TRI NATIONAL DEVELOPMENT CORP, 10KSB40, 2000-08-14

TRI NATIONAL DEVELOPMENT CORP
10KSB40, 2000-08-14
LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES)

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

FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED APRIL 30, 2000

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-KSB. [x]

As of August 10, 2000, 31,760,534 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 August 10, 2000 was
approximately $6,700,000, based on the closing price of the stock on
August 9, 2000.
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TRI-NATIONAL DEVELOPMENT CORP.

FORM 10-KSB
FOR THE FISCAL YEAR ENDED APRIL 30, 2000

TABLE OF CONTENTS

PAGE
----

PART I

ITEM 1. Business. . . . . . . . . . . . . . . . . . . . . . . . .3
ITEM 2. Properties. . . . . . . . . . . . . . . . . . . . . . . 15
ITEM 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 16
ITEM 4. Submission of Matters to a Vote of Security Holders . . 18

PART II

ITEM 5. Market for Registrant's Common Stock and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . 18
ITEM 6. Management's Discussion and Analysis of Results of
Operations and Financial Condition. . . . . . . . . . . 21
ITEM 7. Financial Statements and Supplementary Data . . . . . . 23
ITEM 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures. . . . . . . . . . 37

PART III

ITEM 9. Directors and Executive Officers of the Registrant. . . 38
ITEM 10. Executive Compensation. . . . . . . . . . . . . . . . . 42
ITEM 11. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . 44
ITEM 12. Certain Relationships and Related Transaction . . . . . 44

PART IV

ITEM 13. Exhibits, Financial Statement Schedules and Reports on
Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . 45

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

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PART I

ITEM 1. BUSINESS

GENERAL

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, indirectly through a majority-owned
subsidiary, senior and assisted living facilities.

The Company's projects include current and planned developments in 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, and the Company's property has seen dramatic
appreciation. 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. 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 majority-owned subsidiary,
the development of assisted living facilities, primarily in the S.W. United
States, 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.

The Company was founded in 1988 by Michael Sunstein and became a publicly
traded Canadian corporation in 1989. Since then, the Company has renounced
its original state of incorporation under the laws of the Province of
British Columbia, Canada and on February 24, 1997 applied for Certificate
of Registration and filed Articles of Continuation in the office of the
Secretary of State of Wyoming. The Company is now incorporated under the
laws of the state of Wyoming in accordance with W.S. 17-16-1710 without any
break in corporate existence. The Company is publicly traded on the NASDAQ
OTC BB under the symbol "TNAV" and under the symbol "TND" on the Hamburg
Stock Exchange and the Frankfurt Stock Exchange. The Company maintains its
executive offices in San Diego, California at 480 Camino Del Rio S., Suite
140 and its telephone number is 619-718-6370. As used herein, the term
"TND" or "Company" refers to Tri-National Development Corp. and its
subsidiaries, unless the context indicates otherwise.

BUSINESS STRATEGY

The Company remains tightly focused on its business strategy to maximize
shareholder value, which focuses on three priorities: growth, profitability
and liquidity through both domestic and international real estate
investments. The Company has a long standing escrow to: (1) purchase and
expand Bajamar Ocean Front Hotel and Golf Resort, an existing 27-hole golf
course (averaging approximately 4,000 to 5,000 rounds per month), 81 room
hotel (averaging 70% occupancy rate) located in Baja California, Mexico,
about 50 miles south of San Diego, California; (2) construct and sell 328
ocean view timeshare units and 26,000 square feet of commercial space
within the Bajamar Resort; (3) purchase and develop the 2,500-acre Hills of
Bajamar commercial, residential and industrial project; (4) expand Plaza
Rosarito, an existing 187,500 square foot commercial shopping center, 52
developed residential lots, a 36-unit condominium complex and 15 acres of
undeveloped ocean front land zoned for a 450-room hotel and convention
center, located in Rosarito Beach, Baja California; (5) expand Portal Del
Mar, an existing 123-unit condominium development overlooking the Pacific
Ocean; (6) purchase and expand the former Banco Atlantico building, an
existing 20,000 square foot, 2-story commercial building, located in the
banking district of Tijuana, Mexico; (7) develop and construct assisted
living facilities in the Southwest U.S. and Mexico, starting with our
existing projects in Youngtown, Arizona, San Marcos, California and
Temecula, California; and (8) directly or

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indirectly develop and acquire hotel properties in the South and Southeast
United States, with properties in Tennessee, North Carolina, Louisiana and
Mississippi under current review.

The Company continues to explore opportunities to enter new markets and
plans to grow in its existing markets. Growth in, both new and existing
markets, is expected to be supplemented by strategic acquisitions from time
to time. The Company's business strategy could be materially affected by
various risk factors such as changes in general economic or political
conditions either nationally or in the regions in which the Company
operates or may commence operations, job growth and employment levels, home
mortgage interest rates or consumer confidence, among other things (See
"RISK FACTORS"). Nevertheless, the Company remains optimistic about its
ability to grow its business in 2000.

Land Acquisition and Development

Management believes that its business requires in-depth knowledge of local
markets in order to acquire land in desirable locations and on favorable
terms, to engage subcontractors, to plan communities keyed to local demand,
to anticipate customer tastes and price ranges in specific markets and to
assess the regulatory environment.

The development process generally consists of three phases: land
acquisition; land development; construction and sale or lease. The
development cycles vary depending on the extent of the government approvals
required, the size of the development, necessary site preparation, weather
conditions and marketing results. When feasible, the Company acquires land
positions through the use of options. In addition, the Company acquires
finished lots, condos and commercial building within its pricing
parameters, which reduces the development cycle and provides balance to its
real estate investment portfolio. In acquiring land, the Company considers
such factors as: current market conditions, with an emphasis on the prices
of comparable sales and leases, expected sales and lease rates, proximity
to metropolitan areas, population, industrial and commercial growth
patterns, estimated costs, customer preferences and environmental and
regulatory matters. The Company employs standards for assessing all
proposed purchases based, in part, upon after tax cash flow and overall
return on investment. Consistent with these standards, the Company seeks to
minimize and defer all expenditures for purchases by utilizing options,
phasing land purchases and development, and relying upon non-recourse
seller financing or third party lenders. In addition, the Company
emphasizes pre-sales in virtually all of its developments versus
speculative inventory.

The Company acts as the general contractor for its developments and hires
subcontractors for all production activities. The use of subcontractors
enables the Company to reduce its investment in direct labor costs,
equipment and facilities. The Company generally prices product only after
if has entered into contracts for the construction with subcontractors, an
approach which improves its ability to estimate costs accurately.

Sales

Sales by the Company are generally made pursuant to a standard sales
contract, which generally requires a customer deposit at the time of
execution and an additional payment upon mortgage approval. Subject to
particular contract provisions, the Company generally permits customers to
cancel their obligations and obtain refunds of their deposits in the event
mortgage financing is unobtainable within a specified period of time.

Provided escrows can be closed on all of its current properties, Management
believes the Company's current supply of land is sufficient for its
reasonably anticipated needs over the next several years, and that it will
be able to acquire additional land on acceptable terms for future
developments absent great changes in current land acquisition market conditions.

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SAFE HARBOR STATEMENTS

Statements of the Company's or management's intentions, beliefs,
anticipations, expectations and similar expressions concerning future
events contained in this document constitute "forward looking statements"
as defined in the Private Securities Litigation Reform Act of 1995. As
with any future event, there can be no assurance that the events described
in forward looking statements made in this report will occur or that the
results of future events will not vary materially from those described in
the forward looking statements made in this report. Important factors that
could cause the Company's actual performance and operating results to
differ materially from the forward looking statements include, but are not
limited, changes in the general level of economic activity in the markets
served by the Company, competition in the real estate industry and other
industries where the Company markets its products and the introduction of
new products by competitors in those industries, delays in refining the
Company's construction and sales techniques, cost overruns on particular
projects, availability of capital sufficient to support the Company's level
of activity and the ability of the Company to implement its business strategy.

THE PROPERTIES

CURRENT AND PLANNED DEVELOPMENTS IN MEXICO

Hills of Bajamar

The Hills of Bajamar property is a 2,500-acre parcel located in the
Municipality of Ensenada, on the Pacific Ocean side of Baja California,
Mexico, roughly 50 miles south of San Diego, California. The purchase
contract completed in 1992 through the Company's wholly-owned Mexican
subsidiary, Planificacion Desarollos de Jatay, S.A. de C.V.
("Planificacion"), provides for an overall purchase price of $6,000,000 for
the 2,500 acres ($2,400 per acre or $.60 per sq. meter). The property is
being purchased on a gradual basis in 247-acre increments at $600,000
apiece. In September 1998, the Company, in accordance with its contract,
had taken title to an additional 247 acres. In September 2000, in
accordance with its contract, the Company is scheduled to make additional
$600,000 payment. The Company recently received a financing commitment for
$2,000,000 to make this scheduled payment and complete the engineering for
Vinas de Bajamar (See below). This will give the Company title to a total
of approximately 750 acres and places the balance of roughly 1,750 acres in
trust with Banco Ixe. Title to additional acres will be released to the
Company as annual payments are made to the seller. In the event the Company
is unable to make its scheduled annual payments, the trust is subject to
cancellation and the property will be subject to refinancing under which
the Company may be required to pay a significantly higher price per acre.
Balance owing on the remaining 2,000 acres is $4,800,000 at $600,000
annually with no interest until 2003.

To date, the Company has contributed a total of $4,300,000 in cash and
stock toward this property and its development. Certified bank appraisals
completed in March of 1998 valued the property in excess of $71,000 per
acre. The purchase terms were negotiated in 1991 prior to four events: (1)
the passage of NAFTA; (2) the liberalization of foreign ownership of land
in Mexico; (3) the California Department of Real Estate issuing a decree
that the advertisement in California for sale of foreign homes and land is
no longer subject to their jurisdiction; and (4) the mega-developments in
the area (see below).

The Hills of Bajamar property is located in the region that has become
known as "the Gold Coast" because of the current and planned developments.
New developments in the region include: (1) access to U.S. title insurance;
(2) access to U.S. mortgage money; (3) a $200 million plan to privatize and
expand the port of Ensenada, which is underway and is to include a 70 mile
railroad link to the United States, Baja California's first container-
handling facility, and a new passenger cruise ship terminal, which is also
under construction; (4) a $400 million power plant that will generate 440
megawatts, enough to power one million homes, to be built in the Rosarito
and Ensenada area; (5) the possible legislation of casino gaming which
would be a tremendous windfall for the Mexican economy and the Baja
California coast; (6) construction is under way on Puerto Salina, a
reported $150 million, 600-boat marina that is located just one mile north
of the Hills of Bajamar or 46 nautical miles south of San Diego; (7) Fox
Studios has built a movie studio located on a 150-acre site just north of
the Hills of Bajamar with a project cost in excess of $55 million for the
filming of

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the movie, the Titanic. There are many additional movies scheduled for
filming at this same studio. Fox recently announced the addition of "Fox
World", a $100 million theme park to the studio.

The Company's development focus is the creation of a large-scale world
class resort, also encompassing a residential and retirement complex on the
combined ultimate 4,000 acres of the Hills of Bajamar and the Bajamar Hotel
and Golf Resort. The residential complex will include condominiums,
single-family housing, ranchettes and assisted living, located within a
1-hour drive from San Diego, California. The region caters primarily to
Southern California travelers already visiting Baja California, and
provides an alternative attraction to Palm Springs, Phoenix and Las Vegas.
Where these desert communities are only viable six months of the year due
to extreme heat in the summer, Baja California offers a year round climate
averaging 75 degrees Fahrenheit. Additionally, Baja California offers the
amenities available from its oceanfront location including fishing,
sailing, swimming, surfing, other water sports, and oceanfront golf, a
competitive advantage that desert communities cannot provide.

The residential development will be built around a 150-acre medical campus
the Company plans to joint venture with International Health Networks, Inc.
on the southwest corner of the Hills of Bajamar property (see below). The
medical campus will utilize the lower cost for support available in Mexico,
combined with the historic quality of medicine in the United States. The
medical campus will also provide services to the 2 million tourists
crossing the border each month, including the 500,000 people that cross for
work and business, and the 75,000 ex-patriots living in the region who
presently must rely on the Mexican health care system, which is designed
primarily for Mexican Nationals.

Sales of Property at Hills of Bajamar

Vinas de Bajamar

GMA International, a world-renowned master planner, was retained to develop
a master plan for the first 1,000 acres named, Vinas de Bajamar, which is
now finalized. The zoning has been approved and a construction company has
been retained to start cutting the roads in accordance with the master
plan. This allows the Company to launch a 1,100 residential lot sales
program in August of 2000. Stewart Title of Houston, Texas will be doing
all of the title work for this property.

