UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended December 31, 1999
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from to
Commission file number: 0-27691
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Golden Opportunity Development Corporation
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(Name of Small Business Issuer in Its Charter)
Louisiana 87-0067813
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
268 West 400 South Salt Lake City, Utah 84101
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(Address of Principal Executive Offices) (Zip Code)
(801) 575-8073
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of each Exchange on Which Registered
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Common Stock ($0.001 Par Value) None
Preferred Stock ($0.001
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [X].
The issuer's total revenues for the year ended December 31, 1999, were $360,313.
The aggregate market value of the registrant's Common Stock, $0.001 par value
held by non-affiliates is not available because the Company has no publically
traded market for its stock . On March 31, 1999, the number of shares
outstanding of the registrant's Common Stock, $0.001 par value (the only class
of voting stock), was 255,423.
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TABLE OF CONTENTS
Page No.
PART I
Item 1. Description of Business..........................................1
Item 2. Description of Property Management's Discussion
and Analysis or Plan of Operation................................8
Item 3. Legal Proceedings................................................9
Item 4. Submission of Matters to a Vote of Security Holders.............10
PART II
Item 5. Market for Common Equity and Related Stockholders...............10
Item 6. Management's Discussion and Analysis or Plan of Operation.......11
Item 7. Financial Statements 15
Item 8. Changes in and Disagreements with Accountants...................16
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...............16
Item 10. Executive Compensation ..........................................17
Item 11. Security Ownership of Certain Beneficial Owners and Management...18
Item 12. Certain Relationships and Related Transactions...................20
Item 13. Exhibits and Reports on Form 8-K................................20
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PART I
Forward-Looking Statements. This Registration Statement includes
"forward-looking statements." Forward looking statements contained in this
registration statement are based on management's beliefs and assumptions and on
information currently available to management. Forward-looking statements
include statements in which words such as "expect, " "anticipate," "intend,"
"plan," "believe," "estimate," "consider," or similar expressions are used.
You should not construe any forward-looking statement as a guarantee of future
performance. These statements inherently involve risks, uncertainties and
assumptions. The future results and stockholder values may differ from those
expressed in these forward-looking statements, and those variations may be
material and adverse. Many factors that will affect these results and values are
beyond our ability to control or predict.
ITEM 1. DESCRIPTION OF BUSINESS
A. General
As used herein the term "Company" refers to Golden Opportunity Development
Corporation, its subsidiaries and predecessors, unless the context indicates
otherwise. The Company was incorporated in Louisiana on May 7, 1997 for the
purpose of engaging in any lawful activity for which corporations may be formed
under the Business Corporation Law of Louisiana.
The Company is currently engaged in the business of operating and acquiring
hospitality property. The Company currently owns a 134 unit motel, a restaurant
facility and four adjacent office retail buildings in Baton Rouge, Louisiana
(the "Motel"). The Motel is located next to the Mississippi River, three blocks
from a river boat dock, at 427 Lafayette Street, Baton Rouge, Louisiana. The
Company is also actively seeking to acquire other hospitality properties.
The Company's operations are largely being overseen by Diversified Holdings I,
Inc., a majority shareholder, (the "Parent Company") by way of a Management
Agreement entered into on April 30th, 1999 between the Company and the Parent
Company. The Company agreed to compensate Diversified Holdings I, Inc. $10,000
per month plus 5% of net income, if any, in excess of $5,000 in return for
management services provided by Diversified Holdings I, Inc.
CyberAmerica Corporation, the majority shareholder and parent corporation of
Diversified Holdings I, Inc., acquired an indirect controlling interest in the
Company through Innovative Property Development Corporation ("IPDC"), a
consolidated subsidiary, that acquired a controlling interest in the Company
pursuant to a Stock Acquisition Agreement dated April 30, 1998. Under the terms
of the Stock Purchase Agreement, IPDC acquired a 51% interest in the Company in
exchange for a $50,000 cash infusion to cover operating deficiencies related to
the Motel and transferred 118,520 shares of restricted stock of Oasis Resorts
International, Inc. (f.k.a. Flexweight Corporation) which was paid to the Smith
Family Trust and San Pedro Securities, Ltd. Then, on April 2, 1999, pursuant to
an Acquisition Agreement, IPDC sold all of its assets to Diversified Holdings 1,
Inc., a 90% owned subsidiary of CyberAmerica Corporation. The sale of IPDC's
assets to Diversified Holding I, Inc. included its entire controlling interest
in the Company. Consequently, Diversified Holdings I, Inc. became the
controlling shareholder of the Company. As a result of this transaction,
CyberAmerica Corporation retained its indirect control interest in the Company
while relinquishing its control interest in IPDC.
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Other substantial beneficial shareholders of the Company include the Smith
Family Trust whose principal and control person is Brad Smith and San Pedro
Securities, Ltd., whose principal and control person is Laura Olsen. Both the
Smith Family Trust and San Pedro Securities, Ltd.,were initial shareholders of
the Company and they each have an 8.9% beneficial ownership interest in the
Company. Neither the Smith Family Trust or San Pedro Securities, Ltd., presently
participate in the management of the Company or the Motel nor did they have any
material relationship to the Motel prior to its acquisition by the Company.
B. The Motel
The Motel was acquired on May 31, 1997 by San Pedro Ltd. and the Smith Family
Trust for the purpose of subsequently transferring the property to the Company
for a 100% interest in the Company. The Company acquired the Motel for a One
Million Nine Hundred Thousand Dollar ($1,900,000) note. Principal and interest
on the mortgage are payable in 359 monthly installments of Eleven Thousand Three
Hundred Ninety-One Dollars and Forty-Six Cents ($11,391.46) until July 1, 2027,
when the remaining principal and interest is due in full. These payments are
made to the General Lafayette Inc. c/o James A. Thom III, M.D. and his wife,
Evelyn M Thom 130 Main Street, Baton Rouge, Louisiana, 70081. Additional
consideration paid by the Company for the acquisition of the Motel included
75,000 shares of SynFuel Technology stock. No other liens or encumbrances on the
Motel exist other than the note. The Motel is located in the Parish of East
Baton Rouge, State of Louisiana. The assessed value of the property and the
Motel when it was acquired by the Company in May of 1997 was $200,000. The
current assessed value of the property and Motel remains approximately $200,000.
The Motel currently has an occupancy rate of approximately 57% of its rentable
rooms. However, the Company expects this rate to increase once the renovations
are complete and the Motel becomes a Villager Lodge. The Motel generates average
monthly rental revenues of Twenty-Six Thousand Seven Hundred and Sixty-Six
Dollars ($26,766) and Three Thousand Two Hundred and Sixty Dollars ($3,260) are
generated from leases on other property. The Motel's current occupancy rate,
based upon the number of available rooms, is as mentioned above approximately
57%. The current number of available rooms fluctuates between 80 and 84. The
Motel's low occupancy rate is due in part to the fact that the Motel is in need
of substantial repairs including repairs to approximately fifty(50) rooms that
are not rentable. If these approximately fifty (50) unrentable rooms are added
into the calculation of the Motel's occupancy rate, the Motel would have an
occupancy rate of approximately 37%. The Company is in the process of renovating
approximately one room a month until it obtains sufficient financing to renovate
the entire Motel. At the time the Company acquired the Motel, approximately 40
rooms were rentable out of a total of 134 rooms. The neighborhood in which the
Motel is located was considered economically depressed prior to the Company's
acquisition of the Motel. However, the neighborhood over the last couple of
years has been in the process of being revitalized. The Company suspects that
the Motel's poor condition was the result of the Motel's prior inability to
generate sufficient revenues to make the necessary upgrades, repair and
improvements to properly maintain the property. The Motel's inability to
generate sufficient revenues historically was most likely the result of the
formerly depressed local economy. The Company has been unable to find adequate
financing to fully renovate the Motel to date.
