UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarter ended January 31, 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-QSB. [x]
As of March 22, 2000, 39,223,298 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 March 22, 2000 was
approximately $20,223,532, based on the closing price of the stock on
March 22, 2000.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
FORM 10-QSB
FOR THE QUARTER ENDED JANUARY 31, 2000
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
A) Consolidated Balance Sheets as of January 31, 1999
and 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . .3
B) Consolidated Statements of Operations for
the nine months ended January 31, 1999 and 2000. . . . . . . .4
C) Consolidated Statements of Cash Flows for
the nine months ended January 31, 1999 and 2000. . . . . . . .5
E) Notes to the Financial Statements. . . . . . . . . . . . . . .6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . 15
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 17
ITEM 2. Changes in Securities and Use of Proceeds. . . . . . . . . . 17
ITEM 3. Default of Senior Securities . . . . . . . . . . . . . . . . 17
ITEM 4. Submission of Matters to a Vote of Security Holders. . . . . 17
ITEM 5. Other Information. . . . . . . . . . . . . . . . . . . . . . 17
ITEM 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 18
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS: Jan 31, 2000 Jan 31, 1999
- ------- ------------ ------------
<S> <C> <C>
Current assets:
- ----------------
Cash in banks $ 125,957 $ (71,789)
Cash in banks - Restricted (Note 2) 1,947,746
Accounts receivable, net 362,236 438,633
Assisted living-Youngtown (Note 3) 18,685,473 4,002,300
Assisted living-Other Locations in process (Note 5) 541,154 340,500
Citizens Business Bank Judgment Receivable (Note 6) 6,092,065 5,566,328
------------ ------------
Total current assets 27,754,631 10,275,972
------------ ------------
Investments:
- ------------
NetRom, Inc. convertible preferred stock (Note 7) 1,292,794 3,000,000
NetRom, Inc. common stock (Note 8) - 4,200,000
Taig convertible preferred stock (Note 9) 3,000,000 -
MRI Medical Diagnostics, Inc. (Note 10) 26,638 20,308
Hills of Bajamar (Note 11) 4,198,456 4,159,159
Plaza Resort Timeshares (Note 12) 14,647,851 13,341,192
La Perla condominiums (Note 13) - 6,000,000
Activity Link, Inc. ( Note 14) - 216,064
Plaza Rosarito (Note 15) 11,849,141 1,008,108
Portal Del Mar condominiums (Note 16) 1,484,232 100,000
Hall of Fame Fitness Center (Note 17) 50,558 25,000
International Health Network (Note 18) 17,334 10,000
------------ ------------
Total investments 36,567,004 32,079,831
------------ ------------
Other assets:
- -------------
Capitalized equipment lease 436,999 489,280
Property, furniture, and equipment, net (Note 19) 136,755 175,810
Other Assets (69,306)
------------ ------------
Total other assets 504,448 665,090
------------ ------------
Total Assets $ 64,826,083 $ 43,020,893
============ ============
Liabilities and stockholders' equity:
- -------------------------------------
Current liabilities:
- --------------------
Accounts payable and accrued liabilities $ 1,826,203 $ 1,137,101
Citizens Business Bank Judgment expenses (Note 6) 3,171,838 1,948,215
Loans payable-short term-1 year or less (Note 20) 25,229,254 1,053,114
------------ ------------
Total current liabilities 30,227,294 4,138,430
Deferred revenue-Citizens Business Bank
Judgment (Note 6) 2,920,227 3,618,113
Notes payable-net of current portion (Note 21) 22,433,408 18,746,187
------------ ------------
Total Liabilities 55,580,930 26,502,730
------------ ------------
Stockholders' equity:
- ---------------------
Common stock 11,015,973 11,375,859
Paid in Capital 805,749 -
Convertible preferred stock 9,458,000 9,458,000
Accumulated deficit (12,034,569) (4,315,697)
------------ ------------
Total stockholders' equity 9,245,153 16,518,162
------------ ------------
Total liabilities and stockholders' equity $ 64,826,083 $ 43,020,893
============ ============
</TABLE>
See accompanying notes.