The Company is currently filming the property with digital technology and
anticipates including these images with the master plan and lot map to
support sales on its web site as soon as it is available. The Company plans
to sell the lots starting at $20,000 each with 10% down and zero interest
financing for 8 years. Upon full sell out of the 1,100 residential lots,
the projected gross revenues would exceed $30 million with total down
payments of $3 million and annual mortgage payments of roughly $4 million.
Also included in the overall master plan is the development of an 18-hole
golf course, 100-room hotel and roughly 250 acres for commercial use,
including 150 acres for a planned medical campus (see below).

The roads and utilities to the Hills of Bajamar are to be completed by
Promar, S.A. de C.V., a Mexican development company, pursuant to a contract
and in accordance with the master plan. The Company has been informed by
Promar that the improvements to the property will be completed by Bechtel
Corp., a U.S. company, which also has been contracted by Promar to build a
new international airport 7 miles to the southeast of the property. The
improvements are to be paid by Promar as an additional cost to the airport.
This will significantly enhance the Hills of Bajamar, while allowing Promar
access to the airport from the main coast highway by way of a toll road off
ramp through a portion of the Hills of Bajamar.

International Health Networks ("IHN"), a Nevada corporation, is headed up
by three prominent physicians, all of whom are also shareholders of the
Company, including Dr. Jerry Parker, who is a director and officer 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 to Baja California, Mexico.

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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 an 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. The original contract is being revised at this date.

In May of 1999, the Company received the approvals from the Mexican
government for the development of a medical school and a four-year
university. The Company had originally planned to build this facility on
it's Hills of Bajamar property, however it has redesigned it's concept
plans to build the school on the north end of Bajamar, upon closing of
escrow if that can occur in the near future.

In February of 1998, the Company sold 50 acres of its Hills of Bajamar
property to Netrom, Inc. (OTC BB:NRMM) of San Diego, California for $60,000
per acre for 1 million shares of NetRom's Convertible Preferred Stock, at
a value of $3.00 per share, plus a construction and multi-year management
contract (See "NOTES TO THE FINANCIAL STATEMENTS"). NetRom, Inc., a
developer of action sports CD-Rom and interactive internet programming, had
originally intended to develop the site as a post-production multimedia
studio, with additional rights to use the site for Action Sports events.
NetRom is currently revising its corporate plans and is discussing revising
this acquisition.

In June of 1998, the Company sold 50 acres of its Hills of Bajamar property
to Taig Ventures, Inc., a Utah corporation, for $60,000 per acre for
3,000,000 shares of Taig's Convertible Preferred Stock, at a value of $1.00
per share, plus a construction and multi-year management contract. Taig
Ventures Inc., a telecommunications company that services emerging markets,
is based and has operations in Vancouver, B.C.. Taig has begun the
pre-planning stages to develop infrastructure on the site to offer local
and long distance telephone service, cable TV, cellular and internet access
to Baja California. Taig's entry to this region follows on the
privatization of Mexico's telecommunication services and a proposed
border-free telecommunications zone between San Diego and Tijuana by the
San Diego based International Communications Council.

Plazas Resort and Commercial Property

Plazas Resort and Commercial Property, is a planned 326-unit vacation
ownership (timeshare) complex and 26,000 square feet of commercial space,
already under construction, that will encompass 14+ acres located on the
golf course and facing the Pacific Ocean, within the Bajamar resort. While
we have been waiting for the June 1996 escrow to close on the Bajamar
Resort (see below), work has continued on the plans for the structures, as
well as, all of the marketing materials. The Company anticipates there
will be great demand, since there is no real competition in the region,
certainly not on a golf course and on the ocean only 50 miles from San
Diego, California. To date, the Company has contributed in excess of
$5,200,000 in cash and stock toward the Plazas Resort.

Bajamar Ocean Front Hotel and Golf Resort

Bajamar Ocean Front Resort located in Baja California, Mexico on the
Pacific Ocean roughly 50 miles south of the San Diego border is the subject
of a June 1996 escrow established with Stewart Title Company of Houston,
Texas. The escrow was opened with Desarrollos Urbanos Baja California,
S.A., which is 1/2 owned by Grupo Situr, S.A., once the largest Mexican
resort development-company in Mexico. Subsequent to the opening of the
escrow, Grupo Situr's financial problems grew into a national issue and the
Mexican government became involved with several banks involved with Grupo
Situr in an attempt to work out the overall issues. The property at
Bajamar, which is the subject of our contract, is only a small fraction of
the Grupo Situr holdings. However, all contracts and sales were put on
hold until a complete workout plan was effected with the banks.
Consequently, the Company has retained its escrow position and is patiently
waiting for the resolve.

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The escrow includes the existing 27 holes of golf, the existing 81-room
hotel, the clubhouse, tennis courts, land and plans for an additional 102-
room hotel with conference center, land and plans for an additional 9 holes
of golf and approximately 300 acres of developed land for residential
housing adjacent to the golf courses. The closing of this escrow is also
important to the timeshare and/or fractional ownership program that is
located on land separate from this escrow (see above), however, located
within the Bajamar resort. The timeshare and/or fractional ownership
program will benefit from a relationship with the adjacent golf courses and
hotel. The Company had previously delayed the start of these programs in
anticipation of its escrow closing and thereby guaranteeing the
availability of these amenities.

Portal Del Mar

In February of 1999, the Company , through a wholly owned Mexican
subsidiary, signed purchase agreements and provided the $500,000 down
payment to acquire Portal Del Mar for $1,250,000. Portal Del Mar is a
123-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 recently received a financing
commitment for $7.5 million to complete the remaining 80 units, add a
clubhouse, 3 tennis courts, 2 pools and a spa with beach access and
palapas. Each condo completed is intended to include an oversize terrace
with ocean views. Comparable condominiums located across the road are
selling in the $250,000 range. The Company arranged financing for the
remaining $750,000 of acquisition cost and closed escrow on this property
in June of 1999 and intends to initially operate this property as a hotel
and eventually begin timeshare sales in late 2001. The Company expects to
start timeshare sales at $5,000 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 $5,000, the projected gross revenues would exceed $31
million with down payments of $9 million and annual mortgage payments of
approximately $2.5 million.

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. Pursuant to current agreements, the loan is
due and payable November 21, 2000. The Company currently has a financing
commitment for this property in excess of $14 million to payoff Capital
Trust, Inc. prior to November 21, 2000 and provide adequate construction
financing to complete the project. Plaza San Fernando's appraised value is
in excess of $33 million. Fonatur, the tourism arm of the Mexican
government, has approved a $38 million loan for the construction of a hotel
and convention center on a portion of the property. The Company intends to
joint venture this component with a major U.S. hotel operator.

The Company 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 the 450-room hotel and convention
center, 18 acres of developed land, including 187,500 square feet of
existing steel, concrete and marble commercial space, 42 developed
residential lots and a 80% complete 36-unit condominium complex. 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. The Company's initial plans
are to sell the 42 residential lots at approximately $30,000 each with a
20% down payment and the balance at 11% over 10 years. The Company has
initial plans and will start to execute multi-year, triple- net leases from
established preliminary commitments for approximately 100,000 square feet
of the existing commercial property at up to $2.00 per square foot per
month from U.S. and Mexican retail operations, consistent with comparable
lease rates in the area, which upon full lease up should generate in excess
of $4 million annually and become one of the most significant shopping
centers in Baja California. The Company has already pre-leased roughly 60%
of the 187,500 square foot shopping center. Additionally, the Company
received approval to sell the commercial space as condominiums at up to
$200 per square foot, with a 30% down payment and the balance at 14% over
5 years. This allows the Company an additional exit vehicle if desired and
an alternative to leasing. The down payments would be deposited into an
escrow account, until

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the Company completes approximately $1,500,000 in improvements, of which
approximately $800,000 has already been completed. Upon full sell out, the
projected gross revenues generated from the property could be in excess of
$35 million, with down payments over $11 million and annual mortgage
payments of roughly $5 million.

Former Banco Atlantico Building

In March of 1999, the Company, through a wholly owned Mexican subsidiary,
signed purchase agreements and provided the $25,000 down payment to acquire
the former Banco Atlantico building for $950,000. This building is a 20,000
square foot, 2-story commercial building in the heart of the banking
district in Tijuana, Mexico and across the street from the Plaza Rio
Tijuana shopping center. The Company has entered into discussions with a
tenant to lease the entire building and provide their own improvements.

Plaza Rio Tijuana

In June of 1999, Tri-National Tijuana, S.A. de C.V., a wholly owned Mexican
subsidiary, signed purchase agreements to acquire an existing roughly
15,000 square foot single story commercial center adjacent to Plaza Rio
Tijuana Shopping Center in Tijuana, Mexico for $550,000. The Company has
entered into negotiations with a tenant to lease the entire building and
utilize the existing tenant improvements. In the event escrow is not
closed by December 31, 2000, the Company could lose its purchase rights in
the property.

CURRENT AND PLANNED DEVELOPMENTS IN THE U.S.

Senior Independent and Assisted Living and Alzheimer's Care

Alpine Gardens East (AGE) is a Nevada corporation created in January 1998
to focus on assisted living for senior citizens. The Company acquired 51%
of this corporation for a combination of cash and preferred stock. The
Company's objective is to provide high quality assisted living services to
senior housing residents in a cost-effective manner through AGE. AGE
assisted living facilities are expected to combine housing, minimum health
care and personal support for elderly residents who need assistance with
certain activities of daily living, without the need of a complete nursing
facility.

Youngtown Gardens

In June of 1998, AGE closed on the 5.5 acre developed parcel to build its
first independent and assisted living project, known as Yougntown Gardens,
in Youngtown, Arizona, just north of Phoenix and adjacent to Sun City.
Youngtown Gardens includes 90 units/134 beds of independent and assisted
living, and 36 units/56 beds of Alzheimer's and dementia care, which will
be overseen by fellow-shareholder, Dr. Javaid Sheikh, a world-renowned
expert on geriatrics and currently Associate Professor of Psychiatry at
Stanford University. To date, the Company has contributed approximately
$2,000,000 in cash and stock to this project and in July of 1999 received
$10,500,000 in construction financing from Del Mar Mortgage.

In August of 2000, AGE received approvals to sell all 126 units as
condominiums. AGE expects to receive Certificates of Occupancy for the 36
unit Alzheimer's component in the next 30 days. Through AGE, the Company
has offered for sale all 126 condominiums as non-owner occupied investments
and owner occupied sales, at an average price of $197,500.

As of the date of the date of the report, Youngtown Gardens is
approximately 95% completed and will be available for move-in in September
of 2000. The total retail value of this project is in excess of
$20,000,000.

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Temecula Gardens

In November of 1999, the Company acquired 22.68 acres of developed land in
Temecula, California for $4,300,000 for a combination of cash and notes
(See "NOTES TO THE FINANCIAL STATEMENTS"). The land includes the business
plan, drawings, permits, approvals and zoning for a retirement, independent
and assisted living campus, which upon full build out is in excess of
$50,000,000.

San Marcos Gardens

In April of 1999, the Company acquired 2.39 acres of undeveloped land in
San Marcos, California for $800,000 (See "NOTES TO THE FINANCIAL
STATEMENTS"). The Company plans to develop a 60-unit Alzheimer's care facility.

Through AGE, the Company is in negotiations on five additional sites in its
primary market area of California, Nevada and Arizona. There is no
assurance that any ongoing negotiations will result in future real estate
acquisitions or developments by AGE or the Company.

HOTEL PROPERTIES IN THE S.E. UNITED STATES.

The Company has incorporated majority owned subsidiaries focused on the
acquisition of hotel properties in the South and Southeast United States.
Paul Goss, long time V.P. and Legal Counsel of Tri-National, is the newly
appointed President of these subsidiaries. He has already reviewed cash
flow statements and conducted onsite inspections of 9 available income-
producing properties in Tennessee, Mississippi, Louisiana and North
Carolina. The Company's intent is to acquire smaller, boutique hotels that
have developed their own competitive niche in their individual markets.

RECENT DEVELOPMENTS

TRI-NATIONAL MORTGAGE COMPANY

The Company has formed a wholly-owned subsidiary to arrange financing for
prospective customers to facilitate sales of residential lots,
condominiums, single family homes and timeshare sales. Management believes
that the ability to offer customers financing on firm, competitive terms as
a part of the sales process is an important factor in completing sales.
Not only could this facilitate sales, but the mortgages could earn income
while enhancing the balance sheet. The principal sources of income for
this 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 recently retained Mr. Robert Margolis as V.P. Finance and he will
oversee the operations of this subsidiary (See "DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT").