The Company's current plans are to renovate the Motel in compliance with the
requirements of the Villager Franchise Systems, Inc. uniform franchise offering
circular. The Company has retained the services of an architectural firm in its
effort to begin renovations and thereby, comply with requirements of becoming a
Villager Lodge Extended Stay Living Franchise. In July, 1999, the Company signed
a Franchise Agreement with Villager Lodge. The Company is in the process of
obtaining the necessary financing to begin operations
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as a Villager Lodge. The Company expects that the source of such financing will
be bank or institutional financing, equity offerings and/or private placements.
As mentioned above, the Company is currently financing renovations on a room by
room basis with operating cash flows. The Company expects that initial costs to
renovate the Motel in compliance with the Villager Lodge franchise agreement
will be approximately $2,000 per room during the first year of operation as a
Villager Lodge. The Company expects that after the first year of operations as a
Villager Lodge, additional renovations will need to be made at a cost of
approximately $2,000 to $3,000 per room.
Villager Lodge is a national chain with over ninety (90) locations throughout
the country. Villager Lodge has a toll free 800 number for national reservations
and directory assistance for Villager Lodge locations nation wide. Additionally,
Villager Lodge maintains a national advertising campaign and an Internet website
upon which potential guests can view the Villager Lodge national directory and
make reservations at any Villager Lodge nation wide. Villager lodge has an
Internet web site located at http://www.villager.com. .
The estimated minimal initial costs to begin operations as a Villager Lodge is
$250,000. The Company believes that it will need an additional $250,000 to fully
complete the renovation requirements for the Village Lodge. The completion of
renovations and the successful retention of the Villager Lodge franchise is
expected to significantly increase the Motel's rental revenues. However, there
is no guarantee that the Company will obtain the necessary financing to make the
renovations required under the Licensing Agreement with Villager Lodge. In the
event the Company does not obtain the necessary financing, the Company may not
be able to operate as a Villager Lodge franchisee. In the event the Company is
unable to comply with the requirement of the Villager Lodge Franchise Agreement
because of a lack of financing, the Company will continue to operate its Motel
as the General Lafayette Inn. Villager Lodge has agreed to release the Company
from any liability under the Franchise Agreement, if the Company is unable to
obtain sufficient financing.
The material terms of the Franchise Agreement entered into by the Company and
Villager Lodge are as follows:
o The Company gets the exclusive right to operate as a Villager Lodge
within a 7 mile radius.
o The Company must renovate and operate in accord with Villager Lodge
system standards which include but are not limited to the approved
plans for the pre-opening renovation and all items included on the
Punch list that is part of the franchise agreement. Such renovations
include but are not limited to: re-surfacing and re-srtriping the
parking lot, renovating the pool area or taking it out and filling it
in with landscaping, renovating the Motel's lobby and guest rooms,
providing vending and ice machines throughout the Motel, obtaining the
proper Villager Lodge signage, and implementing the Villager Lodge
Project Power Up Property Management System.
o The Company gets to participate in Villager Lodge's marketing program
(ie. directory and toll free national reservation system).
Additionally, the Company must use Villager Lodge advertising
campaigns.
o Villager Lodge will provide both on and off site management training
for the Company.
o The Company paid a non-refundable initial fee in the amount of $10,200
($5,100 upon execution of the franchise agreement and an additional
$5,100 Initial fee for these Villager Lodge franchise rights).
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o Another material fee that the Company shall pay for operating as a
Villager Lodge is a royalty fee equal to 5% of the monthly gross room
rental revenues. Additionally, neither party has renewal or option
rights.
o By June 1, 2000, the Company must upgrade the swimming pool, repair
its decking, replace pool furniture, replace pool fencing, or remove
the pool in its entirety.
o The Company must resurface the parking lot and must upgrade the
property landscaping. Furthermore, to comply with the Villager Lodge
franchise agreement, the Company must, in its efforts to renovate the
Motel, upgrade the guestrooms and bathrooms, replace carpeting,
bedding and furnishings.
To date all franchise fees have been paid in accord with the franchise
agreement. Also the deadlines for the Company's performance as described in
Section 3 of the franchise agreement, which outline's the Company's improvement
obligations, have been extended to March 1, 2000. The Company is currently in
the process of negotiating a six month extension of its improvement obligations
under the franchise agreement.
Currently, the Company operates the Motel as an economy lodging facility. The
Motel's current room rates are generally under $46 a night. If the Company
successfully operates as a Villager Lodge franchise it will operate as an
extended stay lodging facility which will generate an estimated average room
rental of $52 per night with an estimated average occupancy rate of at least
70%(1). Accordingly, if the Company obtains the franchise, the Company believes
that the rental revenues will improve significantly.
During 1999, the Company expended approximately Two Hundred Thirty Thousand Two
Hundred and Eleven Dollars in improvements and other expenses relating to the
operation of the Motel. The Company's prospects for increasing value and
realizing a profit on the Motel are primarily contingent upon the Company's
ability to obtain adequate financing to renovate the Motel. Upon completion of
the renovations to the Motel, management believes that the Motel has the
potential to operate at a profit. However, there is no guarantee that adequate
financing will be secured or that the Motel will obtain profitability.
The Company has in the past, only had one other attempt to affiliate itself with
a national motel chain. Previously, the Company made an attempt to affiliate
itself with Days Inn, but was unsuccessful in its effort due to the Company's
inability to procure adequate financing for the renovations required by Days
Inn. The Company is now attempting to affiliate itself with Villager Lodge.
These are the only franchises the Motel has attempted to affiliate itself with
that current management is aware of.
C. Leasable Commercial Space on the Company's Property
The property upon which the Motel sits also contains approximately 15,000 square
feet of leaseable commercial space of which approximately 33 % is currently
occupied by tenants. The Company currently leases approximately 5,067 square
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(1) The Villager Lodge promotional package that the Company received prior
to its decision to enter into the franchise agreement with Villager Lodge states
that Villager Lodge guarantees that its franchisees will have an occupancy rate
of at least 70% of their rentable rooms by their second year of operation as a
Villager Lodge or they will not have to pay a royalty fee to Villager Lodge
during their third year of operation as such. Accordingly, the Company believes
that Villager Lodge will be able to fill the Motel to these levels. However,
there is no guarantee that the 70% occupancy rate will be reached if the Company
obtains the franchise.
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feet of this commercial space to the Culinary Arts Institute of Louisiana, Inc.
for $3,260 per month on a month to month basis, which may be canceled by either
party with 30 days notice. The Culinary Art Institute of Louisiana, Inc. teaches
students the fine art of cooking and operates a restaurant on its premises in
which its students practice the skills they learn. This facility is only open in
the evenings. The annual rental rate of the commercial space leased to the
Culinary Arts Institute of Louisiana is approximately $8.00 per square foot and
the Motel's average room rental rate is $46.00 per night. The Company
anticipates signing leases to fill the vacant commercial space with a stain
glass maker, a construction company, and a bench maker sometime in the not too
distant future.
D. Acquisition of Other Properties
The Company also intends to acquire additional hospitality properties that
either have the potential for significant capital appreciation with minimal
renovations or may be able to generate positive cash flows by reorganizing and
improving management. The Company has no specific criteria as to the kinds of
hospitality properties it may seek to acquire. Furthermore, the Company has not
limited the geographical location in which it may acquire properties. However,
given the Company's current financial condition, the Company will most likely
only be able to acquire properties that can be acquired for minimal cash down
payments and/or shares of the Company's common stock. Although the Company is
actively seeking to acquire additional hospitality properties, the Company has
not entered into any agreement nor does it have any commitment or understanding
to acquire any additional properties as of the date of this filing. The Company
through its officers and consultants will continue to locate, review and
evaluate various hospitality properties for acquisition or other business
opportunities as they become available.
There is no guarantee that the Company will be successful in its attempts to
acquire additional properties or if such properties are acquired that they will
operate at a profit. To a large extent, the decision to acquire a specific
property or participate in a specific business opportunity may be made upon
management's analysis regarding the quality of the property or business
opportunity. Some of the factors which management may consider include: the
location of the property, local economic factors and demographics, size, age and
physical appearance of the property and numerous other factors which are
difficult, if not impossible, to analyze through the application of any
objective criteria.