3
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TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------
Jan 31, 2000 Jan 31, 1999
------------ ------------
<S> <C> <C>
Revenues:
- ---------
Revenues $ 194,244 $ 492,074
Gain on sale of assets - 27,797
------------ ------------
Total Revenues 194,244 519,871
------------ ------------
Operating Expenses:
- -------------------
Corporate note expense (Excluding interest) 2,169,449 1,143,362
Consulting fees 102,601 899,185
Sales and marketing 119,570 436,964
Legal, accounting and insurance 202,391 301,929
Interest expense 1,006,966 555,148
General and administrative 933,228 1,085,743
------------ ------------
Total operating expenses 4,534,205 4,422,331
------------ ------------
Loss from Operations (4,339,961) (3,902,460)
Write-down of investments (4,664) -
Loss on sale of securities (1,251,978)
------------ ------------
Net income before taxes (5,596,602) (3,902,460)
Provision for income taxes - -
------------ ------------
Net income (loss) $ (5,596,602) $ (3,902,460)
============ ============
Earnings per share-fully diluted $ (0.168) $ (0.153)
</TABLE>
See accompanying notes.
4
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TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------
Jan 31, 2000 Jan 31, 1999
------------ ------------
<S> <C> <C>
Cash from Operating activities
Net cash loss from operations $ (4,392,677) $ (3,902,459)
Accounts receivable & notes receivable 152,166 (149,701)
Accounts Payable - 764,549
------------ ------------
Net Cash from Operating activities (4,240,511) (3,287,611)
------------ ------------
Cash used in Investments
- ------------------------
Furniture and Equipment 63,881 (10,141)
Alpine Gardens East - (268,000)
MRI Medical Diagnostics (2,000)
Activity Link, Inc. - (105,800)
Assisted Living-Youngtown (14,683,173) (434,300)
Assisted Living-Carlsbad and San Marcos (166,154) (40,000)
NetRom Convertible Preferred Stock 1,707,206 -
Hills of Bajamar (7,347) (435,498)
Plaza Rosarito (10,772,403) (1,008,108)
Portal Del Mar (1,384,232) (100,000)
Hall of Fame Fitness Center Building - (25,000)
International Health Network 1,166 (10,000)
Capitalized equipment lease -
Bajamar Las Perlas Condominiums - (1,000,000)
Plaza Resort Timeshares (1,293,307) (262,137)
------------ ------------
Net Cash used in Investments (26,536,363) (3,698,984)
------------ ------------
Cash provided by financing
- --------------------------
Notes and Loans Payable 32,120,640 4,390,188
Common Stock Private Placements & Warrants 268,914 2,305,137
------------ ------------
Net Cash provided by financing activities 32,389,554 6,695,325
------------ ------------
Net change in cash and equivalents 1,612,680 (291,270)
Cash and equivalents, beginning of period 461,023 219,481
------------ ------------
Cash and equivalents, end of period $ 2,073,703 $ (71,789)
============ ============
</TABLE>
See accompanying notes.
5
<PAGE>
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. The Company's development
efforts are focused in four major areas: residential development, resort
properties, commercial development and senior/assisted living facilities.
The Company was incorporated on July 31, 1979 as Rocket Energy Resources
Ltd. under the laws of the Province of British Columbia, Canada by
registration of its Memorandum and Articles. The Company changed its name
to MRI Medical Technologies, Inc. in April of 1989. On December 7, 1992,
the Company changed its name to Tri-National Development Corp. and
recapitalized on the basis of five (5) common shares of MRI Medical
Technologies, Inc. for one (1) common share of Tri-National Development
Corp. In January of 1997, the Shareholders approved a special resolution
to change the corporate domicile from Vancouver, B.C. to the state of
Wyoming. On February 24, 1997, the Company's Articles of Continuation were
accepted by the state of Wyoming and it is now incorporated in good
standing under the laws of the State of Wyoming. The Company maintains its
executive offices in San Diego, California at 480 Camino Del Rio S. in
Suite 140 and its telephone number is 619-718-6370.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Greater San
Diego Imaging Center, a 100% owned subsidiary, Activity Link, Inc., a 85%
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
75% 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 nine
months ended January 31, 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.
FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost and depreciated over the
estimated useful lives of the assets (five to seven years) using the
straight line method.
NOTE 2. CASH IN BANKS
NOTE 3. 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 January 31, 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.
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NOTE 4. 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 75% finished with a target completion date of June 2000. In
February of 2000, the Company named Morgan Stanley Dean Witter the
preferred lender for the individual mortgages on the units.
NOTE 5. 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 January 31, 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. 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 mid 2000.
NOTE 6. 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 Terrace, Inc. received judgements in their favor for
fraud, intentional misrepresentation and deceit/negligent misrepresentation
in the Superior Court of San Bernardino, California. TND and MRI Grand
Terrace, Inc. received judgements totaling almost $5 million dollars,
including punitive and compensatory damages, plus pre-trial interest.
Beginning May 7th, 1998 the $5 million judgement began accruing, post
judgement interest of 10% or $1,400 per day until the full award is paid.
A 35% portion of the award is due to the Company's attorney. The
attorneys, however, filed for recovery of those fees as an additional award
that was heard and approved September 25, 1998. On December 3, 1998, the
court awarded the Company an additional $185,000 in legal fees.
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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.
NOTE 7. NETROM, INC. CONVERTIBLE PREFERRED STOCK
In January of 1998, the Company, on behalf of its wholly-owned Mexican
subsidiary, Planificacion y Desarrollo Regional Jatay, S.A. de C.V., sold
50 acres of its Hills of Bajamar property to NetRom, Inc., a California
publicly traded corporation for $60,000 per acre, for a total purchase
price of $3,000,000, plus construction and management contracts on said 50
acres.
NetRom, Inc. delivered to Tri-National Development Corp. at closing,
1,000,000 shares of its Preferred Convertible stock at a value of $3.00 per
share for a total value of $3,000,000. The preferred stock accumulates
interest at a rate of 15% per annum and will be convertible into common
stock at $3.00 per share or market price for the 10 day average prior to
the date of conversion, whichever is less, but in no event less than $1.50
per share. The conversion date is at the option of Tri-National
Development Corp., however, no sooner than 12 months from the date of
closing and in no case later than 15 days after the common stock of NetRom,
Inc. trades at or above $4.00 per share for a period of thirty consecutive days.
Additionally, NetRom, Inc. provided TND warrants to purchase 1,000,000
common shares at a price of $1.25 per share, 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 January 31, 2000, the Company had sold 1,320,345 shares at an
average price of approximately $.40.
NOTE 8. 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 undone. Neither company
was best served by maintaining the inventory of either the stock or the
land. Consequently, the sale was annulled resulting in the cancellation
of the 4,200,000 restricted common shares of Netrom, Inc. and return of the
200 acres of the Company's Hills of Bajamar.
NOTE 9. 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
8
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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 10. NVESTMENT 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 $.25 to $.40 range.
NOTE 11. REAL ESTATE DEVELOPMENT PROPERTY: HILLS OF BAJAMAR
The Hills of Bajamar (formerly the Santa Fe Ranch) consists of
approximately 2,470 acres (divided into ten 247 acres parcels) of
undeveloped land located fifty miles south of San Diego, California on the
Pacific Coast side of the State of Baja California, Mexico, in the
Municipality of Ensenada. The Company originally had a right to acquire a
100% interest in the property pursuant to a series of agreements requiring
ongoing payments, for each 247 acres parcel released by the vendor.
In an effort to accommodate the Vancouver Stock Exchange, which the Company
was trading on at the time, the Company entered into an agreement with
Pacific Medical International, Inc. (PMI) whereby, subject to TND
shareholder approval, TND divested itself of all of its rights in
consideration for: retention of 86.45 acres of the first parcel of the
Santa Fe Ranch to be released by the original vendor; and the greater of
(1) a one percent royalty on the gross proceeds from the sale of any land
that is part of the said Santa Fe Ranch, or (2) $150,000 for each 247 acres
parcel released by the vendor, beginning with the release of the fourth
parcel and continuing with each release thereafter.
Prior to receiving shareholder approval, the Board renegotiated the
agreement and, on June 23, 1995, the Company held an Extraordinary General
Shareholder Meeting that approved the renegotiated agreement. Under the
renegotiated agreement, the Company was granted 51% of the issued and
outstanding shares of PMI with any dilution of stock to raise further
funding to come from the shareholdings of the minority shareholders of PMI
and not their treasury. PMI also agreed to assume a convertible promissory
note to a Mr. Yates on renegotiated terms and Yates agreed to such
assumption by PMI. The Yates note was originally secured by the Company's
rights to its 86.45 acres of the Santa Fe Ranch. The renegotiated note
with PMI provided for Yates to receive the greater of $2,000 or 50% of the
sale price for each acre of the
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Santa Fe Ranch sold until all funds due to him were paid, with Yates also
to receive a lien against the first 250 acres of the Santa Fe Ranch as security.
The Company then entered into a new agreement in November of 1996 with PMI
to acquire all right and title to the 237 acres then fully paid and in
escrow, as well as, the balance of the contract for the remaining 2,233
acres for a $700,000 promissory note payable, 500,000 shares of TND Class
B Series B Preferred Stock at a value of $4.00 per share and the return of
its 51% interest in PMI. In January of 1998, the Company converted the
$700,000 promissory note into 1,000,000 common shares of the Company. The
Company's basis in the Hills of Bajamar taking into account cash invested,
stock issued and notes given, totals $4,159,159. PMI remains responsible
for its own debts, including the note due to Mr. Yates.
In September of 1998, the Company, in accordance with its contract, took
title to an additional 257 acres, for a total of 494 acres, and placed the
balance of 2,000 acres of Hills of Bajamar in trust with Banco Ixe. Title
to the 2,000 acres will be released to the Company as annual payments are
made to the seller. The Company is in process of making its next payment
of $600,000 to take title to an additional 247 acres.
NOTE 12. 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 13. LA PERLA CONDOMINIUMS
In January of 1999, the Company entered into an acquisition agreement with
Valcas Internacional, S.A. to acquire 2+ developed acres of ocean front
land within the Bajamar resort, with plans for a 32-unit condominium
complex for $6,000,000. The Company paid $1,000,000 in accordance with the
new contract for the 32-unit La Perla condominiums to be built and signed
notes for an additional $5,000,000, pursuant to a construction contract
executed simultaneously.
NOTE 14. ACTIVITY LINK, INC.
In January of 1998, TND, through its wholly owned subsidiary, Tri-National
Resorts Management, Inc., acquired 85% of Activity Link, Inc., a Nevada
corporation, for a combination of $228,000 in cash and 75,000 shares of
restricted Common Stock in TND and a quarterly distribution of profits in
the amount of 15%, once Activity Link, Inc. achieved $300,000 in net
profits. Activity Link, Inc. owned the proprietary rights to "Activity
Link", a reservation system for many different types of tourist activities
that was planned to access directly the concierge desks of major hotels and
resorts. The hotels and resorts were to be billed for each ticket or
reservation paid through Activity Link. Three beta sites for Activity Link
were being prepared for a vacation ownership developer in Hawaii, starting
in late 1998.
As previously announced, the Company reduced its position in Activity Link
to allow the pursuit of outside financing to successfully launch the
project. When raising sufficient amounts of outside capital proved more
difficult than originally planned, it became apparent that the Company's
capital would still be required to move the project forward. Management
made the decision that its time, effort and resources could better serve
the shareholders in its real estate projects, choosing to stay tightly focused.
As of October 31, 1999, no restricted Common Stock in TND had been issued
and a total of $110,000 had been invested in connection with this
acquisition. The Company has written this investment off to $0.