CITIZENS BUSINESS BANK LAWSUIT AND SUBSEQUENT $5 MILLION AWARD

On August 14, 1998, Tri-National and its wholly owned subsidiary, MRI Grand
Terrace, Inc., appeared in the Superior Court of San Bernardino before the
Honorable Barry Plotkin, to hear Chino Valley Bank, now known as Citizens
Business Bank (AMEX:CVB), attempt to attack the judgement of approximately
$5,000,000 signed by Judge Plotkin on June 3, 1998. Tri-National
successfully defeated the bank's motion for a new trial, as well as a
motion for the Judge to set aside the jury's verdicts reached on May 7,
1998. In denying Citizens Business Bank's motions, the court upheld the
jury's respective verdicts of 12 to 0 and 11 to 1, wherein they found the
bank guilty of fraud and negligent misrepresentation in connection with the
sale of the Grand Terrace Retirement Hotel to Tri-National and MRI Grand
Terrace, Inc. in 1992. On August 17, 1998, the bank posted a $7.5 million
bond to allow time to decide whether or not to start the appeal process.
Post judgement interest against the bank continues at the rate of
approximately $500,000 per year. Citizens Business Bank has a total net
worth of approximately $100 million.

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addition to the existing $5,000,000 judgement for punitive and compensatory
damages, including pre-trial interest.

The bank has filed its appeal on June 16, 1999. This gave Tri-National the
right to cross appeal on the basis of the additional damages we believed we
could show. However, we decided not to exercise this right and possibly
open the door for the Appellate Court to return us to court to evaluate
those damages. Instead, the Company filed its answer to their appeal on
September 16, 1999 and will let the Appellate Court proceed. Oral argument
has now been set for September 6, 2000.

WEB SITE

The Company has re-launched its web site, www.tri-national.com. Further
the Company retained a provider of multi-media technology, to enhance the
Company's existing web-site to include state-of-the-art interactive 3-D and
virtual reality multimedia technology to sell the Company's real estate
projects on the world wide web. Visitors to the new site can not only
download the Company's financial information, shareholder letters and press
releases, but can also view the Company's growing number of projects in
Arizona, California and Northern Baja California, Mexico from almost
anywhere on the planet. This new web site is an incredibly powerful tool
that will enable the Company to sell condos, single-family homes,
residential lots and fractional ownership units, as well as, exposure for
the leasing of our commercial properties to virtually anyone in the world.
This not only increases our exposure for sales, but also cuts our sales and
marketing costs tremendously.

VERITAS COMMUNICATIONS GROUP LTD.

In April of 2000, the Company retained Veritas Communications Group Ltd. to
the Company's investor relation activities. Veritas Communications is a
corporate communications firm that specializes in working with emerging
growth companies. Veritas Communications works through various media and
its own network of contacts to disseminate corporate information to
shareholders, insuring easy monitoring of the progress of their investment,
and works to craft and present to new and potential investors an accurate
portrayal of the Company's performance and prospects in order to facilitate
informed investment decisions.

HAMBURG AND FRANKFURT STOCK EXCHANGE LISTINGS

In May of 2000, the Company met the admission requirements and was accepted
for listing on the Frankfurt Stock Exchange under the symbol "TND". This
follows the admission to the Hamburg Stock Exchange in March of 2000. The
Frankfurt listing now provides even greater exposure for the Company in
Europe as it enables German and other European investors to trade the
Company's stock on local platforms, which significantly reduces their
trading costs. Berliner Freiverkehrs AG, a leading German brokerage firm,
has have agreed to serve as market maker for the Company's stock. These
multiple European listings are especially significant in light of the
recent discussions underway regarding the potential merger of the London
Exchange with Frankfurt. As consolidation occurs internationally, the
potential investment community for stocks with foreign listings such as the
Company continues to grow.

UPGRADE OF MEXICAN DEBT BY MOODY'S

In May of 2000, Moody's Investors Service raised Mexico's long-term foreign
currency ceiling for bonds and notes to Baa3 from Baa1. Moody's said solid
fiscal policies and a reduced debt burden improved the nation's outlook.
The upgrade raises Mexican debt to investment grade. Economists said the
higher rating makes the current account more manageable since the influx of
investment will compensate for deficit growth.

RISK FACTORS AFFECTING FUTURE RESULTS REGARDING FORWARD-LOOKING STATEMENTS

The Company's business, results of operations and financial condition are
subject to many risks, including those set forth below. Certain statements
contained in this report, including without limitation statements
containing the words "believes," "anticipates," "expects," and words of
similar import, constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-
looking statements involve known and unknown risks, uncertainties and other
factors which may

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cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. The Company has made forward-looking statements in this report
concerning, among other things, the impact of future acquisitions and
developments, if any, and the level of future capital expenditures. These
statements are only predictions, however; actual events or results may
differ materially as a result of risks facing the Company. These risks
include, but are not limited to, those items discussed below. Certain of
these factors are discussed in more detail elsewhere in this report,
including without limitation under the captions "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Given these uncertainties, readers are cautioned not to place
undue reliance on such forward-looking statements, which speak only as of
the date of this report. The Company disclaims any obligation to update
any such factors or to publicly announce the result of any revisions to any
of the forward-looking statements contained herein to reflect future events
or developments.

The Company has executed numerous contracts for, among other things,
acquisition and development of real estate projects. Certain risks are
inherent with the implementation of the Company's business strategy. These
risks include, but are not limited to, access to capital necessary for
acquisition and development, the Company's ability to sustain and manage
growth, governmental regulation, competition and risks common to the real
estate development industry.

CAPITAL REQUIREMENTS

The Company was organized to create and realize value by identifying and
making opportunistic real estate investments through the direct
acquisition, rehabilitation, development, financing and management of real
properties and/or participation in these activities through the purchase of
debt instruments or equity interests of entities engaged in such real
estate business. The Company's business strategy is to maximize
shareholder value, focusing on three priorities: growth, profitability and
liquidity through both domestic and international real estate investments.
The Company's primary source of equity financing has been through private
placement of its securities, including short-term promissory Notes. As of
April 30, 2000, the Company had placed $11,664,984 of its short-term
corporate Notes (See "NOTES TO THE FINANCIAL STATEMENTS").

To continue its business strategy, the Company intends to fund its next
round of acquisitions, development and general working capital by issuing
a Private Placement of $30,000,000 Fully-Amortized, 10.75% Series B
Convertible Debentures. The Debentures are collateralized by U.S. Treasury
Bonds and a First Mortgage on roughly 1,000 residential lots.

In addition to the Debentures, the Company is seeking property specific
mortgage financing, as well as joint venture partners to finance projects.

Following the completion of the sale of the Debentures, the Company
believes it will have sufficient funds to complete development of several
of its current projects, which will produce increased revenues to the
Company. Once these projects begin producing an income, the Company can
move away from financing its operations through the sale of securities.
However, there is no assurance that the Company will be able to do so.

COMPETITION

The retirement and residential housing business are highly competitive, and
the Company competes with numerous housing producers ranging from regional
and national firms to small and local builders primarily on the basis of
price, location, financing, design, reputation quality and amenities. In
addition, the Company competes with other housing alternatives including
existing homes and rental housing.

VACATION OWNERSHIP (TIMESHARE)

Resort timesharing has existed in Mexico since the early 1970's. During
the past few years, timesharing has been one of the fastest-growing
vacation and real estate industries in the country. On a worldwide basis, it

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is estimated that over 3.75 million households own timesharing in more than
5,000 timeshare projects. It also estimated that worldwide sales volume in
the timeshare industry in 1998 was close to $6 billion.

There are 273 timeshare projects in Mexico, which is about six percent of
the world's total. The timeshare projects are located in Cancun (44),
Puerto Vallarta (42), Acapulco (30), Mazatlan (78), Los Cabos (24), Ixtapa
(19), Manzanillo (14), Cozumel (5), Huatulco (4) and elsewhere around the
country (63). About 21.5 percent of all overnight accommodations in the
nine major coastal resort destinations of Mexico are timeshare units,
including 40.1 percent in Puerto Vallarta.

On a historical basis, more than $6 billion of timeshare inventory has been
sold in Mexico. This involves 795,300 intervals being sold to 568,100
customers, including 233,500 Mexican residents and 334,600 international
consumers. Some 82 percent of the international buyers live in the United
States. The 568,100 owners represent about 16 percent of the world's
total. About $808 million of timesharing, about 15 percent of the world's
total was sold in Mexico in 1997.

This contributes significantly to Mexico's economy. In 1997, the year-round
occupancy rate in built timeshare projects was about 76.5 percent,
compared to about 56.5 percent in the hotel industry. The average
timeshare-vacationing party spends 9.4 nights while on their timeshare
vacation, including occupancy of their timeshare unit and other forms of
overnight accommodation. The average visitor party is 3.8 persons. These
figures mean that the timeshare industry annually generates almost 27
million visitor days in Mexico with over $7 billion in expenditures,
creates directly and indirectly 94,000 jobs and about $900 million in payroll.

There are three vacation ownership properties to compete with in Baja
California, Mexico; the Rosarito Beach Hotel, the Grand Baja Club and
Hussongs Vacation Club in Ensenada, none of which are located on or near a
golf course. However, the U.S. competition is the Four Seasons at Aviara
and Grand Pacific Resorts in Carlsbad, California, the Winner's Circle in
Del Mar, California, Pacific Monarch Resorts in Laguna Hills, California
and the Marriott in Palm Desert, California all at least a 1-3 hour drive
from the Players Club at Bajamar.

The majority of timeshare owners in Mexico are upper-middle income
households. Most are between 40 and 60 years of age, college graduates and
married households. The median income of U.S. owners in Mexico is more
than $68,000. Almost one-third have incomes over $100,000.

Independent and Assisted Living

The health care industry is highly competitive and the Company expects the
assisted living business in particular will become more competitive in the
future. The Company will face competition from numerous local, regional
and national providers of assisted living and long-term care whose
facilities and services are on either end of the senior care continuum from
skilled nursing facilities and acute care hospitals to companies providing
home based health care, and even family members. In addition, the Company
expects that as assisted living receives increased attention among the
public and insurance companies, competition from current and new market
entrants, including companies focused on assisted living, will increase.
Some of the competitors in this industry operate on a not-for-profit basis
or as charitable organizations, while others have, or may obtain, greater
financial resources than those available to the Company.

RAPID GROWTH

MANAGEMENT OF GROWTH

As part of its ongoing business, the Company has experienced and expects to
continue to experience rapid growth. The Company is planning significant
expansion both through internal expansion and acquisitions and development.
In order to maintain and improve operating results, the Company's
management must manage growth and expansion effectively. The Company's
ability to manage its growth effectively requires it to continue to expand
its operational, financial and management information systems and to
continue to attract, train, motivate, manage and retain key employees. As
the Company continues its expansion, it may

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become more difficult to manage geographically dispersed operations. The
Company's failure to effectively manage growth could have a material
adverse effect on the Company's results from operations.

EXTERNAL GROWTH

In line with its business strategy, the Company has entered into, and will
continue to enter into, a number of agreements to acquire properties for
development. There can be no assurance that one or more of such
acquisitions will be completed or that the Company will be able to find
additional suitable properties to continue a steady rate of growth. There
can be no assurance that suitable properties will be available for future
acquisition and development at prices attractive to the Company. The
acquisition and development of properties are subject to a number of risks,
many of which are outside the Company's control. There can be no assurance
that the Company will be able to complete its planned facilities in the
manner, for the amount or in the time frame currently anticipated. Delays
in the progress or completion of development projects could affect the
Company's ability to generate revenue or to recognize revenue when anticipated.

DEVELOPMENT AND CONSTRUCTION RISKS

As part of its business strategy during the next few years, the Company
plans to develop a number of assisted living, resort, commercial and
residential properties. The Company's ability to achieve its development
plans will depend upon a variety of factors, many of which are beyond the
Company's control. The successful development of additional properties
involves a number of risks, including the possibility that the Company may
be unable to locate suitable sites at acceptable prices or may be unable to
obtain, or may experience delays in obtaining, necessary zoning, land use,
building, occupancy, licensing and other required governmental permits and
authorizations. Development schedules may be changed by the Company in
order to accommodate requirements of staffing of new projects and to allow
a phase-in of start-up losses inherent in the marketing and lease-up of new
facilities. Certain construction risks are beyond the Company's control,
including strikes, adverse weather, natural disasters, supply of materials
and labor, and other unknown contingencies which could cause the cost of
construction to exceed estimates. If construction is not commenced or
completed, or if there are unpaid subcontractors or suppliers, or if
required occupancy permits are not issued in a timely manner, cash flow
could be significantly reduced. In addition, any property in construction
carries with it its own risks such as construction defects, cost overruns,
adverse weather conditions, the discovery of geological or environmental
hazards on the property and changes in zoning restrictions or the method of
applying such zoning restrictions. The nature of licenses and approvals
necessary for development and construction, and the timing and likelihood
for obtaining them vary widely from country to country, state to state, and
from community to community within a state.