E. Competition
The Company currently has no direct competition in the downtown Baton rouge area
because no other economy lodging facilities exist within a one-half mile radius
of the Motel. However, outside of the one-half mile radius there exist several
national branded or franchised lodging chains with significantly newer
facilities and more capital resources which are in indirect competition with the
Motel.
In addition to these nationally branded or franchised lodging facilities that
exist outside of the one-half mile radius of the Motel, the Company is aware
that two lodging facilities are presently being built within approximately a
half-mile radius of the Motel. One of these facilities will be a 300 room Crown
Plaza Hotel which will service the Riverboat Casino and is expected to be open
for business sometime in the Spring of 2000. The other will be a 150 room
lodging facility built by Louisiana State University. The construction of these
facilities could adversely effect the Company's ability to generate revenues
however, the Company believes that it will be able to maintain a competitive
niche in the downtown Baton Rouge area as an economy or extended stay lodging
facility in comparison to these other lodging facilities presently being built
whose market is anticipated to appeal to market segments other than the Motel's.
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Moreover, Motel's ability to remain competitive in the downtown Baton Rouge area
may be affected by a number of factors, including the location and quality of
its property, the number and quality of competing properties nearby, its
affiliation with a recognized name brand, and general regional and local
economic conditions.
If the Company acquires additional hospitality properties they will be subject
to intense competition with other hospitality properties many of which will have
a competitive edge over the Company by virtue of their stronger financial
resources and prior business experience. There is no assurance that the Company
will be successful in obtaining suitable properties.
The profitability of the Motel and future hospitality properties are subject to
general economic conditions, competition, the desirability of the location, the
relationship between supply and demand for motel rooms and other factors. The
Company operates the Motel and may operate future hospitality properties in
markets that contain numerous competitors and the continued success of the
Company will be a result, in large part, of the ability of these competitors to
compete with it in such areas as reasonableness of room rates, quality of
accommodations, service level and convenience of location. There can be no
assurance that demographic, geographic or other changes in the market will not
adversely affect the convenience or desirability of the Company's operations.
Furthermore, there can be no assurance that in the market in which the Company
owns and operates the Motel or future properties that competing motels, hotels,
and inns will not provide greater competition for guests than currently exists,
or that new motels, hotels or inns will not enter such market.
F. Seasonality
The lodging industry is seasonal in nature. Lodging facilities experience
seasonal trends that effect their rate of occupancy depending on the type of
lodging facility and its location. For example, resorts located in warm climates
may experience higher occupancy rates at Christmas time. With respect to the
Company's Motel, it experiences greater revenues due to higher occupancy rates
at several different times throughout the year. In particular, the Motel expects
that it will experience increased occupancy rates during the fall and winter.
The Company bases this belief on the fact that the Louisiana State University
football season attracts many visitors during the fall and the influx of
northerners who visit the south during the winter months to escape the cold.
These seasonal conditions can be expected to cause quarterly fluctuations in the
Company's revenues, profit margins and net earnings. Although the Company's
limited empirical data regarding occupancy rates does not presently reflect an
increase in such rates during these seasonal periods, the Company expects that
future occupancy rates will reflect theses seasonal trends in the future
G. Supply and Demand
In some years construction of lodging facilities in the United States resulted
in an excess supply of available rooms, and the oversupply had an adverse effect
on occupancy levels and room rates in the industry. Although the relationship
between supply and demand has been favorable in recent years, the lodging
industry may be adversely affected in the future by (i) an oversupply of
available rooms, (ii) national and regional economic conditions, (iii) changes
in travel patterns, (iv) taxes and government regulations which influence or
determine wages, prices, interest rates, construction procedures and costs, and
(v) the availability of credit.
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The local occupancy rate for lodging facilities in the area where the Company's
Motel is located is approximately 64% (2). The Company may, in the future,
expand in other places throughout the United States where there may be an
oversupply of lodging facilities. However, as for the area where the Motel is
located, there is currently not an oversupply of lodging facilities. The Company
is aware that two lodging facilities are being constructed in the immediate
vicinity. However, these new facilities may attract greater tourism and exposure
for the Motel's lower end market segment or may result in an oversupply of
rooms. The Company is uncertain as to the effect that these new facilities may
have on the Motel's future occupancy rate, but management believes that the
Motel will be able to remain competitive with these newly constructed facilities
due to its niche as an economy lodging facility.
H. Regulation
The lodging industry is subject to numerous federal, state and local government
regulations, including those relating to the preparation and sale of food and
beverages (such as health and liquor license laws). Additionally the Company's
business is subject to extensive federal, state and local regulatory
requirements, including building and zoning requirements, all of which can
prevent, delay, make uneconomic or significantly increase the cost of renovating
a lodging facility. Furthermore, the Company is subject to laws governing its
relationship with employees, including minimum wage requirements, over time pay,
working conditions, work permit requirements and discrimination claims. An
increase in the minimum wage rate, employee benefit costs or other costs
associated with employees could aversely affect the Company. Under the Americans
with Disabilities Act of 1990 ("ADA"), all public accommodations are required to
meet certain federal requirements related to access and use by disabled persons.
While the Company believes that the Motel is in substantial compliance with
these regulations and requirements, a determination that the Company is not in
compliance with the ADA could result in the imposition of fines or the award of
damages to private litigants. These and other initiatives could adversely affect
the Company as well as the lodging industry in general.
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws often impose liability whether or not
the owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. Certain environmental laws and common law
principals could be used to impose liability for release of asbestos- containing
materials ("ACM's") into the air, and third parties may seek recovery from
owners or operators of real property for personal injury associated with
exposure to released ACM's. Environmental laws also may impose restrictions on
the manner in which the property may be used or businesses may be operated, and
these restrictions may require substantial expenditures. In connection with the
ownership or operation of the Motel, the Company may be potentially liable for
any such costs. No assurance can be given that a material environmental claim
will not be asserted against the Company. The cost of defending against claims
of liability or remediating a contaminated property could have a material
adverse effect on the results of operations of the Company.
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(2) The Company's source for the 64% local occupancy rate is Smith Travel
Research which generated a report for the Company on local occupancy rates. This
figure represents the local occupancy rate for value Motels in the Baton Rouge,
Louisiana area during 1999. Based on the same report, the local occupancy rate
for this area in 1998 was 66.6%.
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I. Employees
The Company's future success will depend, in part, on its continuing ability to
attract, retain and motivate and skilled personnel who are in great demand. The
Company currently has 11 full time employees and no part time employees.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's sole asset is the General Lafayette Inn, a 134 unit Motel and
restaurant, and four adjacent office/retail buildings, in Baton Rouge, Louisiana
(the "Motel"). The Motel is located next to the Mississippi River, three blocks
from a river boat dock, at 427 Lafayette Street, Baton Rouge, Louisiana.
Approximately 60 of the 134 rooms are in disrepair.
The Company presently plans to affiliate the Motel as a Villager Lodge franchise
but must renovate within the franchiser's standards to achieve this status. The
Company intends to finance the renovations necessary to become a Villager Lodge
franchise through operating cash flows on a room by room basis. The initial cost
of such renovations is estimated at $250,000. The Company intends to finance the
renovations necessary to become a Villager Lodge franchise by finding bank or
institutional financing, equity offerings and/or private placements. Currently,
the Company is financing the renovations with operating cash flows on a room by
room basis.
The Company currently leases approximately 5,067 square feet of the
office/retail space on this property to the Culinary Arts Institute of
Louisiana, Inc. for $3,260 per month on a month on a month to month basis, which
may be canceled by either party by giving thirty days prior notice to the other
party. The Culinary Arts Institute of Louisiana, Inc. teaches students the fine
art of cooking and operates a restaurant on its premises in which its students
practice the skills they learn. The restaurant is only open in the evenings.
The Company owns the Motel and the property upon which it sits pursuant to a 30
year mortgage note in the amount of $1,900,000. Under the terms of the note the
Company is required to make 359 monthly payments in the amount of $11,391.46
each. The installments are to be paid to the General Lafayette Inc., c/o James
A. Thom III, M.D. and his wife, Evelyn M. Thom 130 Main Street, Baton Rouge,
Louisiana, 70081.
The Motel's current occupancy rate is approximately 58% of its rentable rooms.
However, the Company expects this rate to increase once the renovations are
complete and it becomes a Villager Lodge. The property upon which the Motel is
located also contains approximately 15,000 square feet of leaseable commercial
space of which 5,067 square feet is presently rented to the Culinary Arts
Institute of Louisiana, Inc. Hence, the occupancy rate of the property's
leaseable commercial space is approximately 33 %. The annual rental rate of the
commercial space leased to the Culinary Arts Institute of Louisiana is also
approximately $8.00 per square foot.
As for the competitive nature of the lodging industry in the local area, within
approximately one mile of the Motel, the Company is aware that two lodging
facilities are presently being built. One of these facilities will be a 300 room
Crown Plaza Hotel, the other a 150 room lodging facility built by Louisiana
State University. The Company believes that it will be able to maintain a
competitive niche as an economy and extended stay lodging facility in comparison
to these other lodging facilities that are presently being built in the area.
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The federal tax basis for of the Motel is Two Million Five Hundred Ninety-Nine
Thousand Eight Hundred Forty-Six dollars ($2,599,846). The facilities are being
depreciated by straight line method over a period of thirty-nine (39) years. The
realty tax rate is .627 and the annual realty taxes for 1998 were Sixteen
Thousand Two Hundred Ninety-Eight Dollars ($16,298). The Company is depreciating
the property over a 39 year period and uses the straight line method of
accounting for depreciation purposes. The Company has yet to receive its 1999
realty tax bill and the Company is of the opinion that the Motel and property
are adequately covered by insurance.
The Company's headquarters are located at 268 West 400 South, Salt Lake City,
Utah 84101 where it shares office space with the Company's parent. The Company's
management agreement with its parent includes the cost of using these facilities
and the use of all the office equipment.
ITEM 3. LEGAL PROCEEDINGS
The Company is currently not a party to any pending legal proceedings. However,
its parent corporation, CyberAmerica Corporation is involved in the legal
proceedings mentioned below. These proceedings may or may not have a material
effect on the Company.
State of West Virginia vs. Canton Tire Recycling West Virginia, Inc.,
Canton Industrial Corporation and CyberAmerica Corporation
Suit was filed on August 14, 1998 in the Circuit Court of Wood County,
Parkersburg, West Virginia as file no. 98 C 354 seeking the completion of
clean up procedures for property owned by Canton Tire Recycling West
Virginia, located in the city of Parkersburg. The state is requesting that
certain waste material present on the site and any remaining material in
the on site storage tanks be removed and that an oil/water separator
located on the property be cleaned out. CyberAmerica and the State of West
Virginia enter into a Consent Decree by which CyberAmerica agreed to submit
and complete a Remediation and Sampling Work Plan and the payment of
$88,000 in fines and penalties ($28,000 has been paid, $20,000 is payable
each May 31 from the year 2001 through 2003.) The work required by the
Remediation and Sampling Work Plan has been completed and submitted to the
State. Local counsel and local environmental engineers are awaiting
confirmation from the State of completion of the work and any subsequent
work that may be required by the state based upon test results indicating
that soil contamination testing required by the Plan reported contamination
exceeding state guidelines. The nature and cost of further testing or
clean-up cannot be determined at this time, pending further instructions
from the state of West Virginia. The liability of prior owners is also
being explored for any potential additional costs for clean-up of soil
contamination that took place prior to CyberAmerica's acquisition of the
property.
Legong Investments N.V., a Netherlands Antilles Corporation v. CyberAmerica
Corporation
On November 12, 1999 this plaintiff filed suit against CyberAmerica in the
Third Judicial District Court, For Salt Lake County, State of Utah, Civil
NO. 990911427. The suit alleges to seek recovery under CyberAmerica's
convertible debenture issued to the plaintiff with a date of September 17,
1996 and a principal face amount of $300,000. The debenture originally had
a maturity date of September 16, 1997, which was extended by the parties in
an agreement dated October 16, 1997. Plaintiff has demanded full payment
9
<PAGE>
of the outstanding balance due and the suit states a demand in the amount
of $543,997, plus costs and reasonable attorney fees or the issuance of
583,090 shares of free trading CyberAmerica common stock. CyberAmerica
acknowledges that some amount is owed and did tender to the Plaintiff a
$20,000 check on October 25, 1999 in partial satisfaction of the debenture.
This suit was settled on June 9, 2000 with a cash payment of $275,000 and
the transfer of 25,000 shares of CyberAmerica common stock.
Possible Actions by Governmental Authorities
Canton Illinois Property
In January 2000, the United States Environmental Protection Agency ("EPA")
forwarded to CyberAmerica and to Thistle Holdings, Inc. informing each
corporation that the EPA has identified them as potentially responsible
parties, as former owners or operators of the property, for reimbursement
of all costs incurred by the EPA for actions taken pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"). Both corporations responded that they were not currently
owners nor operators of the property (the City of Canton having taken title
to the property) and that the materials identified as requiring removal,
friable asbestos and asbestos-containing material, were placed on the site
by owners prior to the acquisition of the property by either of these
corporations. CyberAmerica declined to involve itself in the clean-up
process, no response has been made by the EPA as of the date of the filing
of this Form 10-KSB-A.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the year 1999, the Company did not submit any matters to a vote of
security holders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company currently has no public trading market. The Company intends to file
a Form 15c-(2)(11) in an effort to obtain a listing on the NASD over the counter
bulletin board in the year 2000 in an effort to provide some liquidity for its
shareholders and create a public market for the Company's securities. However,
there is no guarantee that the Company will obtain a listing on the NASD over
the counter bulletin board or that a public market for the Company' securities
will develop, even if a listing on the NASD over the counter bulletin board is
obtained.
Record Holders
As of March 30,2000, there were 28 shareholders of record holding a total of
275,423 shares of Common Stock. The holders of the Common Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of
stockholders. Holders of the Common Stock have no preemptive rights and no right
to convert their Common Stock into any other securities. There are no redemption
or sinking fund provisions applicable to the Common Stock.
10
<PAGE>
Dividends
The Company has not declared any cash dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The payment of
dividends is within the discretion of the Board of Directors and will depend on
the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its Common Stock other than those generally imposed
by applicable state law.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Revenues
Revenues for the year ended December 31, 1999 increased to $360,313 from
$330,527 for the year ended December 31, 1998, an increase of 9%. The increase
in revenues was attributable to an increase in occupancy.
Losses
Net losses for the year ended December 31, 1999 decreased to $253,455 from
$281,157 for the year ended December 31, 1998, a decrease of $27,702.
The Company expects to continue to incur losses at least through fiscal 2000 and
there can be no assurance that the Company will achieve or maintain
profitability or that its revenue growth can be sustained in the future.
Expenses
General and administrative expenses for December 31, 1999 and 1998 were $236,885
and $140,515, respectively. The reason for the $116,830 increase is primarily
attributable to an increase in management fees because the Company was only
obligated to pay for eight months worth of management fees in 1998 as opposed to
a full year worth of management fees in 1999.
Depreciation and amortization expenses for the years ended December 31, 1999 and
December 31, 1998 were $50,960 and $49,463, respectively. The increase was due
to improvements and purchase of property and equipment.
The Company expects increases in expenses through 2000 as the Company steps up
its effort to acquire additional properties and works towards finalizing its
efforts to begin operating as a Villager Lodge franchisee.
For the years ended December 31, 1999 and 1998 the Motel's direct operating
costs were $223,659 and $298,593 respectively, a decrease of $74,934. This
decrease is primarily attributable to a decrease in the cost of contract labor
as a result of less maintenance and repairs occurring in 1999.
11
<PAGE>
Liquidity and Capital Resources
The Company has expended significant resources on renovating the Motel and
maintenance because of the age and poor condition of the facility. The Company
anticipates spending substantial amounts of capital in an effort to comply with
the requirement of becoming a Villager Lodge franchisee. For example:
o The Company paid an initial fee in the amount of $10,200 that consists
of a $5,100 payment upon execution of the franchise agreement and a
$5,100 payment as an initial fee.
o With respect to future royalties, the Company will pay a royalty fee
equal to 5% of the gross room revenues of the facility per month.
o Additionally, the Company must construct, equip, and operate upon
completion of the material terms of the franchise agreement an
addition having at least 32 guest rooms to the then existing facility.
The Company will not be required to pay an additional room fee for the
addition.
o The Company does not plan on installing kitchen facilities in the
rooms. However, the Company will install kitchenette units in each
guestroom consisting of a small refrigerator, a microwave, and a small
work top area. The installation of the kitchenette units may cost up
to $750 per room. The effect that the addition of kitchenette
facilities to the guest rooms may have upon the restaurant is
immaterial because the Company does not operate the restaurant. The
Culinary Arts Institute of Louisiana, Inc. operates the restaurant and
the Company does not receive a percentage of rent based upon the
restaurant's sales.
o With respect to additional utilities, the Company must, under the
terms of the franchise agreement with Villager Lodge, supply cable
television (including ESPN, CNN and one more premium movie channel) in
each guest room within 90 days of entering the Villager Lodge system.
The Company is also required, in its front office, to maintain two
dedicated phone lines and a third phone line for Internet access.
Additionally, the Company must install electrical outlets that have no
more than four power receptacles that are of the 115 volt, 60 H, 3
prong type before installing the Villager Lodge Property Management
System.
Cash flow used by operations were $227,726 for the year ended December 31, 1999,
compared to cash flow provided for operations of $96,438 for the year ended
December 31, 1998. Cash flows used in operating activities for the year ended
December 31, 1999 are primarily attributable to settlement of debt for related
party transaction shown as an account payable in the prior year.
Cash flow provided in financing activities was $239,385 for the year ended
December 31, 1999, compared to net cash flows used of $19,038 for the year ended
December 31, 1998. The Company had positive cash flow for the year ended
December 31, 1999 as a result of the issuance of common stock to satisfy debt
owed to a related party.
The Company has funded its cash needs from inception through December 31, 1999
with revenues generated from its operations and advances from its Parent
Company. In addition, the Company may issue additional shares of its common
stock pursuant to a private placement or registered offering, if necessary to
raise additional capital.
12
<PAGE>
Capital Expenditures
The Company made $8,100 and $71,926 in capital expenditures on property or
equipment for the years ended December 31, 1999 and 1998, respectively.
The Company has a working capital deficiency at December 31, 1999 in the amount
of $254,720. However, $215,908 of this working capital deficiency is owed to the
Company's parent. The Company intends to fund the Motel's operations over the
course of the next year with long term bank financing, increasing rental
revenues from increased occupancy rates and/or equity financing in the form of a
private placement offering. During 2000 the Company expects to spend up to
$500,000 or more in capital improvements on renovations to the Motel.
Anticipated capital expenditures will depend upon financing that is being sought
for renovations. It is anticipated that the cost to make the initial renovations
in each room of the Motel will be approximately $2,000 or $250,000 total. These
initial renovations will include new paint, new carpeting, new door locks and
replacing certain fixtures. The Company anticipates spending an additional
$2,000 to $3,000 per room after the initial renovations are made on new
furnishings and updating the exterior of the building. The Company anticipates
the source of these expenditures to come from equity offerings, bank financing,
or loans from insiders and control persons of the Company. In the event that the
Company is unable to obtain the necessary amount of capital, the Company may
choose not to operate as a Villager Lodge and may operate as an independent
motel until financing is obtained.
Income Tax Expense (Benefit)
The Company has an income tax benefit resulting from net operating losses to
offset future operating profit.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations
over the past three years. The Company believes that it can offset inflationary
increases in the cost of materials and labor by increasing sales and improving
operating efficiencies.
Known Trends, Events, or Uncertainties
Lodging Industry Operating Risks. The Company is subject to all operating risks
common to the lodging industry. These risks include, among other things, (i)
competition for guests from other hotels, a number of which may have greater
marketing and financial resources than the Company, (ii) increases in operating
costs due to inflation and other factors, which increases may not have been
offset in recent years, and may not be offset in the future, by increased room
rates, (iii) dependance on business and commercial travelers and tourism, which
business may fluctuate and be seasonal, (iv) increase in energy costs and other
expenses of travel which may deter travelers, and (v) adverse effects of general
and local economic and weather conditions.
Capital Requirements and Availability of Financing. The Company's business is
capital intensive, and it will have significant capital requirements in the
future. The Company's leverage could affect its ability to obtain financing in
the future to undertake remodeling or refinancings on terms and subject to
conditions deemed acceptable to the Company. In the event that the Company's
cash flow and working capital are not sufficient to fund the Company's
expenditures or to service its indebtedness, it would be required to raise
additional funds through the sale of additional equity securities, the
refinancing of all or part of its indebtedness or the sale of assets. There can
be no assurances that any of these sources of funds would be available in an
13
<PAGE>
amount sufficient for the Company to meet its obligations. Moreover, even if the
Company were able to meet its obligations, its leveraged capital structure could
significantly limit its ability to finance its remodeling program and other
capital expenditures to compete effectively or to operate successfully under
adverse economic conditions. Additionally, financial and operating restrictions
contained in the Company's existing indebtedness may limit the Company's ability
to secure additional financing, and may prevent the Company from engaging in
transactions that might otherwise be beneficial to the Company and to holders of
the Company's common stock. The Company's ability to satisfy its obligations
will also be dependant upon its future performance, which is subject to
prevailing economic conditions and financial, business and other factors beyond
the Company's control.
General Real Estate Investment Risks. The Company's investments are subject to
varying degrees of risk generally incident to the ownership of real property.
Real estate values and income from the Company's current properties may be
adversely affected by changes in national or local economic conditions and
neighborhood characteristics, changes in interest rates and in the availability,
cost and terms of mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for capital
improvements, changes in governmental rules and fiscal policies, civil unrest,
acts of God, including earthquakes and other natural disasters which may result
in uninsured losses), acts of war, adverse changes in zoning laws and other
factors which are beyond the control of the Company.
Value and Illiquidity of Real Estate. Real estate investments are relatively
illiquid. The ability of the Company to vary its ownership of real estate
property in response to changes in economic and other conditions is limited. If
the Company must sell an investment, there can be no assurance that the Company
will be able to dispose of it in the time period it desires or that the sales
price of any investment will recoup the amount of the Company's investment.
Property Taxes. The Company's property is subject to real property taxes. The
real property taxes on this property may increase or decrease as property tax
rates change and as the property is assessed or reassessed by taxing
authorities. If property taxes increase, the Company's operations could be
adversely affected.
Risks of Remodeling / Expansion Strategy. The Company intends to pursue a
strategy of growth through the remodeling of the Motel and may pursue a similar
strategy in acquiring future properties. There can be no assurance that the
Company will obtain adequate financing for the renovations nor can there be any
assurance that renovations undertaken by the Company will be profitable. The
construction of renovations that are not profitable could adversely affect the
Company's profitability. The Company may in the future require additional
financing in order to continue its renovation plans. There is no assurance that
such additional financing, if any, will be available to the Company on
acceptable terms.
Investment in Single Industry/Property. The Company is subject to risks inherent
in investments in a single industry/property. The effects on the Company's
revenues resulting from a downturn in the lodging industry would be more
pronounced than if the Company had diversified its investments outside of the
lodging industry.
Year 2000. The Year 2000 problem is a result of computer programs being written
using two digits to define the applicable year. If not corrected, any programs
or equipment that have time sensitive components could fail or create erroneous
results. The Company has completed a review of its existing systems and has
upgraded 100% of its existing system with hardware and software that purports to
be Year 2000 compliant.
The Company believes that it is fully year 2000 complaint. The cost associated
with the updating of the Company's computer systems was not material. The
Company only uses a single personal computer for it day to day operations.
14
<PAGE>
The Company currently has limited information concerning the year 2000
compliance status of its clients and associates. However, even if the Company's
client's are not Year 2000 compliant the Company does not anticipate that any
such noncompliance will have a material adverse effect on the Company's
business, financial condition, results of operations or cash flows.
ITEM 7. FINANCIAL STATEMENTS
The Company's financial statements for the fiscal year ended December 31, 1999
and 1998 are attached hereto as F-1 through F-11.
INDEX TO FINANCIAL STATEMENTS
Audited Financial Reports for the period ending December 31, 1999 and December
31, 1998.
Independent Auditor's Report.................................................F-1
Balance Sheet ...............................................................F-2
Statement of Operations......................................................F-3
Statements of Cash Flow......................................................F-4
Statement of Shareholder's Equity............................................F-5
Notes to Financial Statements................................................F-6
15
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Golden Opportunity Development Corporation:
We have audited the accompanying balance sheets of Golden Opportunity
Development Corporation as of December 31, 1999 and 1998 and the related
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 1999 and 1998. 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 audit 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 audit provides 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 Golden Opportunity Development
Corporation as of December 31, 1999 and 1998 the related statements of
operations, stockholders' equity and cash flows for the years ended December 31,
1999 and 1998 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8, the Company's
history of operating losses raise substantial doubt about its ability to
continue as a going concern. Management's plans in those matters are also
described in Note 8. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Crouch Bierwolf & Chisholm
----------------------------------
Salt Lake City, Utah
March 21, 2000
F-1
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings I, Inc.)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1999 1998
------------------ ----------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 10,027 $ 6,468
Prepaid Expenses 4,333 -
Deposits 4,052 4,052
------------------ ----------------
Total Current Assets 18,412 10,520
Property and Equipment, net 2,556,526 2,599,386
------------------ ----------------
TOTAL ASSETS $ 2,574,938 $ 2,609,906
================== ================
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Accounts payable $ 30,126 $ 67,961
Accounts payable-related party 215,908 239,223
Sales tax payable - 24,514
Security deposit note payable - 7,586
Current portion of long-term obligations 27,098 25,524
------------------ ----------------
Total Current Liabilities 273,132 364,808
Long-Term Obligations Net of Current Portion 1,808,938 1,840,360
------------------ ----------------
TOTAL LIABILITIES 2,082,070 2,205,168
================== ================
Shareholders Equity
Common stock, $.001 par value, 50,000,000 shares authorized, 255,423
and 100,000 issued and outstanding at December 31, 1999 and 1998,
respectively 255 100
Additional paid-in capital 1,041,330 699,900
Retained earnings (Deficit) (548,717) (295,262)
------------------ ----------------
Total Shareholders Equity 492,868 404,738
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 2,574,938 $ 2,609,906
================== ================
</TABLE>
See Notes to Financial Statements
F-2
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings, I, Inc.)
STATEMENTS OF OPERATION
<TABLE>
<CAPTION>
Years Ended
December 31,
1999 1998
--------------------- ---------------------
<S> <C> <C>
Revenue
Hotel Revenue $ 321,193 $ 291,407
Lease Revenue 39,120 39,120
--------------------- ---------------------
Total Revenues 360,313 330,527
Operating Expenses
Hotel Direct Costs 223,659 298,593
General and administrative 106,279 140,515
Salaries 130,606 42,597
Depreciation 50,960 49,463
Interest expense 102,264 123,113
--------------------- ---------------------
Total Operating Expenses 613,768 611,684
Net Loss $ (253,455) $ (281,157)
===================== =====================
Net Loss per share $ (1.22) $ (2.81)
===================== =====================
Weighted average shares outstanding 207,411 100,000
===================== =====================
</TABLE>
See Notes to Financial Statements
F-3
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings, I, Inc.)
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Years Ended
December 31,
1999 1998
------------------- --------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Loss $ (253,455) $ (281,157)
Adjustments for Non-Cash Items
Depreciation and Amortization 50,960 49,463
Non-cash services through issuance of stock 29,200 -
Changes in Operating Assets and Liabilities net of effects from
acquisitions
Deposits - 948
Prepaid Expenses (4,333) -
Accounts Payable (17,998) 67,961
Accounts Payable-Related Party (23,315) 239,223
Accrued Expenses (32,100) 20,000
------------------- --------------------
Net Cash Provided by (Used in) Operating Activities (251,041) 96,438
------------------- --------------------
Cash flow from investing activities
Purchase of fixed assets (8,100) (71,926)
------------------- --------------------
Net Cash (Used) by investing activities (8,100) (71,926)
------------------- --------------------
Cash flow from financing activities
Proceeds from parent 317,001 -
Common Stock Issued for Cash 18,700 -
Proceeds from note - 7,586
Repayment to parent (43,153) -
Repayment of note (29,848) (26,624)
------------------- --------------------
Net Cash (Used) by Financing Activities 262,700 (19,038)
------------------- --------------------
Net Increase (Decrease) in Cash 3,559 5,474
------------------- --------------------
Cash at Beginning of Period 6,468 994
Cash at End of Period $ 10,027 $ 6,468
================== ====================
</TABLE>
See Notes to Financial Statements
F-4
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings, I, Inc.)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional Accumulated
Shares Amount Paid-in Capital Deficit Total
===================================================================================
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 100,000 $ 100 $ 699,900 $ (14,105) $ 685,895
Net Loss for period ended December 31, 1998 - - (281,157) (281,157)
----------- ---------- ------------ ----------- -----------
Balance, December 31, 1998 100,000 100 699,900 (295,262) 404,738
Common Stock issued for Debt/Additional
contributed capital (Related Party) 112,523 112 293,573 - 293,685
Common Stock issued for Cash 13,700 14 18,686 - 18,700
Common Stock issued for Services 29,200 29 29,171 - 29,200
Net Loss for period ended December 31, 1999 - - - (253,455) (253,455)
----------- ---------- ------------ ----------- -----------
Balance, December 31, 1999 255,423 $ 255 $ 1,041,330 $ (548,717) $ 492,868
=========== ====== =========== =========== ==========
</TABLE>
See Notes to Financial Statements
F-5
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings I, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1: ORGANIZATION AND OPERATIONS
Organization
Golden Opportunity Development Corporation (the Company) was incorporated on May
7, 1997 under the laws of the state of Louisiana. As of December 31, 1999 the
Company is a majority owned subsidiary of Diversified Holdings I, Inc. The
Company owns and manages a hotel located in Baton Rouge, Louisiana.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The accompanying financial statements have been prepared on the accrual method
using generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and the liquidation of liabilities
in the normal course of business. The Company reports income and losses for
financial reporting and income tax purposes on the accrual method of accounting
in accordance with Financial Accounting Standards ("FAS").
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting period. In these financial statements assets and
liabilities involve extensive reliance on management's estimates. Actual results
could differ from those estimates.
Earnings (Loss) Per Share
The computation of earnings (loss) per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be
equivalents.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets, generally
estimated as follows: buildings, 20 to 39 years, leasehold improvements, 20
years, and vehicles, 5 years. Depreciation expenses for December 31, 1999 and
1998 were $50, 960 and $49,463, respectively. The cost of assets sold or retired
and the related amounts of accumulated depreciation are removed from the
accounts in the year of disposal. Any resulting gain or loss is reflected in
current operations. Expenditures for maintenance and repairs are expended as
incurred; additions and improvements are capitalized.
F-6
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings I, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company reviews quarterly its properties in accordance with the Statement of
Financial Accounting Standards ("SFAS") No. 121 "Accounting for the Impairment
of Long Lived Assets" to determine if its carrying costs will be recovered from
future operating cash flows. In cases where the Company does not expect to
recover its carrying costs, the Company recognizes an impairment loss.
The balances of the major classes of assets as of the balance sheet dates were
as follows:
December 31 December 31,
1999 1998
-------------------- ---------------------
Building $1,800,000 $1,800,000
Land 800,000 800,000
Leasehold Improvements 61,225 53,125
Furniture and Fixtures 9,170 9,170
Vehicles 9,631 9,631
------------------- --------------------
2,680,026 2,671,926
Less - Accumulated Depreciation (123,500) (72,540)
------------------- --------------------
$ 2,556,526 $ 2,599,386
=================== ====================
Revenue Recognition
Revenue and rental recognition for the Company is reported on an accrual method
of accounting in accordance with Financial Accounting Standards ("FAS").
Accordingly, revenues are recognized when the services have been rendered (point
of sale). Revenue from credit sales is recorded at the gross amount. Bad debts
from uncollectible credit sales or insufficient funds on checks are immaterial
and account for less than 1% of rental revenue.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial statements." The
Staff determined that a lessor should defer recognition of contingent rental
income until the specified target that triggers the contingent rental income is
achieved. Rental revenues are recognized on an accrual basis. Lease revenue is
based on a month-to-month lease and is only recognized after it is received.
Accordingly, SAB No. 101 will not have an impact on the Company.
Income Taxes
The Company reports income and losses for financial reporting and income tax
purposes in accordance with Financial Accounting Standards No. 109, Accounting
for Income Taxes, which requires an asset and liability approach to financial
accounting and reporting for income taxes. FAS 109 requires deferred tax
balances to be adjusted to reflect the tax rates in effect when those amounts
are expected to become payable or refundable. The Statement requires that
deferred income taxes be provided to reflect the impact of temporary differences
between the amount of assets and liabilities for financial reporting purposes
and such amounts as measured by current tax laws and regulations. A valuation
allowance is established, when needed, to reduce deferred tax assets to the
amount expected to be realized.
F-7
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings I, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
No provision for income taxes has been recorded due to operating loss
carryforwards totaling approximately $400,000 that will be offset against future
taxable income. These NOL carryforwards begin to expire in the year 2012. No tax
benefit has been reported in the financial statements because the Company
believes there is a 50% or greater chance the carryforwards will expire unused.
Deferred tax assets and the valuation account is as follows at December 31,
1999:
Deferred tax asset:
NOL carryforward $ 136,000
Valuation allowance $ (136,000)
--------------
Total $ -
NOTE 3: SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
The following are supplemental disclosures of cash flow information:
1. Cash paid for interest was $111,174 and $123,113, for December 31, 1999 and
1998, respectively.
2. On May 31, 1997 the Company received a mortgage note from James A. Thom
III, M.D., and Evelyn M. Thom, for the sum of $1,900,000 payable in 360
consecutive monthly installments, namely, 359 installments of $11,391.46
and one final installment, the 360th, for the balance due.
3. Common stock was issued for the following purposes:
<TABLE>
<CAPTION>
1999 1998
Shares Amount Shares Amount
------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Issued for debt 112,523 $293,685 - -
Issued for cash 13,700 18,700 - -
Issued for services 1,200 1,200 - -
Issued for services - related party 28,000 28,000 - -
-------------- --------------- ------------- ----------------
155,423 $341,585 - -
============== =============== ============= ================
</TABLE>
No stock was issued for the debt or services in 1998.
F-8
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings I, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 4: LONG-TERM DEBT
Long-term debt consists of the following at:
<TABLE>
<CAPTION>
December 31,
1999 1998
----------------- -----------------
<S> <C> <C>
Note payable in the original amount of $1,900,000,
bearing interest at 6% for 30 years, with monthly
payments of $11,391, secured by hotel property. $ 1,836,036 $ 1,865,884
Less: Current portion (27,098) (25,524)
----------------- -----------------
Total Long Term Notes Payable $ 1,808,938 $ 1,840,360
================= ================
</TABLE>
Scheduled principal reductions are as follows:
December 31, 2000 27,098
December 31, 2001 28,769
December 31, 2002 30,544
December 31, 2003 32,427
December 31, 2004 34,427
Thereafter 1,682,771
NOTE 5: RELATED PARTY TRANSACTIONS
During 1999, the Company had the following related party transactions:
a. The Company pays a monthly management fee to its parent Company,
Diversified Holdings I, Inc., in the amount of $10,000. In addition,
Diversified Holdings I, Inc. paid $150,370 in expenses on behalf of the
Company, resulting in a payable at the end of the period of $215,908.
During 1999, a portion of this payable ($293,685) was reduced by issuing
112,523 shares of common stock. A portion of the common stock issued was
attributed to additional capital contributions.
b. The Company issued 28,000 shares of common stock to 3 directors for
consulting services. These shares were valued at $1.00 per share.
c. The Company pays a $10,000 monthly management fee to it's parent,
Diversified Holdings I, Inc. See Note 6 for details of the management
agreement.
Pursuant to SFAS 123, paragraph 8, the Company's policy for accounting for
issuance of stock for goods or services is based on the fair value of the
consideration received.
F-9
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings I, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 6: MANAGEMENT AGREEMENT & FEES
The Company entered into a management agreement with Diversified Holdings I,
Inc. (formerly known as Innovative Property Development Corporation) to provide
management services to the Company for $10,000 per month. Management services
include:
1. Collection of all rents and payments for all expenses.
2. Promote and lease available space and motel rooms.
3. Select and obtain tenants, execute leases, extensions, and renewals.
4. Accounting and legal services.
5. Repair and maintain property, including maintenance of all insurance
policies.
6. Human resource services.
NOTE 7: LEASE AGREEMENTS
Currently, the Company leases the entire first floor of Building C of the
General Lafayette Inn, with two classrooms on the second floor, approximately
5067 square feet, to Culinary ARTS Institute of Louisiana, Inc. The current
lease is operated month to month and may be cancelled on 30 day notice by either
party, with monthly lease payments of $3,260. The Company does not pay any of
the direct costs associated with the leased property. As of the balance sheet
date, the Company is in negotiations with the Culinary ARTS Institute of
Louisiana, Inc. to enter into a one year commercial lease for monthly lease
payments of $3,500.
For December 31, 1999 and 1998, rental revenues from this leased property
included in income were $39,120 and $39,120, respectively.
NOTE 8: GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has a history of operating
at a loss and is dependent upon financing to continue operations. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty. It is management's plan to reduce expenses and increase
revenues through capital improvements to the property. The Company's parent
plans to finance the capital improvements.
F-10
<PAGE>
GOLDEN OPPORTUNITY DEVELOPMENT
CORPORATION (A Majority Owned Subsidiary of
Diversified Holdings I, Inc.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 9: COMPENSATORY BENEFIT PLANS
Pursuant to Rule 701 of the Securities Act of 1993 for services for consultants
and advisors, the Company has established the following stock option plan,
pursuant to a board resolution of the Board of Directors:
--1999 Benefit Plan, whereby, the total value of shares issued pursuant
to this plan shall not exceed a value of greater than Five Hundred
Thousand dollars ($500,000), the Company may issue common stock or
grant options to acquire the Companys common stock to employees,
directors, officers, consultants, or advisors, including individuals
who contribute to the Company but are not employees, provided that bona
fide services are rendered. The purpose of the plan is to aid the
Company in maintaining and developing a management team, attracting
qualified officers and employees, and rewarding those individuals who
have contributed to the success of the Company. At December 31, 1999,
the total value of shares available was Four Hundred Fifty Thousand
Eight Hundred ($450,800). There was no shares of common stock issued
during 1999 for the compensation plan.
F-11
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has had no changes in or disagreements with its accountants in its
two most recent fiscal or any later interim period.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
The Officers and Directors of the Company as of December 31, 1999 are as
follows:
Name Age Position
---- --- --------
Richard D. Surber 27 President & Director
Svetlana Senkovskaia 39 Secretary/Treasurer and Director
John Fry 66 Director
Richard D. Surber graduated from the University of Utah with a Bachelor of
Science degree in Finance and then with a Juris Doctorate with an emphasis in
corporate law; including securities, taxation, and bankruptcy. He has been an
officer and director of several public companies which include: CyberAmerica
Corporation, a substantial shareholder of the Company (president and director
from 1992 to the present). CyberAmeriuca Corporation is holding company whose
subsidiaries invest in real estate and provide financial consulting services;
Chattown.com Network (f.k.a Vaxcel, Inc.), which is unrelated to the Company
(president and director form June, 1999 to the present). Chattown.com Network,
Inc. currently has no operations but intends to acquire an internet company by
March 30, 2000; Kelly's Coffee, Group, Inc., is a shell company whose plan is to
acquire an unidentified company(president and director from May, 1999 to the
present); Innovative Property Development Corporation ("IPDC"), N.K.A. China
Mall USA.com., Inc. was a former subsidiary of CyberAmerica Corporation. It
currently is a non reporting Chinese Internet company (president and director
1992 to June, 1999); Eurotronics Corporation, F.K.A. Hamilton Exploration, Inc.,
was a shell company which is currently unrelated to the Company (president and
director 1994-1996). Its current operations if any are not known; Area
Investment Development Company, which is unrelated to the Company was a shell
company (president and director 1994-1996). Its has recently acquired an
Internet company whose content revolves around religious events; Youthline USA,
Inc., F.K.A. Ult-i-Med Health Centers, Inc., was a non reporting shell company
that acquired an educational company which distributes education newspapers to
children in grades K-12 (secretary and director from April 6, 1999 to July
29,1999); Premier Brands, Inc., was and remains a shell company (president and
director April, 1998 - September, 1998) and Golden Opportunity Development
Corporation, a wholly owned subsidiary of CyberAmerica Corporation, (president
and director from September, 1999 to present). Its operations consist of
operating a 1324 room hotel in Baton Rouge, Louisiana Mr. Surber is also the
President and a Director of several private shell companies that intend to
become fully reporting public companies.
16
<PAGE>
Svetlana Senkovskaia is 39 years old and graduated from Leningrad University in
Leningrad, Russia with a Master's Degree in Chemistry. Since 1997 Ms.
Senkovskaia has been the property manager of the Company's Motel, the General
Lafayette. Additionally, Ms. Senkovskaia has been a director of the Company for
approximately four months. Prior to her affiliation with the Company and the
Motel, Ms. Senkovskaia was a property manager for four years for Oasis
International, Inc. Ms. Senkovskaia's term of office as one of the Company's
directors is for one year or until each year's annual meeting of the
shareholders.
John Fry is 66 years old and has been a retired executive for the past five
years. Prior to his retirement, Mr. Fry was a the Vice President of Firestone
Tire Company for over 35 years. Presently, Mr. Fry on a part time basis acts as
a business consultant and an outside director to the Company. Mr. Fry's term of
office as one of the Company's directors is for one year or until each year's
annual meeting of the shareholders.
Allen Wolfson has never been named as an officer or director of the Company. He
may, however, have significant influence and "control" (as defined in Rule 12b-2
of the Securities Exchange Act of 1934) over the affairs of the Company by
virtue of Mr. Wolfson's beneficial ownership of over 5% of the Company's Common
Stock and the potential influence Mr. Wolfson has with respect to the Company's
parent. For more information on Mr. Wolfson, see "Item 7. Certain Relationships
and Related Transactions."
Additionally, Mr. Wolfson is the uncle of Richard Surber, the Company's chief
executive officer, president and director. Mr. Wolfson obtained a B.S. in
Marketing from the University of Southern Florida in 1968 and in 1970 he
graduated with an M.A. in Distributive Vocational Education. Mr. Wolfson has
worked 59 credit hours toward an M.B.A. from Troy State University in
Montgomery, Alabama. He has also been a licensed general contractor and a real
estate agent and developer. Mr. Wolfson has been the sole owner of A-Z
Professional Consultants, Inc. since April 11, 1990 and has been a professional
consultant for various public and private companies for 20 years. A-Z has been a
consultant to the Company's parent since 1992 and has been a significant
beneficial owner of the Company's parent Common Stock since that time. A-Z
locates potential business opportunities, primarily related to real estate
transactions, on behalf of the Company's parent. While Mr. Wolfson has no formal
authority to act on behalf of the Company, the influence he exerts on the
Company through this consulting arrangement gives Mr. Wolfson potential control
over the Company's operations.
Furthermore, Mr. Wolfson is the sole shareholder and 100% owner of A-Z Oil,
L.L.C., a Utah Limited Liability Company, that provides consulting services to
its clients. A-Z Oil, owns approximately 7.3% of the Company's common stock.
In 1986, Mr. Wolfson was convicted of violating 18 U.S.C.ss.371; 18
U.S.C.ss.ss.1001 and 1002; and 18 U.S.C.ss.ss.1014 and 1002 in the U.S. District
Court for the Middle District of Florida, Tampa Division (the "Florida Court").
Mr. Wolfson was on probation for these offenses until January 23, 1999.
On October 9, 1996, the Securities and Exchange Commission initiated
administrative proceedings in the Southern District of New York against Mr.
Wolfson based upon allegations that he violating Section 10b of the Securities
Exchange Act of 1934. The allegations involved a payment allegedly made to an
undercover agent of the Federal Bureau of Investigation, who was posing as a
broker, for the purchase of stock in an unaffiliated corporation. The
administrative matter is still pending, but no material developments have
occurred since it was filed in October 1996.
17
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
No compensation in excess of $100,000 was awarded to, earned by, or paid to any
executive officer of the Company during 1998 or 1997. The following table and
the accompanying notes provide a summary of compensation paid since the
Company's inception on May 7, 1997 concerning cash and noncash compensation paid
or accrued by the Company's president.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payout
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Year Salary Bonus Compensation Award(s) Options payout Compensation
Position ($) ($) ($) ($) SARs(#) ($) ($)
--------------- -------- ------------ ---------- ----------------- ------------- --------------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard D.(3) 1999 - - - 25,000 - - -
Surber, 1998 - - - - - - -
President/CEO
Charles K.(4) 1998 - - - - - - -
Wilkerson, 1997 - - - - - - -
President
--------------- -------- ------------ ---------- ----------------- ------------- --------------- ---------- -----------------
</TABLE>
Compensation of Directors
The Company's directors are currently not compensated for their services as
director of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the stock of the Company as of March 29, 2000, by each shareholder
who is known by the Company to beneficially own more than 5% of the outstanding
Common Stock, by each director, and by all executive officers and directors as a
group.
[THIS SPACE LEFT BLANK INTENTIONALLY]
--------------------
(3) Richard Surber was appointed as President, Director and Chief Executive
Officer on April 30th, 1998.
(4) Charles Wilkerson resigned as President and Director on April 30th,
1998.
18
<PAGE>
<TABLE>
<CAPTION>
Title of Class Name and Address of Amount and nature of Percent of Class
Beneficial Ownership Beneficial Ownership
<S> <C> <C> <C>
Common Richard D. Surber, Director 188,523(5) 68.4%
Stock 268 West 400 South, Suite 300
.001 Par Value Salt Lake City, Utah 84101
Common Svetlana Senkovskaia 2,000 0.7%
Stock 427 Lafayette Street
.001 Par Value Baton Rouge, LA 70802
Common John Fry 1,000 0.4%
Stock 3619 Lakeview Road
.001 Par Value Carson City, NV 89703
Common Diversified Holdings I, Inc.(6) 163,523 59.4%
Stock 268 West 400 South, Suite 300
.001 Par Value Salt Lake City, Utah 84101
Common The Smith Family Trust(7) 24,500 8.9%
Stock 427 Lafayette Street
.001 Par Value Baton Rouge, LA 70802
Common San Pedro Securities, Ltd.(8) 24,500 8.9%
Stock Box 87, Punta Gorda
.001 Par Value Belize, Central America
Common A-Z Oil, LLC(9) 20,000 7.3%
Stock 268 West 400 South, Suite 300
.001 Par Value Salt Lake City, