredited investors. The investors principal and
interest are guaranteed by the Company and further bonded by New England
Surety Co., for up to $15 million. The Company collateralized the $8
million in bonding from New England Surety Co. with 187 acres of its Hills
of Bajamar property. The Company has, at its option, the ability to
renegotiate for up to an additional $15 million of bonding from New England
Surety Co., once the $8 million has been placed, using additional
collateral. The Company intends to repay the principal and interest with
cash flow generated from leases and sales of residential lots,
condominiums, single family homes and timeshares. As of July 31, 1999 the
Company placed $9,585,209 in Corporate Notes, of which $1,917,042 will be
retired in the next 12 months.
NOTE 20. LONG-TERM NOTES PAYABLE
Long-term notes payable at July 31, 1999, consisted of the following:
Note payable to Scripps Bank secured
By vehicle, due in monthly installments
Of $460 per month, including interest of
7.45% through September 2001 $ 10,906
Note payable to Greater San Diego
Imaging Center, LLC balloon
Payment 12% due January 30, 2000 307,000
Note payable for capital lease to
Commercial Money Center, Inc. 449,520
Notes payable to Valcas Internacional,
S.A. de C.V., pursuant to La Perla 5,000,000
Construction contract
Corporate Notes payable to accredited
Investors - 10% per annum 9,585,209
Note payable and cash payable to
DUBSCA upon closing of vacation
ownership (timeshare) project 9,079,055
Note payable to Capital Trust
Guaranteed by 3 officers and
Directors and a first trust deed on
Plaza Rosarito, interest at 12%
Due October 1, 2000 8,000,000
13
<PAGE>
Note payable to North County Bank
Guaranteed by a stockholder and equipment,
due in monthly installments of $860, with
interest at 10.5%, through October, 2001 19,916
Note payable to Delanorte Investments, Inc.,
inteest At 10%, due November 1, 2000 200,000
Note payable to Greater San Diego Imaging
Center, LLC - 3% per month, due October 1, 2000 25,473
-----------
32,677,079
Less current portion ( 2,112,042)
-----------
Long-term debt, net of current portion $30,565,037
===========
Maturities of long-term debt are as follows:
Period ending
July 31 Amount
------- ------
2000 $10,449,515
2001 5,556,800
2002 5,556,800
2003 5,556,800
2004 5,557,164
-----------
$32,677,079
===========
NOTE 21. LEASES
The Company leases two office facilities in San Diego, California and one
in Ensenada, Baja California under operating leases which expire in 1999
and the year 2000, respectively. The leases generally require the Company
to pay all maintenance, insurance and property taxes and are subject to
certain minimum escalation provisions. The Company also leases autos,
equipment and computers.
Future minimum operating lease payments as of July 31, 1999 are as follows:
1999 $ 210,700
2000 252,840
-----------
$ 463,540
===========
NOTE 22. GREATER SAN DIEGO IMAGING CENTER
This facility has provided magnetic resonance imaging (MRI) services in the
San Diego area since 1990. On June 4, 1996 the Company entered into an
Asset Purchase Agreement with Greater San Diego Imaging Center (GSDIC) with
an effective date of November 1, 1996. GSDIC owns and operates a magnetic
resonance imaging center in San Diego, California. The Company agreed to
purchase the fixed assets, certain trade accounts receivable, certain
assignable contracts, leases and agreements, prepaid expenses and the
goodwill of the business. The purchase price is $599,999 for the fixed
assets and $1.00 for other assets and is payable as follows:
(a) by payment of $325,000, of which $25,000 U.S. was paid upon execution
of the agreement (partially paid from deposit on letter agreement), and
(b) by the issuance of 857,142 common shares of TND based upon a value of
$0.35 U.S. per share for total share consideration having a value of
$300,000 U.S., and
14
<PAGE>
(c) on December 30, 1996, the Company entered into an agreement with First
Colonial Ventures, Ltd., Nevada publicly traded company, to sell it 1/3 of
GSDIC for $350,000 cash, payable over twelve months. As of April 30, 1998,
First Colonial had paid a total of $112,367, with unpaid principal,
interest and penalties of $357,748. The Company has declared First
Colonial in default and has retained the 1/3 interest as liquidated damages.