REGULATION AND ENVIRONMENTAL

The Company and its subcontractors must comply with various federal, state
and local ordinances, rules and regulations concerning zoning, building
design, construction and similar matters. The operations of the Company
are affected by various federal, state and local environmental laws,
ordinances and regulations, including regulations pertaining to
availability of water, municipal sewage treatment capacity, land use,
protection of endangered species, population density and preservation of
the natural terrain and coastlines. These and other requirements could
become more restrictive in the future, resulting in additional time and
expense to obtain approvals for development. When acquiring land for
development or existing facilities, the Company typically obtains
environmental reports on the properties as part of its due diligence in
order to lessen its risk of exposure.

The Company is also subject to regulations and restrictions by the
government of Mexico concerning investments in business operations in this
country by U.S. companies, none of which has to date had a material adverse
effect on the Company's consolidated operations. The Company's foreign
operations are also subject to exchange rate fluctuations, which could
affect the Company's financial statements and the reported profits.

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VOLATILITY OF STOCK PRICE

Sales of substantial amounts of shares of Common Stock in the public market
or the perception that those sales could occur could adversely affect the
market price of the Common Stock and the Company's ability to raise
additional funds in the future in the capital markets. The market price of
the Common Stock could be subject to significant fluctuations in response
to various factors and events, including the liquidity of the market for
the shares of the Common Stock, variations in the Company's operating
results, change in earnings estimates by the Company and/or securities
analysts, publicity regarding the industry or the Company and the adoption
of new statutes or regulations in any the Company's particular industries.
In addition, the stock market in recent years has experienced broad price
and volume fluctuations that often have been unrelated to the operating
performance of particular companies. These market fluctuations may
adversely affect the market price of the shares of Common Stock.

CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS

As of April 30, 2000, the Company's directors and executive officers and
their affiliates beneficially owned approximately 15.1% of the Company's
outstanding shares of Common Stock (See "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT)." As a result, these stockholders,
acting together, would be able to significantly influence many matters
requiring approval by the stockholders of the Company, including the
election of Directors. These shares are available for sale in accordance
with Rule 144. Rule 144 provides, in essence, that a shareholder who is an
affiliate of the Company, after holding restricted securities for a period
of one year, may every three months, sell them in an unsolicited brokerage
transaction in an amount equal to 1% of the Company's outstanding common
shares, or the average weekly trading volume, if any, during the four weeks
preceding the sale. Non-affiliated shareholders holding restricted
securities are not subject to the 1% limitation and may sell unlimited
amounts of shares they own, under certain circumstances, after a one year
holding period. If a substantial part of the shares, which can be sold
were so sold, the price of the Company's common shares might be adversely
affected.

EMPLOYEES

As of April 30, 2000, the Company and its subsidiaries employed 16 people
on a full-time basis and 3 on a part-time basis. The Company's success is
highly dependent on its ability to attract and retain qualified employees.
To date, the Company believes it has been successful in its efforts to
recruit qualified employees, but there is no assurance that it will
continue to be successful in the future. The Company believes relations
with its employees are excellent. No employees are represented by
collective bargaining agreements.

ITEM 2. PROPERTIES

LEASES

The Company leases one office facility in San Diego, California and one in
Ensenada, Baja California under operating leases that expire in 2000 and
the year 2001, 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 plans to maintain additional operations in Rosarito Beach, Baja
California at its Plaza Rosarito site.

The Company believes that such properties, including the equipment located
therein, are suitable and adequate to meet the requirements of its businesses.

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U.S. PROPERTIES

The Company, through a majority owned subsidiary, owns approximately 5.5
acres of developed land in Youngtown, Arizona for the construction of a
126-unit assisted living and Alzheimer's care facility.

The Company owns approximately 2.39 acres of developed land in San Marcos,
California for the construction of a 60-unit Alzheimer's care facility (See
"BUSINESS").

The Company owns, through a majority owned subsidiary, approximately 20.5
acres of developed land in Temecula, California for the construction of a
250-unit retirement, independent, assisted living and Alzheimer's facility
(See "BUSINESS").

MEXICAN PROPERTIES

The Company owns, through a wholly-owned Mexican subsidiary, 494 acres of
the Hills of Bajamar. The Hills of Bajamar property is a 2,500-acre parcel
located in the Municipality of Ensenada, on the Pacific Ocean side of Baja
California, Mexico, roughly 50 miles south of San Diego, California. The
purchase contract completed in 1992 through the Company's wholly-owned
Mexican subsidiary, Planificacion Desarollos de Jatay, S.A. de C.V.
("Planificacion"), provides for an overall purchase price of $6,000,000 for
the 2,500 acres ($2,400 per acre or $.60 per sq. meter). The property is
being purchased on a gradual basis in 247-acre increments at $600,000
apiece. In September 1998, the Company, in accordance with its contract,
had taken title to an additional 247 acres. In September 2000, in
accordance with its contract, the Company is scheduled to make additional
$600,000 payment. This will give the Company title to a total of
approximately 750 acres and places the balance of roughly 1,750 acres in
trust with Banco Ixe. Title to additional acres will be released to the
Company as annual payments are made to the seller. In the event the Company
is unable to make its scheduled annual payments, the trust is subject to
cancellation and the property will be subject to refinancing under which
the Company may be required to pay a significantly higher price per acre.
Balance owing on the remaining 2,000 acres is $4,800,000 at $600,000
annually with no interest until 2003 (See "BUSINESS").

The Company is purchasing, through a wholly-owned Mexican subsidiary, 14
acres of developed land at the Bajamar Hotel and Golf Resort for the
construction of a 328-unit vacation ownership complex. The Bajamar Hotel
and Golf Resort is location directly across the highway from the Hills of
Bajamar.

The Company owns, through a wholly-owned Mexican subsidiary, a 126-unit
condominium project known as, Portal Del Mar. Portal Del Mar is situated
on 6 acres overlooking the Pacific Ocean outside of Rosarito Beach in Baja
California, Mexico.

The Company owns Plaza Rosarito, which 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 15 acres of developed land,
including 187,500 square feet of existing steel, concrete and marble
commercial space, 42 developed residential lots and a 80% complete 36-unit
condominium complex.

The Company uses U.S. title insurance for all of its U.S. and Mexican
properties, primarily Stewart Title in Houston, Texas.

ITEM 3. LEGAL PROCEEDINGS

CITIZENS BUSINESS BANK LAWSUIT AND SUBSEQUENT $5 MILLION AWARD

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denying Citizens Business Bank's motions, the court upheld the jury's
respective verdicts of 12 to 0 and 11 to 1, wherein they found the bank
guilty of fraud and negligent misrepresentation in connection with the sale
of the Grand Terrace Retirement Hotel to Tri-National and MRI Grand
Terrace, Inc. in 1992. On August 17, 1998, the bank posted a $7.5 million
bond to allow time to decide whether or not to start the appeal process.
Post judgement interest against the bank continues at the rate of
approximately $500,000 per year. Citizens Business Bank has a total net
worth of approximately $100 million.

Additionally, Tri-National's motion for attorney fees and costs was heard
and approved on September 25, 1998. On December 3, 1998, the court awarded
the Company an additional $185,000. These costs are in addition to the
existing $5,000,000 judgement for punitive and compensatory damages,
including pre-trial interest.

Sliver Pointe Investments, LLC provided the remaining $750,000 bridge loan
to complete the acquisition of the Portal Del Mar property. The six-month
loan was due in January, 2000. However, there are several issues to be
resolved between the parties, which are now in the hands of local counsel.

COMMERCIAL MONEY CENTER

This was a loan against the MRI equipment at the Greater San Diego MRI
Center, which the Company has withheld payments due to consequential legal
theories, which will be resolved in court. It is believed that the Company
could be liable for up to $250,000.

SHORT TERM CORPORATE NOTES

The Company has made private offerings of its securities, including its
common stock and nine-month corporate notes ("Notes"), in reliance on
exemptions from the registration requirements of the Securities Act of 1933
and applicable state securities laws. Recently, the Company became the
subject of a cease and desist order issued by the Wisconsin Securities
Division, based on sales of its Notes to Wisconsin residents. The nine-
month promissory note program was brought to the Company by the investment
banking firm, Johnson, Richards & Company, Inc., and the Company relied on
representations made by that firm that a federal exemption was available
under the right terms and conditions. With the proceeds being used for
specific projects etc., the Notes were considered commercial paper and
exempt from securities registration. Although the Company believes it
properly met the criteria for exemption, because it used the proceeds to
acquire real estate and is arguing that the sales met the requirements of
the Wisconsin private offering exemption, it has paid off all of the Notes
due in Wisconsin. The Company has also agreed to a voluntary cease and
desist order in California with respect to sales of those same Notes in
that state. The California Department of Corporations required the Company
to offer rescission to California investors in that offering and all
California investors accepted that rescission offer. This requires the
Company to repay all California investors their principal only, which the
Company has already started paying. The California order does not prohibit
future exempt or qualified sales of the Company's securities in California.

Additionally, the Louisiana Commissioner of Securities is currently
examining the sales of the Notes to Louisiana residents. In the event that
it is found that the sales did not meet the requirements of applicable
exemptions from registration in Louisiana, it is the position of the State
of Louisiana that the Company must refund all investments in the Notes to
Louisiana purchasers. The Company issued approximately $1,500,000 in Notes
to Louisiana investors. The Company has already started to pay off Notes
due in Louisiana and intends to meet the balance of the refund obligation
with a combination of revenues generated by Plaza Rosarito, equity and/or
debt financing and the leveraging of portions of its real estate

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portfolio. There can be no absolute assurance, however, that the
violations will in fact be cured in this manner and therefore it is
possible that further remedial action may be required.

Because the Company has relied on federal and state exemptions for
placement of its Notes, it is possible that other states may find that the
Company did not comply with the various blue sky exemptions. The
consequences of any such violations may vary from state to state, but could
include the requirement that the Company rescind some or all of the sales
in such states at the request of the affected subscribers and prepare
formal registration statements and/or other documentation at the request of
the securities regulators. Additionally, the Company and/or its officers
may be subject to civil and/or criminal fines or penalties including, but
not limited to, a sanction with regard to the Company's ability to make any
public offering in the future. It is believed that the Company can
continue its operations through its development of cash and revenues from
its ongoing operations despite the rescission offer in California and
potential refund to Louisiana investors.

NEW ENGLAND INTERNATIONAL SURETY

As stated, to implement its business strategy, the Company initially funded
acquisitions, development and general working capital by issuing a Private
Placement of nine-month Corporate Notes at 10% interest per annum. The
investors principal and interest are guaranteed by the Company and further
bonded by New England International Surety Co., for up to $15 million. The
Company collateralized the $15 million in bonding from New England
International Surety Co. with a portion of its Hills of Bajamar property
and paid over $1,000,000 in bonding fees. As of April 30, 2000 the
Company placed $11,664,984 in Corporate Notes, of which all are due. The
Company intends to repay the principal and interest with cash flow
generated from operations, property specific mortgages and the sale of its
Series B Convertible Debentures. New England International Surety Co. has
not performed and the matter has been turned over to legal counsel to
pursue the recovery of the bonding fees through litigation.

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

There were no matters submitted to security holders for a vote during the
Company's fourth quarter.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The following table sets forth the trading history of the Common Stock on
the Over the Counter Bulletin Board through June 30, 2000, as reported by
AB Watley, Inc.. The quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions. As of April 30, 2000, there were 31,647,534 shares issued
and outstanding.

1998 QUARTER HIGH BID LOW BID HIGH ASK LOW ASK

1999 QUARTER

First (1/1 - 3/30) $1.00000 $0.62500 $1.03130 $0.68750
Second (4/1 - 6/30) 1.00000 0.62500 1.06250 0.68750
Third (7/1 - 9/30) 1.00000 0.56250 1.06250 0.56250
Fourth (10/1 - 12/31) 0.90625 0.37500 1.00000 0.43750

2000 QUARTER

First (1/1 - 3/30) $0.78125 $0.43750 $0.84375 $0.50000
Second (4/1 - 6/30) 0.43750 0.25000 0.46875 0.28125

18
<PAGE>
COMMON STOCK

The authorized Common Stock of the Company consists of 100,000,000 shares
of Common Stock without par value. At April 30, 2000, there were
31,647,534 shares issued and outstanding. In prior quarters, the Company
had inadvertently included common stock issued as collateral for loans in
the total issued and outstanding. In the current quarter and year end, the
Company has made the proper calculations and deducted a total of 8,292,000
common shares issued as collateral from the total issued and outstanding.

The Common Stock has full voting rights on all matters for which
shareholder approval is required or permitted.

The Common Stock does not possess any preferential right to dividends and
therefore is entitled to dividends only when and if dividends on such
Common Stock are declared by the Board of Directors, and only from funds
legally available therefore.

The holders of common stock have equal ratable rights to dividends from
funds legally available therefore, when, as and if declared by the Board of
Directors of the Company; are entitled to shares ratably in all of the
assets of the Company available for distribution to holders of Common Stock
upon liquidation, dissolution or winding up of the affairs of the Company;
do not have preemptive, subscription or conversion rights and there are no
redemption or sinking fund provisions applicable thereto. Such shares are
entitled to one vote per share on all matters which stockholders may vote
on at all meetings of shareholders. All shares of common stock are fully
paid and nonassessable.