NOTE 15. PLAZA ROSARITO
On November 20, 1998, Tri-National Holdings, S.A. de C.V., a wholly-owned
Mexican subsidiary, purchased the Plaza San Fernando property from Banco
Bital with a $1 million cash down payment. In July of 1999, Capital Trust,
Inc. of New York, one of the Company's Investment Bankers, provided the
remaining $8 million necessary to close and complete the escrow and will
maintain a participation in the project. Plaza
10
<PAGE>
San Fernando's appraised value is in excess of $33 million. Tri-National
has renamed this property, Plaza Rosarito. It is located in the heart of
Rosarito Beach in Baja California, Mexico, minutes from the 20th Century
fox film studio where "Titanic" was filmed and down the street from the
famous Rosarito Beach Hotel. Plaza Rosarito includes 15 acres of
undeveloped oceanfront land zoned for a 450-room hotel and convention
center that is already approved for a $38 million construction loan
guarantee from Fonatur, the tourism arm of the Mexican government, and 18
acres of developed land, including 187,500 square feet of existing steel
and concrete commercial space, 42 developed residential lots and a 80%
complete 30-unit condominium complex. The Company has started selling the
shopping center as commercial condominiums at an average price of up to
$170 per square foot.
NOTE 16. PORTAL DEL MAR CONDOMINIUMS
In June of 1999, Tri-National Portal, S.A. de C.V., a wholly-owned Mexican
subsidiary of Tri-National Development Corp., closed and completed the
escrow to acquire Portal Del Mar for $1,250,000. Portal Del Mar is a 126-
unit, 2 and 3-bedroom condominium development on 6 acres overlooking the
Pacific Ocean in Baja California, Mexico, just south of Rosarito Beach.
The 126 ocean view condominiums are in various stages of completion, with
approximately 46 completed. The Company plans to add a clubhouse, 3 tennis
courts, 2 pools and a spa with beach access and palapas. Comparable
condominiums located across the road are selling in the $250,000 range.
The Company intends to initially operate the project as a hotel and spa and
eventually sell the condominiums as timeshares at an average price of
$6,000 per week.
NOTE 17. 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.
NOTE 18. INTERNATIONAL HEALTH NETWORKS, INC.
International Health Networks (IHN) is Nevada corporation and a majority-
owned subsidiary of the Company. IHN is headed up by three prominent
physicians, all of whom are also shareholders of Tri-National, including
Dr. Jerry Parker, who is a director of the Company. IHN is a multitude of
U.S. medical services designed for Mexico that the Company has envisioned
for the past several years as the magnet for attracting the retiree market
in Baja California, Mexico.
The primary focus for IHN is a planned medical campus, to be built on Hills
of Bajamar property. The medical campus was originally contracted for by
IHN in 1997 in an agreement that called for 150 acres at the south end of
the property at a price of $25,000 per acre with an option for an
additional 100 acres at $60,000 per acre for 3 years. The Company retained
the construction rights to build all required facilities on the combined
250 acres and maintain a property management contract. The campus is to
include an acute care hospital associated with a recognized U.S. medical
provider, a medical school complete with dormitories, class rooms and
auditorium, medical exhibition center, R & D facilities for pharmaceutical
industry and facilities for long-term care combined with anti-aging and
wellness programs. This campus is important not only to the region, but to
the Company's desire to create a retirement mecca on its properties. With
IHN now a majority-owned subsidiary of TND, the original contract is being
revised. The Company has a minimal cash position in this entity to date.
NOTE 19. PROPERTY, FURNITURE AND EQUIPMENT
Furniture and equipment consists of the following:
Furniture and equipment $573,754
Less accumulated depreciation (69,306)
--------
$504,448
========
11
<PAGE>
NOTE 20. 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 Surety Co., for up to $15 million. The Company
collateralized the $15 million in bonding from New England Surety Co. with
247 acres of its Hills of Bajamar property. The Company intends to repay
the principal and interest with cash flow generated from leases and sales
of residential lots, commercial and residential condominiums, single-family
homes and timeshares. As of January 31, 2000 the Company placed
$11,664,984 in Corporate Notes, of which $11,664,984 will be retired in the
next 12 months.