This facility, with tenant improvements, was originally financed for $2.5
million. The equipment has a current appraisal of $1.2 million and tenant
improvements valued at $241,000. A $75,000 "open unit" upgrade was
completed for claustrophobic and large patients.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANAYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The Company remained tightly focused through its year end April 30, 1999
and into the first quarter ending July 31, 1999 on the Company's business
strategy to maximize shareholder value, which focuses on three priorities:
growth, profitability and liquidity through both domestic and international
real estate investments. The following discussion and analysis relates to
the Company's execution of that strategy and its financial condition and
results of operations for the three months ended July 31, 1999. This
information should be read in conjunction with our Consolidated Financial
Statements and the notes related thereto.
THE COMPANY
Tri-National Development Corp. is a multi-faceted international real estate
development, sales and management company. The Company's development
efforts are focused in four major areas: residential development, resort
properties, commercial development and assisted living facilities.
The Company's projects include current and planned developments in Canada,
Mexico and the United States, with a primary focus on large scale, multi-use
projects in Northern Baja California, Mexico. The Company started
buying property in 1991 some 50 miles south of the San Diego border, in a
region known as the "Gold Coast", the stretch of land in between Tijuana
and Ensenada. Since that time, there has been an enormous amount of
development in the area, with plans for new marinas, a new international
airport, film studios, and numerous commercial and residential complexes
proposed, initiated and constructed. As a result, the Company's property
has seen dramatic appreciation and drawn the Company's focus to this area
in Mexico. Since then, the Company has significantly added to its real
estate holdings in this region through options and purchases of numerous
projects, utilizing its long standing relationships and reputation to
purchase quality properties at significant values.
Most of the additional Mexican projects the Company has acquired involve
purchases from a Mexican Bank Trust program known as Fobaproa. This agency
is a Mexican version of the Resolution Trust Corporation in the U.S. which
was created a number of years ago and given responsibility for liquidating
massive quantities of U.S. bank properties taken back after default. It is
reported that there are up to $60 billion worth of Mexican real estate
properties under Fobaproa's jurisdiction. Tri-National has been working in
Mexico for almost ten years now, and has developed a reputation as a strong
development partner, a contributor to the communities in which it works,
and a company with major development and financing resources. As a direct
result of the credibility and respect the Company has gained, it is being
given the opportunity to participate in the acquisition of some of these
properties at terms that represent very attractive values. This allows the
Company to become a major force in the ongoing development of this rapidly
growing region.
The Company is also actively pursuing, through a separate division, the
development of assisted living facilities, primarily in the S.W. United
States. This division was created to meet the growing need for well-person
care for aging baby boomers. The Company sees significant potential
synergy between the Baja developments and the assisted living division as
the Company works with strategic partners to bring U.S. quality medical
care to Baja, thereby allowing the provision of assisted living facilities
at a greatly reduced cost relative to similar U.S. properties. In keeping
in line with the Company's business strategy and real estate investment
objectives, this division balances the Company's optimum real estate
holdings between Mexico and the United States.
15
<PAGE>
RESULTS OF OPERATIONS
REVENUES
For the three months ending July 31, 1999, the Company had total revenue of
$76,200 with a net loss of $1,684,202 or $.05 per share, compared to
$249,618 in total revenues and a net loss of $308,487 or $.001 per share
for the same period last year.
OPERATING EXPENSES
As of the date of this filing, the Company is three months into it's new
fiscal year, which continues until April 30, 2000. The first year of the
new millenium should also bring the Company to a new era of increasing
earnings and cash flow. The majority of the Company's shareholders have
long recognized Tri-National as a growth company moving towards maturity,
much like a research and development company during it's early stages. As
a growth company with a low priced stock, Tri-National has had to buy
relatively expensive money to execute its business strategy and growth.
This high cost is evident in our past fiscal year and first quarter with
the huge fees, sales commissions, associated expenses and interest expense,
all of which appears under the G & A expenses, which translated into the
year end loss of $.11 per share and first quarter loss of $.05 per share,
compared to a net loss of $.001 for the same period last year. As a growth
company, Tri-National has focused on the acquisition of properties that
will support that growth and properties that will quickly begin
contributing to earnings and cash flow. The Company incurred these losses
in order to provide for this growth and the opportunity to benefit the
shareholders with consistent annual earnings for the next ten years and more.
SALES CHANNELS
To help provide the consistent annual earnings Management seeks to deliver
to its stockholders, the Company has formed a mortgage company to arrange
financing for prospective customers to facilitate sales of residential
lots, condominiums, single family homes and timeshare sales. Not only does
this facilitate sales, but mortgages typically earn consistent predictable
income while enhancing the balance sheet. The principal sources of income
from the mortgage subsidiary are: (1) interest income earned on mortgage
loans (2) net gains from the sale of loans, if sold and (3) loan servicing
fees.
The Company has started or plans to start sales in the next quarter on the
following projects:
PLAZA ROSARITO
In July of 1999, the Company closed escrow on Plaza Rosarito in Baja
California, which includes 15 acres of undeveloped beach front land zoned
for a 450-room hotel with convention center, an existing 187,500 square
foot shopping center, an existing 80% complete condominium complex and 42
residential lots.
A. Fonatur, the tourism arm of the Mexican government, has approved a $38
million loan for the construction of the hotel and convention center. The
Company intends to joint venture this component with a major U.S. hotel
operator.
B. The Company has already sold roughly 40% of the 187,500 square foot
shopping center as commercial condominiums at $200 per square foot, with a
30% down payment and the balance at 15% over 10 years. The down payments
are being deposited into an escrow account, until the Company completes
approximately $1,500,000 in improvements.
C. The Company plans to sell the 30 condominiums at $100,000 each with a
20% down payment and the balance at 11% over 10 years.
D. The Company plans to sell the 42 residential lots at $30,000 each with
a 20% down payment and the balance at 11% over 10 years.
16
<PAGE>
Upon full sell out, the projected gross revenues generated from B, C, and
D would be in excess of $41 million with down payments over $11 million and
annual mortgage payments of roughly $5.6 million.
PORTAL DEL MAR
In June of 1999, the Company closed escrow on Portal Del Mar in Baja
California, which includes 122 condominiums with 46 units 80% complete and
76 at foundation. The Company intends to sell the condominiums as
timeshares starting at $3,000 per week with a $1,500 down payment and the
balance at 12% over 7 years.
Upon full sell out of the 6,222 weeks at an average price of $4,000, the
projected gross revenues would exceed $24 million with down payments of $12
million and annual mortgage payments of approximately $2.3 million.
HILLS OF BAJAMAR
The Company currently owns 494 acres out of a contract for 2,500 acres of
undeveloped land in Baja California. In July of 1999, the Company
subdivided and zoned 234 acres for 1,100 1/4 acre residential lots. The
Company plans to sell the lots starting at $30,000 each with 10% down and
1% per month at 12% interest per year for 180 months. Pursuant to the
proposed master plan, the remaining acres are conservatively estimated to
be valued at $20,000 per acre (actual bank appraisal completed last year
valued the property at $71,000 per acre). Balance owing on the remaining
2,006 acres is $4,800,000 at $600,000 annually with no interest until 2003.
Upon full sell out of the 1,100 residential lots, the projected gross
revenues would exceed $33 million with total down payments of $3.3 million
and annual mortgage payments of roughly $3.9 million.
BAJAMAR PROPERTIES (EXCLUSIVE OF ESCROW TO ACQUIRE HOTEL AND GOLF PROPERTIES)
The Company owns developed land for the construction of 32 condominiums,
known as La Perla, and a 26,000 square foot commercial building and suites
across from the main hotel overlooking the Pacific Ocean within the Bajamar
Resort. The 32 units have already been pre-sold with deposits for a total
of $8 million in gross sales to be financed by outside lenders.
The Company owns an additional 16-acre parcel adjacent to La Perla, zoned
for the construction of 326 timeshare units purchased with plans and
permits for $12 million with a balance of approximately $7.8 million
payable from construction draws when available. The 326 units are
projected to generate gross sales in excess of $1670 million, with
commissions and marketing estimated at roughly $90 million.
YOUNGTOWN, ARIZONA
This 126-unit assisted living facility is currently under construction on
a 6-acre site in Youngtown, Arizona just outside of Phoenix. The models
are completed and the infrastructure for remainder of the property is
progressing. The Company plans to sell the 126 units at $197,500 each as
investments to accredited investors and then maintaining a management
contract for the facility. The Company currently has 200 reservations for
the 126 units.
All of the properties and potential sales channels listed above do not
include management contracts, which provide for additional annual cash
flows.
FINANCIAL CONDITION
To implement its business strategy, the Company initially funded
acquisitions, development and general working capital by issuing a Private
Placement of approximately $10 million in nine-month Corporate Notes at 10%
interest per annum. The investors principal and interest are guaranteed by
the Company and further
17
<PAGE>
bonded by New England Surety Co., for up to $15 million. The Company
collateralized the $15 million in bonding from New England Surety Co. with
187 acres of its Hills of Bajamar property.
The Company is in the process of preparing for filing to the S.E.C. a SB-2
Registration Statement for a $15 million convertible preferred stock
offering. If the Company is successful in its filing and funding of this
offering, proceeds generated would be used to payoff the nine-month
Corporate Notes and all non-mortgage debt in addition to providing working
capital. The Company intends to pay interest on the preferred shares with
cash flow generated from leases and sales of residential lots,
condominiums, single-family homes and timeshares.
In addition to the convertible preferred stock offering, the Company is
seeking joint venture partners, such as Capital Trust, Inc. of New York, to
finance several projects, including the Bajamar Hotel and Golf Resort, the
Hills of Bajamar properties and the La Paz Hotel.
Tri-National Development Corp. has not paid cash dividends on its common
stock. The preferred stock is estimated to pay $9 to 10.50 per annum per share.
YEAR 2000 ISSUES
Some older computer software was written using two digits rather than four
to define the applicable year. As a result, those computer programs have
time-sensitive programming software that recognize a date using "00" as the
year 1900 rather than the year 2000. This could cause a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, create tenant
statements, or engage in similar normal business activities.
The Company's plan to resolve Year 2000 issues involves the following four
phases: assessment, remediation, testing and implementation. To date, the
Company has assessed all existing internally used hardware and systems
(both information technology and non-information technology) that could be
significantly affected by the Year 2000 issue. Based on these assessments,
management believes that existing hardware and systems used by the Company
are Year 2000 compliant. Additionally, as of July 31, 1999, the Company
successfully upgraded the existing network and property
operations/accounting systems. These upgrades were instituted to meet
current and future needs of the Company, not as a result of our initial
Year 2000 assessment. The Company has taken precautions, including testing
these systems prior to implementation, to insure that all upgrades and
modifications are Year 2000 compliant.
The Company has queried and/or received disclosure statements from
significant external service providers. To date, the Company is not aware
of any Year 2000 problems with these third parties that would materially
impact the Company's results of operations, liquidity or capital resources.
However, the Company has no means of ensuring that external service
providers will be Year 2000 compliant. The inability of these service
providers to complete their Year 2000 resolution processes in a timely
manner could impact the Company. The effect of non-compliance by service
providers is not determinable. The Company has initiated the transition to
internalize property management, accounting and sales and leasing of its
properties, thereby significantly reducing the use of third parties in
these areas.
As noted above, the Company has completed the initial assessment and
believes the existing internal systems and upgrades are Year 2000
compliant. The Company does not expect historical and future costs related
to the Year 2000 issue to have a material effect on the consolidated
financial position or results of operations of the Company. Although
management does not currently believe that the effect of the Year 2000
problem will have a material impact on the Company, there is no guarantee
that unforeseen circumstances will not arise which could cause a material
adverse effect upon the Company's operations
18
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See notes to the financial statements.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULT OF SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON Form 8-K
(a) REPORTS ON FORM 8-K. For the three months ended July 31, 1999, no
reports on Form 8-K were filed by the Company.
(b ) EXHIBITS. The following exhibits are filed as a part of this report:
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule
SIGNATURES:
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of San Diego, California, on this 14th day of September, 1999.
TRI-NATIONAL DEVELOPMENT CORP.,
a Wyoming Corporation
BY: Michael A. Sunstein BY: Gilbert Fuentes
TITLE: Chief Executive Officer, President TITLE: Chief Financial Officer,
Director Treasurer
BY: Jason A. Sunstein
TITLE: Vice President,
Secretary
19
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> JUL-31-1999
<CASH> 808,857
<SECURITIES> 0
<RECEIVABLES> 442,517
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,897,043
<PP&E> 622,453
<DEPRECIATION> 0
<TOTAL-ASSETS> 52,914,433
<CURRENT-LIABILITIES> 8,467,677
<BONDS> 0
0
9,458,000
<COMMON> 16,404,247
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 52,914,433
<SALES> 76,200
<TOTAL-REVENUES> 76,200
<CGS> 0
<TOTAL-COSTS> 0
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 287,473
<INCOME-PRETAX> (1,684,202)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,684,202)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,684,202)
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