The holders of shares of common stock of the Company do not have cumulative
voting rights. Thus, the holders of more than 50% of such outstanding
shares, voting for the election of directors can elect all of the directors
to be elected, and in such event, the holders of the remaining shares will
not be able to elect any of the Company's directors.

HOLDERS

As of April 30, 2000, there were approximately 1,024 registered holders of
the Company's Common Stock.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock,
and may elect to retain its net income in the future to increase its
capital base. The Company does not currently anticipate paying cash
dividends on its Common Stock in the foreseeable future.

STOCK FOR VINAS DE BAJAMAR LOTS CONVERSION

During the year end April 30, 1998, the Company carried out a Private
Placement to existing shareholders for approximately 4,000 square foot
residential lots at the Hills of Bajamar. The cash price per lot was
$10,000 and the stock price per lot was 5,000 shares of Common Stock at a
value of $2.00 per share. A total of 15 shareholders subscribed to the
Private Placement for a total 22 lots, totaling 110,000 shares of Common
Stock. In August of 2000, the Buyers selected, on average, 7,000 square
foot lots within its Vinas de Bajamar development and the Company cancelled
their respective stock certificates.

STOCK ISSUED FOR SERVICES

In an effort to preserve cash, the Company issued a total of approximately
800,000 shares of Common Stock in the Company for services for the year end
April 30, 2000. Services included full-time and part-time employees,
outside consultants, marketing, architects, engineers, land planners,
accounting and legal services, web site design and other professional services.

19
<PAGE>
STOCK ISSUED TO CAPITAL TRUST, INC.

A total of 4,000,000 restricted common shares were issued to Capital Trust,
Inc. of New York, in connection with the $8 million loan for the closing of
Plaza Rosarito (See "BUSINESS"). The 4,000,000 common shares will be
canceled upon repayment of the loan. As these shares were issued for
collateral purposes only, they are not included in the issued and
outstanding calculations. In addition, 2,000,000 restricted common shares
were issued to The A.J. Hester Group.

STOCK ISSUED TO VILLA SERENA

A total of 1,200,000 restricted common shares were issued to Villa Serena
Homeowners Association as collateral for a $300,000 loan. The 1,200,000
common shares will be canceled upon repayment of the loan. As these shares
were issued for collateral purposes only, they are not included in the
issued and outstanding calculations.

STOCK ISSUED TO SILVER POINTE INVESTMENTS, LLC

A total of 2,112,000 were transferred to Silver Pointe Investments, LLC as
collateral for a $750,000 loan. The 2,112,000 common shares will be
canceled upon repayment of the loan. As these shares were issued for
collateral purposes only, they are not used in the issued and outstanding
calculations.

STOCK ISSUED TO NORMAN LIZT

A total of 980,000 restricted common shares were issued to Norman Lizt as
collateral for a $400,000 loan in connection with the acquisition of the
land in San Marcos, California. As these shares were issued for collateral
purposes only, they are not included in the issued and outstanding calculations.

WARRANTS GRANTED AND EXERCISED DURING THE YEAR

In 1996, the Company carried out a private placement of 1,945,741 units of
the Company at a price of $0.285 per unit for gross proceeds of $521,971.
Each unit consists of one common share in the capital of the Company and a
two year non-transferable share purchase warrant. Each non-transferable
share purchase warrant entitles the holder thereof to purchase one common
share in the capital of the Company at any time during the first six months
of the term of the warrant at a price of $0.285, at any time during the
second six months of the term of the warrant at a price of $0.40, at any
time during the third sixmonths of the term of the warrant at a price of
$0.55 or at any time during the final six months of the term of the warrant
at a price of $0.75. The term of the warrant commenced on the October 30,
1996 and expired on October 30, 1999. As of October 30, 1999, a total of
1,818,495 warrants had been exercised, leaving 127,246 warrants unexercised
and expired.

In 1996, the Company also carried out a private placement of 968,020 units
at a price of $0.35 per unit for gross proceeds of $338,807. Each unit
consists of one common share in the capital of the Company and a two year
non-transferable share purchase warrant. Each non-transferable share
purchase warrant entitles the holder thereof to purchase one common share
in the capital of the Company at any time during the first year of the term
of the warrant at a price of $0.40 or at any time during the final year of
the term of the warrant at a price of $0.50. The term of the warrant
commenced on the October 30, 1996 and October 30, 1998. As of October 30,
1998, a total of 943,145 warrants had been exercised, leaving 24,875
unexercised and expired.

During the year ended April 30, 1998, the Company carried out a private
placement of 1,857,332 units for gross proceeds of approximately $669,194.
Each unit consists of one common share in the capital of the Company and a
one year non-transferable share purchase warrant for a term of one year.
Each non-transferable share purchase warrant entitles the holder thereof to
purchase one common share in the capital of the Company at any time during
the year of the term of the warrant at an average price of approximately
$.80 per share. As of April 30, 2000, a total of 28,572 warrants had been
exercised and 1,828,760 had expired unercised.

20
<PAGE>
At the year end April 30, 2000 no additional warrants had been issued or
outstanding.

RECENT SALES OF SECURITIES

The Company offered and completed a private placement of 2,000,000 shares
of its common stock from April of 1999 and closed in July of 1999 at an
average price per share of $.65, for gross proceeds of roughly $1,250,000.
The Use of Proceeds for the private placement was related to the
acquisition of Portal Del Mar. The shares issued pursuant to this private
placement are restricted securities as defined by Rule 144.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANAYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION

OVERVIEW

The Company was organized to create and realize value by identifying and
making opportunistic real estate investments through the direct
acquisition, rehabilitation, development, financing and management of real
properties and/or participation in these activities through the purchase of
debt instruments or equity interests of entities engaged in such real
estate business. The Company's business strategy is to maximize
shareholder value, focusing on three priorities: growth, profitability and
liquidity through both domestic and international real estate investments.
The Company's primary source of equity financing has been through private
placement of its securities, including short-term corporate notes
("Notes"). As of April 30, 2000, the Company placed $11,664,984 pursuant
to private placement offerings of its Notes, which are all now due. The
Company intends to repay the principal and interest with cash flow
generated from operations, property specific mortgages and the sale of its
Series B Convertible Debentures.

To continue its business strategy, the Company intends to fund its next
round of acquisitions, development and general working capital by issuing
a Private Placement of $30,000,000 Fully-Amortized, 10.75% Series B
Convertible Debentures ("Debentures"). The Debentures are collateralized
by U.S. Treasury Bonds and a First Mortgage on roughly 1,000 residential lots.

In addition to the Debentures, the Company is seeking property specific
mortgage financing, as well as joint venture partners to finance projects.

Following the completion of the sale of the Debentures, the Company
believes it will have sufficient funds to complete development of several
of its current projects, which will produce increased revenues to the
Company. Once the projects including condominium sales at Youngtown
Gardens, residential lot sales at Vinas de Bajamar, monthly rental income
from Portal Del Mar and monthly lease payments from Plaza Rosarito begin
producing an income, the Company can move away from financing its
operations through the sale of securities. However, there is no assurance
that the Company will be able to do so.

RESULTS OF OPERATIONS

YEAR ENDED APRIL 30, 2000 COMPARED TO YEAR ENDED APRIL 30, 1999. During
the year ended April 30, 2000, the Company had a net income of $532,629 or
$.015 per share, as compared to a net loss of $(2,906,671) or $(0.113) per
share for the same period ended April 30, 1999. This change is primarily
attributable to an extraordinary gain on the Company's convertible
debentures. Operating expenses for the year end April 30, 2000 was
$6,186,738, an increase from $5,889,020 for the year ending April 30, 1999.
This increase is attributable to an increase in legal and accounting fees
in relation to the Company's offering of it short-term promissory notes,
and the resulting increase in corporate note expense to $2,271,959 for the
year ended April 30, 2000, compared to $1,863,942 for the year ended April
30, 1999. For the year ended April 30, 2000, the Company had total
revenues of $194,579 compared with $611,861 in total revenues for the
preceding fiscal year end.

The Company's general and administrative expense for the year ended April
30, 2000 increased to $1,571,391 from $1,532,684 for the same period ending
April 30, 1999. This slight increase is attributable to

21
<PAGE>
primarily to the aforementioned increases in legal and accounting fees, the
increased corporate note expense resulting from the offering of the
Company's short-term promissory Notes, and a decrease in consulting fees to
$317,875 from $926,640 in 1999.

LIQUIDITY AND CAPITAL RESERVES

Net change in cash during the fiscal year ended April 30, 2000 was
$4,747,150, compared to a net change in cash of $241,542 for the fiscal
year ended April 30, 1999. Net cash used by operating activities totaled
$(3,359,784) for the year ended April 30, 2000, an increase of $505,967
from $(2,853,817) for the year ended April 30, 1999. This difference is
attributable primarily to an increase in interest paid on corporate Notes
during the fiscal year ended April 30, 2000 as compared to the same period
in 1999.

Net cash used by investing activities totaled $(17,667,833) during the year
ended April 30, 2000, compared to $(2,194,540) provided during the year
ended April 30, 1999. This difference is primarily attributable to an
increase in expenditures for the acquisition and

Net cash provided by financing activities totaled $25,774,767 for the year
ended April 30, 2000, an increase of $20,484,868 from $5,289,899 in
financing activities for the year ended April 30, 1999. The increase
primarily attributable to construction financing and mortgages for the
acquisition and development of the Company's properties, including Alpine
Gardens East, Youngtown Gardens, Temecula Gardens, Carlsbad and San Marcos,
California properties, the Hills of Bajamar, Plaza Rosarito and Portal Del Mar.

At April 30, 2000, the Company's cash, which includes cash reserves and
cash available for investment, was $5,208,173, up from $461,023 at the
preceding fiscal year end. The increase primarily attributable to
construction financing and mortgages for the acquisition and development of
the Company's properties, including Alpine Gardens East, Youngtown Gardens,
Temecula Gardens, Carlsbad and San Marcos, California properties, the Hills
of Bajamar, Plaza Rosarito and Portal Del Mar.

PLAN OF OPERATION

To date, the Company has obtained funds for the acquisition of its
properties from the sale of common stock and 9-month promissory notes
("Notes"). Recently, state and federal securities regulators have begun to
target nine-month note programs, primarily being offered by sham and/or
start-up companies. The Company has agreed to voluntarily cease sales of
its Notes, although management feels that the program met the requirements
of federal and state exemptions from registration for sales of commercial
paper. Due to the cessation of its Note sales, the Company has experienced
an immediate need for alternative funding both to service the existing
Notes and for the completion of development on its current projects.
Although the Company hopes to pay off the Notes with proceeds generated
from operations and proceeds generated from the $30 Million Series B
Convertible Debentures Offering. Additional funding may be required for
acquisition of additional properties and completion of development of
existing properties. The Company believes that completion of development
will result in an immediate, long-term and consistent increase in the
Company's revenues, and that revenues generated from existing properties
can be used to acquire new properties and to build up and diversify the
Company's real estate investment portfolio.

22
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TRI-NATIONAL DEVELOPMENT CORP.

PAGE
----

Report of Ludlow & Harrison, Independent Auditors. . . . . . . . . . 24
Consolidated Balance Sheets as of April 30, 2000 and 1999. . . . . . 25
Consolidated Statements of Operations for year ended
April 30, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Consolidated Statements of Cash Flows for year ended
April 30, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 28

23
<PAGE>
LUDLOW & HARRISON
a CPA Corporation

3545 Camino Del Rio South Suite D (619) 283-3333
San Diego, CA 92108 Fax: (619) 283-7977
--------------------------------------------------------------------------

Independent Auditor's Report
----------------------------

We have audited the accompanying balance sheets of Tri-National Development
Corp. as of April 30, 1999 and 2000, and the related statements of income,
retained earnings 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 Tri-National
Development Corporation as of April 30, 1999 and 2000, and the results of
its operations and its cash flows for the years then ended in conformity
with generally accepted accounting principles.

/s/ Ludlow & Harrison
Ludlow & Harrison
A CPA Corporation

August 10, 2000

24
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
April 30, 00 April 30, 99
ASSETS: ------------ ------------
-------
<S> <C> <C>
Current assets:
----------------
Cash in banks $ 81,294 $ 461,023
Cash in banks - Restricted (Note 2) 5,126,879 -
Accounts receivable, net 1,715,844 445,096
Assisted living-Youngtown (Note 3) 16,999,119 -
Citizens Business Bank Judgment Receivable (Note 4) 6,092,065 5,605,341
------------ ------------
Total current assets 30,015,201 6,511,460
------------ ------------
Investments:
------------
NetRom, Inc. convertible preferred stock (Note 5) 1,292,794 -
NetRom, Inc. common stock (Note 6) - 3,000,000
Taig convertible preferred stock (Note 7) 3,000,000 3,000,000
MRI medical diagnostics, Inc. (Note 8) 18,185 24,638
Hills of bajamar (Note 9) 4,219,577 4,191,109
Plaza resort timeshares (Note 10) 14,645,085 13,354,544
Bajamar las perlas condominiums (Note 11) - 6,000,000
Assisted living-Other Locations in process (Note 12) 2,450,516 104,500
Plaza rosarito (Note 13) 11,883,398 1,076,738
Portal del mar condominiums (Note 14) 1,484,232 100,000
Hall of fame fitness center (Note 15) 50,708 50,558
Bajamar Airport 22,766 -
Alpine Gardens East (16) 4,295,270 4,272,800
International health network (Note 17) 17,334 18,500
------------ ------------
Total investments 43,379,866 35,193,387
------------ ------------
Other assets:
-------------
Capitalized equipment lease 408,264 478,840
Property, furniture, and equipment, net 3,169 158,795
Other Assets 11,888 -
------------ ------------
Total other assets 423,320 637,635
------------ ------------
Total Assets $ 73,818,387 $ 42,342,482
============ ============
Liabilities and stockholders' equity:
-------------------------------------
Current liabilities:
--------------------
Accounts payable and accrued liabilities $ 2,300,319 $ 600,813
Citizens Business Bank Judgment expenses (Note 4) 3,171,838 1,961,870
Loans payable-short term-1 year or less (Note 18) 33,686,763 1,519,572
------------ ------------
Total current liabilities 39,158,920 4,082,255

Deferred revenue - (Note 4) 4,502,035 3,643,471
Notes payable-net of current portion (Note 19) 20,796,075 20,828,199
------------ ------------
Total Liabilities 64,457,030 28,553,925
------------ ------------

Stockholders' equity:
---------------------
Common stock 13,814,089 10,747,059
Paid in Capital 1,431,142 -
Convertible preferred stock - 9,458,000
Accumulated deficit (5,883,874) (6,416,502)
------------ ------------
Total stockholders' equity 9,361,357 13,788,557
------------ ------------

Total Liabilities and Stockholders' Equity $ 73,818,387 $ 42,342,482
============ ============
</TABLE>

See accompanying notes.
25
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND CHANGES IN RETAINED EARNINGS

<TABLE>
<CAPTION>
Year Ended
--------------------------------
April 30, 00 April 30, 99
------------ ------------
<S> <C> <C>
Revenues:
---------

Revenues $ 194,579 $ 611,861
------------ ------------

Operating Expenses:
-------------------

Corporate note expense (Excluding interest) 2,271,959 1,863,942
Consulting fees 317,875 926,640
Sales and marketing 478,011 448,944
Legal, accounting and insurance 248,696 336,801
Interest expense 1,298,806 780,009
General and administrative 1,571,391 1,532,684
------------ ------------
Total operating expenses 6,186,738 5,889,020

------------ ------------
Loss from Operations (5,992,159) (5,277,159)

Other Expenses and Losses
-------------------------
Write-down of investments (112,252) (191,909)
Gain on sale of assets - 2,562,397
Loss on sale of securities (1,251,978) -
------------ ------------

Loss before taxes (7,356,388) (2,906,671)

less:income tax (Note 20) - -

Extraordinary items - net of tax (Note 21) 7,889,017 -

------------ ------------
Net income (loss) 532,629 (2,906,671)

Retained earnings, beginning (6,416,502) (3,509,831)

------------ ------------
Retained earnings, ending $ (5,883,874) $ (6,416,502)
============ ============

Earnings per share-fully diluted $ 0.015 $ (0.113)

Earnings per share-fully diluted
(Extraordinary item) $ 0.23 $ -
</TABLE>

See accompanying notes.

26
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended
--------------------------------
April 30, 00 April 30, 99
------------ ------------
<S> <C> <C>
Cash from Operating activities
------------------------------
Net cash loss from operations $ (3,449,062) $ (2,963,224)
Accounts receivable-Trade 111,875 (136,943)
Accounts Payable-Trade (22,597) 246,350
------------ ------------
Net Cash from Operating activities (3,359,784) (2,853,817)
------------ ------------

Cash used in Investments
------------------------
Furniture and Equipment 25,687 385,787
Alpine Gardens East (5,669) (270,500)
MRI Medical Diagnostics 6,453 (4,588)
Assisted Living-Youngtown (4,862,054) (434,300)
Assisted Living-Other Projects (1,933,095) (72,000)
NetRom Convertible Preferred Stock 455,228 -
Hills of Bajamar (51,234) (459,765)
Plaza Rosarito (8,546,694) (1,076,738)
Portal Del Mar (1,384,232) (100,000)
Hall of Fame Fitness Center Building (150) (50,558)
International Health Network 1,166 (18,500)
Capitalized equipment lease (70,810) (17,889)
Bajamar Las Perlas Condominiums - (75,489)
Plaza Resort Timeshares (1,290,541) -
Other Assets (11,888) -
------------ ------------
Net Cash used in Investments (17,667,833) (2,194,540)
------------ ------------

Cash provided by Financing
--------------------------
Notes and Loans Payable 25,682,124 6,458,541
Common Stock Private Placements & Warrants 92,643 (1,168,642)
------------ ------------
Net Cash provided by financing activities 25,774,767 5,289,899
------------ ------------

Net change in cash and equivalents 4,747,150 241,542
Cash and equivalents, beginning of period 461,023 219,481
------------ ------------
Cash and equivalents, end of period $ 5,208,173 $ 461,023
============ ============
</TABLE>

See accompanying notes.

27
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.

NOTES TO THE FINANCIAL STATEMENTS

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 and
under the symbol "TND" on the Hamburg Stock Exchange and the Frankfurt
Stock Exchange. The Company's development efforts are focused in four
major areas: residential development, resort properties, commercial
development and senior andassisted 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
MedicalTechnologies, 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, Tri-National Holdings, SA de
CV, a 100% owned subsidiary, Planificacion Desarrollos de Jayay, SA de CV,
a 100% owned subsidiary, Inmobilaria Plaza Baja California, S.A. and Alpine
Gardens East, Inc., a 51% owned subsidiary. 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
twelve months ended April 30, 2000 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.

In prior quarters, the Company had inadvertently included common stock
issued as collateral for loans in the total issued and outstanding. In the
current quarter and year end, the Company has made the proper calculations
and deducted a total of 8,292,000 common shares issued as collateral from
the total issued and outstanding.

28
<PAGE>
FURNITURE AND EQUIPMENT

Furniture and equipment are stated at cost and depreciated over the
estimated useful lives of the assets (three to five years) using the
straight line method.

NOTE 2. CASH IN BANKS - RESTRICTED

The cash in the bank consists of $5,126,879.16 reserved for the
construction of 126 units at the Company's Youngtown Gardens Senior Housing
Project in Youngtown, Arizona.

NOTE 3. ASSISTED LIVING - YOUNGTOWN

In January of 1998, TND, through its majority owned subsidiary, Alpine
Gardens East, 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, which was converted to 864,500 common
shares and a new mortgage. Tri-National, through 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 for the recently finished construction on two
models. The Company has received $10,500,000 in construction financing from
Del Mar Mortgage for the buildout of the rest of the project, which is
roughly 95% finished with a target completion date of August 2000. In
February of 2000, the Company named Morgan Stanley Dean Witter the
preferred lender for the individual mortgages on the units.

NOTE 4. CITIZENS BUSINESS BANK JUDGMENT 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 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 errace, Inc. received judgments 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 judgments totaling almost $5 million dollars, including
punitive and compensatory damages, plus pre-trial interest. Beginning May
7th, 1998 the $5 million judgment began accruing, post judgment 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.

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<PAGE>
The bank has filed its appeal on June 16, 1999. This gave Tri-National the
right to cross appeal on the basis of the additional damages we believed we
could show. However, we decided not to exercise this right and possibly
open the door for the Appellate Court to return us to court to evaluate
those damages. Instead, we filed our answer to their appeal September 16,
1999 and will now let the Appellate Court proceed. Oral argument has now
been set for September 6, 2000.

The deferred income from this judgment receivable is $2,920,227.05.

NOTE 5. 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 accumulated
interest at a rate of 15% per annum and was to be convertible into common
stock at $3.00 per share or market price for the 10 day average prior to
the date of conversion, whichever is less, but in no event less than $1.50
per share. The conversion date was 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, presumed that NetRom, Inc.
would achieve its stated projection of $.31 per share in earnings for the
year ending December 31, 1998. In the event that NetRom, Inc. fell below
the $.31 per share earnings projection, but no lower than $.21 in earnings
for that period, then the warrant price would fall to $1.00 per share.
Further, if the earnings fell to between $.11 and $.21, then the option
price would be reduced to $.75 per share and in the event the earnings fell
below $.11 per share, the option price would be reduced to $.50 per share.
The price and terms for the property were 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 shares within the volume limitations pursuant to Rule
144. As of April 30, 2000, the Company had sold 1,320,345 shares at an
average price of approximately $.40.

NOTE 6. 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. would increase its total holdings to 250 acres. The combined parcel
would 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. represented
approximately 30% of the total shares outstanding of NetRom, Inc.

In April of 1999, this transaction was mutually annulled. 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.

30
<PAGE>
NOTE 7. 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.

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, whichever 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 8. 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-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 $.15 to $.40 range.

NOTE 9. REAL ESTATE DEVELOPMENT PROPERTY: HILLS OF BAJAMAR

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<PAGE>
commitment for $2,000,000 to make this scheduled payment and complete the
engineering for Vinas de Bajamar (See below). This will give the Company
title to a total of approximately 750 acres and places the balance of
roughly 1,750 acres in trust with Banco Ixe. Title to additional acres
will be released to the Company as annual payments are made to the seller.
In the event the Company is unable to make its scheduled annual payments,
the trust is subject to cancellation and the property will be subject to
refinancing under which the Company may be required to pay a significantly
higher price per acre. Balance owing on the remaining 2,000 acres is
$4,800,000 at $600,000 annually with no interest until 2003.

NOTE 10. 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 second quarter, the Company
paid $200,000 additional as it modified the original contract.

NOTE 11. 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. It was subsequently determined that these units
could not be developed as timeshares and consequently not economically
feasible. The $1,000,000 the Company invested in La Perla was credited to
the original Plaza Resort timeshare and efforts for La Perla concluded,
with the notes payable cancelled.

NOTE 12. ASSISTED LIVING - OTHER LOCATIONS IN PROCESS

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 $125,000 down payment. The
Company, through its majority owned subsidiary, Alpine Gardens East, plans
to develop and operate this 180-bed assisted living facility, with an
Alzheimer's care component. As of April 30, 2000, the Company had paid a
total of $125,000 in connection with this acquisition.

In November of 1999, the Company closed and completed escrow to acquire a
fully-zoned 22-acre parcel of real property with plans, located in
Temecula, California for $4,300,000 for a combination of cash and notes.
The Company plans to develop a fully-inclusive senior community that will
offer medical facilities, Alzheimer's and dementia care, independent and
assisted living and senior single family housing. The Company has named
the project, Temecula Gardens, Inc. and plans to start construction in late
2000.

In April of 1999, the Company acquired 2.39 acres of undeveloped land in
San Marcos, California for $800,000 (See "BUSINESS"). The Company plans to
develop a 60-unit Alzheimer's care facility.

NOTE 13. PLAZA ROSARITO

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<PAGE>
loan for the construction of a hotel and convention center on a portion of
the property. The Company intends to joint venture this component with a
major U.S. hotel operator.

The deferred income from the sale of commercial at the shopping center is
$1,581,808.

NOTE 14. PORTAL DEL MAR CONDOMINIUMS

NOTE 15. HALL OF FAME FITNESS CENTER

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 the former Banco Atlantico building 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. The
Company has signed a letter of intent to lease this building to Hall of
Fame Fitness, Inc. Nevada corporation, for the buildout of a fitness
center. Additionally, Tri-National would have management and participation
agreements.

33
<PAGE>
NOTE 16. ALPINE GARDENS EAST

Alpine Gardens East is a Nevada corporation formed to own and operate
senior and assisted living facilities in the southwest United States. As
of April 30, 2000, 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.

NOTE 17. INTERNATIONAL HEALTH NETWORKS, INC.

The primary focus for IHN is a planned medical campus, to be built on Hills
of Bajamar property. The medical campus was originally outlined 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 an 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. The
original contract is being revised at this date.

NOTE 18. LOANS PAYABLE SHORT-TERM

To implement its business strategy, the Company initially funded
acquisitions, development and general working capital by issuing a Private
Placement of nine-month Corporate Notes at 10% interest per annum. The
investors principal and interest are guaranteed by the Company and further
bonded by New England International Surety Co., for up to $15 million. The
Company collateralized the $15 million in bonding from New England
International Surety Co. with a portion of its Hills of Bajamar property
and paid over $1,000,000 in bonding fees. As of April 30, 2000 the
Company had placed $11,664,984 in Corporate Notes, of which all are due.
The Company intends to repay the principal and interest with cash flow
generated from operations, property specific mortgages and the sale of its
Series B Convertible Debentures. New England International Surety Co. has
not performed and the matter has been turned over to legal counsel to
pursue the recovery of the bonding fees through litigation.

The Company made the private offering of its nine-month corporate notes
("Notes") in reliance on exemptions from the registration requirements of
the Securities Act of 1933 and applicable state securities laws. Recently,
the Company became the subject of a cease and desist order issued by the
Wisconsin Securities Division, based on sales of its Notes to Wisconsin
residents. The nine- month promissory note program was brought to the
Company by the investment banking firm, Johnson, Richards & Company, Inc.,
and the Company relied on representations made by that firm that a federal
exemption was available under the right terms and conditions. With the
proceeds being used for specific projects etc., the Notes were considered
commercial paper and exempt from securities registration. Although the
Company believes it properly met the criteria for exemption, because it
used the proceeds to acquire real estate and is arguing that the sales met
the requirements of the Wisconsin private offering exemption, it has paid
off all of the Notes due in Wisconsin. The Company has also agreed to a
voluntary cease and desist order in California with respect to sales of
those same Notes in that state. The California Department of Corporations
required

34
<PAGE>
the Company to offer rescission to California investors in that offering
and all California investors accepted the rescission. This requires the
Company to repay all California investors their principal only, which the
Company has already started paying. The California order does not prohibit
future exempt or qualified sales of the Company's securities in California.

Short-term notes payable at April 30, 2000, consisted of the following:

Corporate Notes payable
9-month notes, interest at 10%,
currently due $11,456,686

Note payable to Capital Trust
Guaranteed by 3 officers and
Directors and a first trust deed on
Plaza Rosarito, interest at 12%
due November 21, 2000 8,000,000

Notes payable, short term
interest at 10%, due January 31, 2001 1,420,458

Note payable to Palomar Investments
interest at 10%, due October 1, 2000 19,898

Note payable to Norman Lizt
complete purchase of San Marcos land 429,721

Note payable to Del Mar Mortgage
Construction loan for Youngtown Gardens
interest at 14.5%, due February, 2001 10,600,000

Note payable to Del Mar Mortgage
Complete purchase of Temecula land
Interest at 14.5%, due June 2001 1,760,000
-----------

TOTAL $33,686,763
===========

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<PAGE>
NOTE 19. LONG-TERM NOTES PAYABLE

Long-term notes payable at April 30, 2000, consisted of the following:

Note payable to Palomar Investments
Payment 12% due April 30, 2001 $ 300,693

Note payable for capital lease to
Commercial Money Center, Inc. 436,998
(See "LEGAL PROCEEDINGS")

Note payable and cash payable to
DUBSCA upon closing of vacation
ownership (timeshare) project 9,079,055

Note Payable to Sovereign Capital
Convertible Debenture, 8% interest 297,331

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 13,526

Note Payable to Del Mar Mortgage
Construction loan for Youngtown Gardens
9,874,953

Note Payable to Solymar, Inc.
Due 793,520
-----------

TOTAL $20,796,075
===========

NOTE 20. INCOME TAX

While the corporation has a net income of $532,629 for the year end April
30, 2000, it has a net operating loss carry forward from prior years that
completely absorbs this amount, leaving no federal income taxes to be paid.
A minimum tax of $800 is paid to the State of California, but this is
included in operating expenses.

NOTE 21. EXTRAORDINARY GAIN-DEBENTURES

The Company over the last several years achieved a number of acquisitions
with the use of Convertible Preferred Stock and cash. The contractual
agreements underlying the Convertible Preferred Stock called for the
Company to achieve a trading value of $3.00 per share within a 24 month
period or by January 31, 2000, whichever came first. The agreements
further allowed for the sellers to petition the Company to convert these
Convertible Preferred Shares to interest bearing Convertible Debenture
instruments in the event the Company was not able to meet the $3.00
qualification. The majority of the sellers in fact did request and were
satisfied with the receipt of the appropriate instruments in February and
March of 2000. Subsequently, over the next few months, the note holders
elected to convert these Convertible Debentures into common stock as per
their right under the terms and contained therein. The net effect of this
for the year ending April 30, 2000 is an extraordinary gain in the amount
of $7,889,017.

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<PAGE>
NOTE 22. PROPERTY, FURNITURE AND EQUIPMENT

Furniture and equipment consists of the following:

April 30, 2000 April 30, 1999
-------------- --------------

Furniture and equipment $ 496,673 $ 657,072
Less accumulated depreciation (85,240) (19,437)
---------- ----------
$ 411,433 $ 637,635
========== ==========

NOTE 23. LEASES

The Company leases one office facility in San Diego, California and one in
Ensenada, Baja California under operating leases which expire in 2000 and
the year 2001, 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 April 30, 2000 are as follows:

2000 $210,700
2001 252,840
--------
$463,540
========

NOTE 24. 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. 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 was $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 (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 declared First
Colonial in default and retained the 1/3 interest as liquidated damages.

This facility, with tenant improvements, was originally financed for $2.5
million. The equipment had an 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.

Effective August 31, 1999, the space lease expired and the landlord
insisted on a new 5-year lease at an increase that would have brought the
monthly rental to almost $9,000 per month. Additionally, parent company
and personal guarantees for the full amount of $540,000 were required. It
was determined that the business could not support the expenses required to
justify a large financial commitment. Consequently, the center was closed
effective August 31, 1999.

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

None.

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<PAGE>
PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The By-Laws of the Company provide for indemnification of officers and
directors. The specific provision of the By-Laws related to such
indemnification is as follows:

PART 19

INDEMNITY AND PROTECTION
DIRECTORS, OFFICERS AND EMPLOYEES

19.1 Subject to the provisions of the Company Act, the Directors shall
cause the Company to indemnify a Director or former Director of the Company
and the Directors may cause the Company to the Company is or was a
shareholder the heirs or personal representatives of any such person
against all costs, charges and judgment, actually and reasonably incurred
by him or them including an amount paid to settle an action or satisfy a
judgement in a civil, criminal or administrative action or proceeding to
which he is or they are made a party by reason of his being or having been
a Director of the Company or a director of any such corporation. Each
Director of the Company on being elected or appointed shall be deemed to
have contracted with the Company on the terms of the foregoing indemnity.

19.2 Subject to the provisions of the Company Act, the Directors may cause
the Company to indemnify any officer, employee or agent of the Company or
of a corporation of which the Company is or was a shareholder
(notwithstanding that he is also a Director) and the heirs or personal
representatives against all costs, charges and expenses whatsoever incurred
by him or them and resulting from his acting as of officer, employee or
agent of the Company (if he shall not be a full time employee of the
Company and notwithstanding that he is also a Director), and his heirs and
legal representatives against all costs, charges and expenses whatsoever
incurred by him or them and Secretary by the Company Act or these Articles
and each such Secretary and Assistant Secretary shall on being appointed be
deemed to have contracted with the Company on the terms of the foregoing
indemnity.

19.3 The failure of a Director or officer of the Company to comply with the
provisions of the Company Act or of the Memorandum or these Articles shall
not invalidate any indemnity to which he is entitled under this Part.

19.4 The Directors may cause the Company to purchase and maintain insurance
for the benefit of any person who is or was serving as a Director, officer,
employee or agent of any corporation of which the Company is or was a
shareholder and his heirs or personal representatives against any liability
incurred by him as such Director, officer, employee or agent.

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<PAGE>
OFFICERS AND DIRECTORS

The following table sets forth the name, age and position of each of the
persons who were serving as executive officers and directors of the Company
as of April 30, 2000.

<TABLE>
<CAPTION>
POSITIONS HELD
NAME AGE WITH THE CORPORATION SINCE
---- --- --------------------- -----
<S> <C> <C> <C>
Michael A. Sunstein 58 Director, CEO & 1989
President
Gilbert Fuentes 67 Chief Financial Officer 1996
Paul G. Goss* 58 V.P. Legal Counsel, U.S. 1996
Bersain Gutierrez 43 V.P. Legal Counsel, Mexico 1998
Shane Kennedy 36 Director 1994
Arthur Lilly 68 Director 1995
Dr. Jerry Parker 63 Director and 1996
V.P. Medical Development
Jay Pasternak 43 Director 1994
Dr. Robert Rosen 53 Director 1989
Jason Sunstein 29 Secretary and 1989
V.P. Investor Relations
Ted Takacs 52 Director 1994
Craig Lanser V.P. 2000
Robert Margolis V.P. Finance 2000
</TABLE>

Mr. Goss provides services to the Company as required.

Set forth below is biographical information about each of the Company's
executive officers and directors.

MICHAEL A. SUNSTEIN. Mr. Sunstein has been the Chief Executive Officer and
a Director of the Company since its founding 1989. Prior to joining the
Company, Mr. Sunstein spent 15 years in the housing industry, primarily
with Kaufman and Broad Homes, Inc., a New York Stock Exchange listed
company, where he served as President of the Midwestern Division and acting
President of the East Coast Division. In those capacities he was
responsible for the financial, building and delivery of approximately
$30,000,000 in housing sales annually. He resigned from Kaufman and Broad
and started his own firm in the building and materials and single-family
home industry in Michigan, prior to moving to San Diego in 1982.

GILBERT FUENTES. Mr. Fuentes has been the Chief Financial Officer since
1996. He has 25 years of experience in the banking industry. He has held
the positions of President and Chief Executive Officer, Senior Vice
President, Chief Financial Officer, Treasurer and Comptroller for multi-
billion dollar banking organizations. He has authored several articles in
the fields of finance and cash management, as well as the 1992 and 1993
Economic Forecast of the United States and Mexico, published by the U.S.
Mexico Foundation. Mr. Fuentes has developed innovative cash management
systems, investment strategies and strategic financial plans that resulted
in millions of dollars of incremental income for his former employers.

PAUL G. GOSS. Mr. Goss has been a Vice President and General Counsel to
the Company since September of 1996. Mr. Goss has been the Executive Vice
President and General Counsel for One Capital Corporation, a private
merchant bank with offices in New York and Denver since 1990. Prior to
joining One Capital Corporation, Mr. Goss was engaged in the private
practice of law in Denver, Colorado with a concentration in real estate,
corporate and securities law. He is a member of the Denver and Colorado
Bar Associations. Mr. Goss has a Masters in Business Administration in
addition to his law degree from the University of Denver.

LIC. BERSAIN GUTIERREZ. Mr. Gutierrez joined the Company in October of
1998 as V.P. Legal Counsel, Mexico and Director of Mexican Operations. He
has been instrumental in negotiating, coordinating title policies, surveys
and the filing and approval for Municipal zoning and permits for the
Company's real estate

<PAGE>
projects in Mexico. Prior to joining the Company, Mr. Gutierrez held high
positions in the Secretaria de Hacienda y Credito Publico (I.R.S. of
Mexico), as well as District Attorney for the Federal District of Mexico
City. He also held high positions in the Procudaria de Justicia del D.F.
(the F.B.I. of Mexico). Mr. Gutierrez graduated with honors from the law
school of Universidad Autonoma de Mexico in 1979.

SHANE KENNEDY. Mr. Kennedy has been a Director of the Company since 1994.
Mr. Kennedy has been an insurance adjuster for the Insurance Corporation of
British Columbia since 1990 and is also President of Northern Trader
Incorporated, which is an import and export company. He is Canadian
citizen. Mr. Kennedy received his B.A. degree in Political Science from
the University of British Columbia.

ARTHUR W. LILLY. Mr. Lilly has been a Director of the Company since 1995.
Since January 1, 1995, he has been and is currently Vice President of
Finance and Chief Financial Officer of Canlan Investment Corp. From 1968
to 1994, Mr. Lilly was a partner in the accounting firm of Lilly
Johanneson, which served as the Company's auditors from 1988 to 1994. Mr.
Lilly, a Chartered Accountant, has a Bachelor of Commerce degree from the
University of British Columbia.

DR. JACOB J. PARKER. Dr. Parker has been a Director and V.P. Medical
Development of the Company since 1996. Dr. Parker is currently Medical
Director and Director of Radiology for several MRI centers and breast
imaging centers in Northern California since 1973. He was previously Chief
of Radiology and Nuclear Medicine at Ross General Hospital, Clinical
Professor of Radiology at the University of California, Irvine, and
Instructor of Radiology at the University of Southern California Medical
Center from 1970 to 1988. Dr.Parker received his M.D. from the University
of Manitoba, Canada in 1962.

JAY PASTERNAK. Mr. Pasternak has been a Director of the Company since
1994. He is a Canadian citizen who has spent the last ten years in the
private practice of mental health counseling at the Denwood Institute in
Toronto, Canada, Ontario Hydro, Futures Ontario and the Hubar Memorial
Hospital, all Canadian government facilities. Mr. Pasternak is a C.L.S.
graduate from McMaster University in Hamilton, Ontario (1994) and a Human
Services Counselor graduate from George Brown University 1996.

DR. ROBERT R. ROSEN. Dr. Rosen has been a Director of the Company since
1989. Dr. Rosen is an opthamologist and is presently Executive Director of
MAC-IPA, a 47 physician multi-specialty IPA in Montgomery County,
Tennessee, where he is responsible for policy, long range strategic
planning, physician recruitment, contracting and utilization review. From
1993 to 1995 he was Medical Director of the MidSouth Eye Center in
Clarksville, Tennessee, a private practice, and Medical Director of EYE PA,
a nationwide integrated delivery system for eyecare, a subsidiary of
EYECORP/PRG. From 1992 to 1993 he was Associate Medical Director of East
County Physician Medical Group (IPA) in San Diego, California and from 1977
to 1993 he was President and Medical Director of Eye Care Professionals in
San Diego, a single specialty medical corporation. He was also Medical
Director of the Pearle Eye Foundation from 1987 to 1993, a non-profit
corporation and he also served as Medical Director for Pearle Visioncare,
a California Knox-Keane HMO from 1986 until 1993. Dr. Rosen was Assistant
Clinical Professor of Opthamology at the University of California, San
Diego from 1977 until 1993.

JASON A. SUNSTEIN. Mr. Sunstein has been Vice President of Investor
Relations for the Company since 1989 and for MRI Medical Diagnostics, Inc.
since 1992. He attended San Diego State University where he majored in
Finance and is a licensed securities broker. He is the son of Michael Sunstein.

THEODORE TAKACS. Mr. Takacs has been a Director of the Company since 1994.
Mr. Takacs is a Canadian citizen who for the last ten years has been
engaged in labor relations consulting and negotiation. He is presently a
Constituency Assistant to the Honorable Bill Barlee in Osoyoos, British
Columbia where he also owns and operates an orchard.

ROBERT MARGOLIS. Mr. Margolis has been V.P. Finance for the Company since
early 2000. He has been engaged in the financial services industry for
approximately 30 years. He brings a diverse financing and real estate
lending background, having been the former President of Mortgage Bankers
Acceptance Company, President of Western Empire Savings and Loan
Association, Senior V.P. and Chief Loan Officer of Columbia Savings and
Loan, Senior V.P. of Major and Construction Loan Department for Farwest

40
<PAGE>
Savings and Loan. His career has encompassed working with highly
successfully individuals and achievement-oriented companies on a national
level. During his career Mr. Margolis has been intrically involved in the
financing of over $2 billion of construction and existing residential,
commercial and industrial real estate throughout the United States.

ADVISORY TEAM

The Company has assembled a team of advisors to consult the Company from
time to time on various business matters. The following are key members of
the advisory team:

DOUGLAS MORGAN. Mr. Morgan joined the Company in 1989 as a shareholder and
in September of 1998 as a consultant for internet marketing, web design and
computer software, hardware and networking. Mr. Morgan is a Magna Cum
Laude graduate from both Massachusetss Institute of Technology with a
Bachelors Degree and Stanford University with a Masters Degree, both in
Computer Science and Electrical Engineering. He has over 25 years of
experience in the computer industry with an early background in
programming, design and project management with companies such as Computer
Sciences Corp., Hughes, NCR and Hewlett Packard.

DANIEL LOMAX. Mr. Lomax has been involved with the Company in various
capacities since 1990 and most recently as President of Solymar, the
construction company contracted to build the Company's assisted living
facilities. Mr. Lomax entered the general contracting and development
business in the State of California in 1960 with single-family homes,
remodeling, commercial projects and major shopping center tenant
improvements. In 1975, Mr. Lomax received his BI heavy construction
license from the State of Arizona and started designing, building and
financing single-family town homes, single-family lot homes and
condominiums, exceeding 1,500 units.

LOUIS LESSER. Mr. Lesser has been a consultant to the Company since 1991
on financing and real estate transactions. Mr. Lesser has successfully
built, owned and operated numerous real estate companies, hotel properties
and oil and gas companies since 1935, including Chairman and President of
Louis Lesser Enterprises, Inc. of Beverly Hills, CA, which was listed on
the American Stock Exchange. Louis Lesser Enterprises built developed and
operated over $1,000,000,000 of commercial and residential real estate
properties and over $500,000,000 of housing projects for the Army, Navy,
Air Force and Marine Corps. all over the U.S.

DAVID SONNENBLICK. Mr. Sonnenblick has been a consultant to the Company
since 1996 on financing, real estate transactions and mergers and
acquisitions. Mr. Sonnenblick is currently the Managing Director of the
Los Angeles office for Sonnenblick Goldman Co., a national 105-year old
investment banking firm, headquartered in New York. Mr. Sonnenblick has
successfully closed transactions valued in excess of $1,000,000,000 on
behalf of his clients. Mr. Sonnenblick attended the University of Denver
where he was an honors student and completed his studies at the University
of Colorado where he received a B.A. in Economics in 1982.

NORM EDWARDS.

Mr. Edwards has been a consultant to the Company since 1999 on
administration, financing and mergers and acquisitions. Mr. Edwards has
consulted with various companies for the past 26 years in areas of
corporate development. Mr. Edwards obtained his Bachelors of Science
degree in Business Administration from the California State Polytechnic
College in Pomona, California in 1961. Mr. Edwards is a retired USAF Lt.
Colonel, Command Pilot.

The Company does not have a standing audit or nominating committee of its
board of directors, or committees performing similar functions. However,
the Company plans to form such committees, as it is a requirement for
listing on most exchanges and NASDAQ.

<PAGE>
ITEM 10. EXECUTIVE COMPENSATION

The Company has granted stock options to members of the board of directors
in 1996, 1997 and 1998, outlined below. Other than these stock options,
the Company does not pay compensation to its directors, nor does it
maintain any pension, retirement or other arrangement. The board of
directors for the Company held a total of eight (8) regular meetings during
its last fiscal year. All directors attended each of the meetings via
telephone conferencing.

STOCK OPTIONS GRANTED AND EXERCISED DURING THE YEAR

In December of 1996, 975,000 Employee Stock Options were issued to officers
and directors to purchase Common Stock in the Company at a price of $.25
per share, expiring December 31, 1999. Prior to their expiration date of
December 31, 1999, all 975,000 Employee Stock Options had been exercised at
$.25.

For the year ended April 30, 1997 a total of 1,000,000 Employee Stock
Options were issued to officers and directors to purchase Common Stock in
the Company at a price of $.50 per share and expiring December 31, 1999.
Prior to their expiration date of December 31, 1999, 601,000 Employee Stock
Options had been exercised at $.50 per share.

For the year ended April 30, 1998 a total of 1,000,000 Employee Stock
Options were issued to officers and directors to purchase Common Stock in
the Company at a price of $.50 per share and expiring December 31, 1999.
Prior to their expiration date of December 31, 1999, 50,000 Employee Stock
Options had been exercised at $.50 per share.

The Employee Stock Options for 1999 and 2000 are being held, pending a
Qualified Stock Option Plan that will be presented at the next Annual
Meeting of the Shareholders.

Total compensation paid to officers of the Company for its past three
fiscal years is set forth below:

(THIS SPACE INTENTIONALLY LEFT BLANK)

42
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------
Other Securities
Annual Rstrctd. Under- All Other
Name and Compe- Stock lying LTIP Compe-
Principal nsation Award(s) Options Payouts nsation
Position Year Salary($) Bonus($) ($) ($) (#) ($) ($)

-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael 1997 $ 74,000 $ 0 $ 0 $ 0 550,000 $ 0 $ 0
A. 1998 $120,000 $ 0 $ 0 $ 0 450,000 $ 0 $ 0
Sunstein, 1999 $144,000 $ 0 $ 0 $ 0 0 $ 0 $ 0
CEO &
President

Gilbert 1997 $ 37,000 $ 0 $ 0 $ 0 - $ 0 $ 0
Fuentes, 1998 $ 60,000 $ 0 $ 0 $ 0 150,000 $ 0 $ 0
CFO 1999 $ 72,000 $ 0 $ 0 $ 0 0 $ 0 $ 0

Paul G. 1997 $ 0 $ 0 $ 0 $43,000 0 $ 0 $ 0
Goss, V.P 1998 $ 0 $ 0 $ 0 $66,000 0 $ 0 $ 0
& U.S. 1999 $ 30,000 $ 0 $ 0 $68,250 0 $ 0 $ 0
Counsel

Jason A. 1997 $ 37,000 $ 0 $ 0 $ 0 150,000 $ 0 $ 0
Sunstein, 1998 $ 60,000 $ 0 $ 0 $ 0 150,000 $ 0 $ 0
Secretary 1997 $ 72,000 $ 0 $ 0 $ 0 0 $ 0 $ 0
& V.P

Jerry J. 1997 $ 0 $ 0 $ 0 $ 0 - $ 0 $ 0
Parker, 1998 $ 0 $ 0 $ 0 $ 0 50,000 $ 0 $ 0
M.D., V.P. 1999 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
</TABLE>

(1) Bersain Gutierrez, Craig Lanser and Robert Margolis have only recently
been retained by the Company, and did not receive compensation from
the Company for the calendar year end December 31, 1999.
(2) There are seven six directors for the fiscal year ended April 30, 2000.

(3) Norman Edwards and Douglas Morgan of the Advisory Team received
minimal consulting fees during the calendar year end December 31, 1999.

43
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of April 30, 2000 (based on a total of
31,647,534 outstanding shares of Common Stock) by (1) all persons know by
the Company to own beneficially more than 5% of the common stock, (II) each
of the Company's Directors, (III) each of the Named Executive Officers, and
(IV) all executive officers and directors as a group. Except as otherwise
indicated, the Company believes the persons named in the table have sole
voting and investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.

NAME AND ADDRESS OF SHARES BENEFICIALLY PERCENTAGE
BENEFICIAL OWNER (1) OWNED BENEFICIALLY OWNED
------------------- ------------------- --------------------
Michael A. Sunstein (II)(III) 2,063,240 %6.519
The A.J. Hester Group (I)(2) 2,000,000 6.320
C/o Josephtal and Co.
200 Park Ave., 24th Fl.
New York, NY 10166
Jerry Parker, M.D. (II)(III) 1,850,857 5.848
Jason Sunstein (III) 275,000 0.869
Paul G. Goss (III) 125,000 *
Dr. Robert Rosen (II) 140,000 *
Jay Pasternak (II) 121,287 *
Arthur Lilly (II) 99,000 *
Gilbert Fuentes (III) 50,000 *
Ted Takacs (II) 50,000
Shane Kennedy (II) 1,200 *
Advisory Team 1,242,000 3.924
All Directors and Officers as
a Group (IV) 4,775,584 15.09
TOTAL OF ABOVE 8,017,584 25.34

(1) Except where otherwise noted, the address of the Company's directors
and executive officers is c/o Tri-National Development Corp., 480 Camino
Del Rio S., Suite 140, San Diego, California 92108.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Jason Sunstein, as President of Delanorte Investments, Inc. loaned the
Company $301,650 during the year and was repaid $153,870, leaving a balance
due at April 30, 2000 of $147,780. No terms are specified and no interest
has been charged or collected.

Michael Sunstein, as President of Palomar Investments, Inc., loaned the
Company $264,150 during the year and was repaid $142,500, leaving a balance
due at April 30, 2000 of $121,650. No terms are specified and no interest
has been charged or collected.

44
<PAGE>
PART IV

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON Form 8-K

The following documents are filed as a part of the report:

(a) FINANCIAL STATEMENTS. The following consolidated financial statements
of the Company are included in Part II, Item 7 of this report:

Independent Auditors' Report
Consolidated Balance Sheets as of April 30, 2000 and 1999
Consolidated Statements of Operations for the year ended April 30, 2000
Consolidated Statements Cash Flows for the ended April 30, 2000
Consolidated Statements of Shareholders' Equity for the year
ended April 30, 2000
Notes to Consolidated Financial Statements

(b) REPORTS ON FORM 8-K. For the year end April 30, 2000, no reports on
Form 8-K were filed by the Company.

(c ) 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 this undersigned, thereunto duly authorized, in the
City of San Diego, California, on this 10th day of August, 1999.

TRI-NATIONAL DEVELOPMENT CORP.
a Wyoming Corporation

BY: Michael A. Sunstein BY: Gilbert Fuentes
TITLE: Chief Executive Officer, President TITLE: Chief Financial
Director Officer, Treasurer

BY: Jason A. Sunstein
TITLE: Vice President,
Secretary