The Company has made private offerings of its securities, including its
common stock and nine-month promissory 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 an investment
banking firm 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 and
has placed sufficient funds in its trust account with legal counsel to
payoff the last Note due in Wisconsin April 9, 2000. 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 will require the Company to offer rescission to California
investors in that offering. However, due to the short-term of the Notes,
the Company believes that most of the California investors will opt to
maintain their investments in those Notes until pay off. 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 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.
12
<PAGE>
NOTE 21. LONG-TERM NOTES PAYABLE
Long-term notes payable at January 31, 2000, consisted of the following:
Note payable to Greater San Diego
Imaging Center, LLC balloon
Payment 12% due January 31, 2001 312,000
Note payable for capital lease to
Commercial Money Center, Inc. 454,887
Corporate Notes payable 11,664,984
Note payable and cash payable to
DUBSCA upon closing of vacation
ownership (timeshare) project 9,079,055
Note payable to Capital Trust
Guaranteed by 3 officers and
Directors and a first trust deed on
Plaza Rosarito, interest at 12%
Due July 31, 2000 8,000,000
Note payable to North County Bank
Guaranteed by a stockholder and equipment,
due in monthly installments of $860, with
interest at 10.5%, through October, 2001 19,916
Note payable to Delanorte Investments, Inc., interest
At 10%, due January 31, 2001 229,200
Note payable to Greater San Diego Imaging
Center, LLC - 3% per month, due October 1, 2000 25,473
NOTE 22. LEASES
The Company leases two office facilities in San Diego, California and one
in Ensenada, Baja California under operating leases which expire in 1999
and the year 2000, respectively. The leases generally require the Company
to pay all maintenance, insurance and property taxes and are subject to
certain minimum escalation provisions. The Company also leases autos,
equipment and computers.
Future minimum operating lease payments as of January 31, 2000 are as follows:
2000 $210,700
2001 252,840
--------
$463,540
========
NOTE 23. 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
13
<PAGE>
(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 fully 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.
14
<PAGE>
ITEM 2. 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 (nine-month) promissory
notes (the "Notes"). Through January 31, 2000, the Company raised
$12,541,840 pursuant to private placement offerings of its common stock and
short-term promissory Notes.
RESULTS OF OPERATIONS
YEAR ENDED APRIL 30, 1999 COMPARED TO YEAR ENDED APRIL 30, 1998.
During the year ended April 30, 1999, the Company incurred a net loss of
$(2,906,671) or $(0.113) per share as compared to a net income of $798,390
or $0.046 per share for the same period ended April 30, 1998. This change
is primarily 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 $1,863,942 for the year
ended April 30, 1999 from $39,597 for the year ended April 30, 1998. For
the year ended April 30, 1999, the Company had total revenues of $611,861
compared with $434,413 in total revenues for the preceding fiscal year end.
The Company's general and administrative expense for the year ended April
30, 1999 increased to $1,532,684 from $963,821 for the same period ending
April 30, 1998. This increase is primarily attributable 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, an increase in consulting fees to $926,640 in 1999
from $96,242 in 1998, and an increase in sales and marketing expenses to
$448,944 in 1999 from $40,664 in 1998.
PERIOD ENDED JANUARY 31, 2000 COMPARED TO PERIOD ENDED JANUARY 31, 1999.
During the nine month period ended January 31, 2000, the Company incurred
a net loss of $(5,596,602) or $(.168) per share as compared to a net loss
of $(3,902,459) or $(0.153) per share for the same nine months ended
January 31, 2000. This change is attributable primarily to an increase in
operating expenses for the period as a result of increased corporate note
expense and consulting fees. For the nine months ended January 31, 2000,
the Company had total revenues of $194,244 compared to $492,074 in total
revenues for the same period ended January 31, 1999.
The Company's general and administrative expense for the period ended
January 31, 2000 decreased to $933,228 from $1,085,743 for the same period
ended January 31, 1999. Total operating expenses of the Company increased
to $4,534,205 for the period ended January 31, 2000 from $4,422,331 for the
same period ended January 31, 1999. This is attributable to an increase in
interest expense to $1,006,966 for the period ended January 31, 2000 from
$555,148 for the same period ended January 31, 1999. Additionally, the
increase in total operating expense can be attributed to an increase in
corporate note expense, excluding interest, to $2,169,449 for the period
ended January 31, 2000 from $1,143,362 for the same period ended January 31,
1999. This increase is due to the sale and cost of processing of the
Company's short-term promissory Notes.
LIQUIDITY AND CAPITAL RESERVES
Net change in cash during the nine months ended January 31, 2000 was
$1,612,680, compared to a net change in cash of $(291,270) for the nine
months ended January 31, 1999. Net cash used by operating activities
totaled $(4,240,511) for the nine months ended January 31, 2000, an
increase of $(952,900) from $(3,287,611) used by operating activities
during the nine months ended January 31,1999. This difference is
15
<PAGE>
attributable primarily to an increase in interest paid on corporate Notes
during the nine months ended January 31, 2000 as compared to the same
period in 1999.
Net cash used by investing activities totaled $(26,536,363) during the nine
months ended January 31, 2000, compared to $(3,698,984) provided during the
nine months ended January 31, 1999, a difference of $(22,837,379). This
difference is primarily attributable to an increase in expenditures for the
acquisition and development of the Company's properties, including Assisted
Living - Youngtown, Carlsbad, San Marcos and Temecula Gardens, the Hills of
Bajamar, Plaza Rosarito and Portal Del Mar.
Net cash provided by financing activities totaled $32,389,554 for the nine
months ended January 31, 2000, an increase of $25,694,229 from $6,695,325
used by financing activities during the nine months ended January 31, 1999.
This difference is primarily attributable to private placements of the
Company's common stock and warrants, as well as an increase in Notes and
loans payable.
At January 31, 2000, the Company's cash, which includes cash reserves and
cash available for investment, was $2,073,703, up from $(71,789) at the
preceding nine months end.
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.
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, including
Plaza Rosarito. Although the Company hopes to pay off the Notes with
proceeds generated from Plaza Rosarito, additional equity and/or debt
financing may be required, in part, to service and retire that pre-existing
debt. 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
and long-term 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.
Due to disagreements with the investment banking firm which originally
presented the short-term promissory note offering to the Company over the
Company's voluntarily cessation of sales and renewals of those Notes and
the cost of continued payment processing, the Company has taken over the
processing of the Notes until their maturity. The extent to which the
increased devotion of resources to the processing of those Notes will
impact the Company cannot be predicted with certainty.
The Company intends to obtain funds to complete development of several of
its current projects through a combination of equity and/or debt financing
(including up to $20,000,000 in convertible debentures), revenues from
Plaza Rosarito and Youngtown and the leveraging of portions of its real
estate portfolio. These current projects are expected to produce increased
revenues to the Company, allowing it to move away from financing its
operations through the sale of securities. However, due to a number of
factors beyond its control, there can be no assurance that the Company will
be able to do so.
As of the date of this report, the Company has no sources of financing
other than the sale of securities and, possibly, property secured
financing. The Company believes that it will be able to obtain property
secured financing to aid in completion of Plaza Rosarito, and that the
income produced by leases of that property will provide sufficient revenues
to aid in completion of other projects and pay off the Notes. In addition,
the Company believes that the income produced by management fees and the
sale of condominiums at its Youngtown Gardens project will also aid in
completion of other projects and pay off the Notes.
16
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As described in Note 2, the Company has a partial interest in an
approximately $5,000,000 judgment rendered against Citizen's Business Bank
in favor of MRI Grand Terrace, Inc. That judgment is currently on appeal
in the California Court of Appeals, San Bernardino County California.
Pursuant to a settlement agreement between the Company and MRI Medical
Diagnostics, Inc. ("MRI"), entered in the bankruptcy proceeding of that
company, the estate of MRI is entitled to 30% of a portion of the net
proceeds of any judgment surviving the appeal.
As described in Note 19 to the financial statements above, the Company has
made a prior offering of nine-month promissory notes pursuant to federal
and state exemptions for commercial paper. The Company believes that it
complied with the "specific use of proceeds" requirement of that exemption
because it applied the proceeds to the acquisition of real property.
However, despite this contention, the Company has been made the subject of
a Wisconsin cease and desist order with respect to the Notes. Pursuant to
arrangement with the State of Wisconsin, the Company has offered rescission
to Wisconsin investors in the Notes. The Company has paid off all of the
Notes due in Wisconsin, with the exception of one Note which does not
become due until April 9, 2000. That investor has rejected the Company's
offer of rescission and opted to hold the Note until maturity.
On January 27, 2000, the California Department of Corporations issued a
Desist and Refrain Order against the Company with respect to future sales
or renewals of the Notes to California residents, and, pursuant to a
settlement agreement entered into between the Department of Corporations
and the Company, will require the Company to offer rescission to each of
the California noteholders. Payment on the rescission offer will not be
due until June 16, 2000, and the Company is confident of its ability to pay
off the Notes held by the California investors either at maturity or by
means of the rescission offer when payment becomes due. The California
order does not prevent future exempt or qualified sales of the Company's
other securities in the State of California.
The Company is currently under investigation by the State of Louisiana with
respect to sales of the Notes in that state. It is the position of the
State of Louisiana that, should it be determined that the Company did not
comply with appropriate state securities registration exemptions in the
sales of the Notes, it will be required to refund the initial investment to
its Louisiana noteholders. The Company issued approximately $1,500,000 in
principal amount of the Notes to Louisiana investors.
The Company believes it can continue its operations and complete
construction on its current projects despite the California rescission
offer and potential refund in Louisiana. However, the Company may seek
additional equity and/or debt financing in order to meet its obligations to
its noteholders and/or to complete current projects so that revenues from
those projects can be applied toward payment on the Notes.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULT OF SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of the Shareholders on December 22,
1999 for the election of directors and ratification of accountants. The
Proxy Statement filed November 24, 1999is incorporated by reference.
ITEM 5. OTHER INFORMATION
None.
17
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON Form 8-K
(a) REPORTS ON FORM 8-K. For the nine months ended January 31, 2000, no
reports on Form 8-K were filed by the Company.
(b ) EXHIBITS. The following exhibits are filed as a part of this report:
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
27.1 Financial Data Schedule
SIGNATURES:
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of San Diego, California, on this 30th day of March, 2000.
TRI-NATIONAL DEVELOPMENT CORP.,
a Wyoming Corporation
/s/ MICHAEL A. SUNSTEIN /s/ GILBERT FUENTES
BY: Michael A. Sunstein BY: Gilbert Fuentes
TITLE: Chief Executive Officer, President TITLE: Chief Financial Officer,
Director Treasurer
/s/ JASON A. SUNSTEIN
BY: Jason A. Sunstein
TITLE: Vice President,
Secretary
18
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-END> JAN-31-2000
<CASH> 2,073,703
<SECURITIES> 0
<RECEIVABLES> 6,454,301
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,754,631
<PP&E> 623,727
<DEPRECIATION> (49,973)
<TOTAL-ASSETS> 64,826,083
<CURRENT-LIABILITIES> 30,227,294
<BONDS> 0
0
9,458,000
<COMMON> 11,015,973
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 64,826,083
<SALES> 0
<TOTAL-REVENUES> 194,244
<CGS> 0
<TOTAL-COSTS> 4,534,205
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<INTEREST-EXPENSE> 1,006,966
<INCOME-PRETAX> (5,596,602)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,596,602)
<DISCONTINUED> 0
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<CHANGES> 0
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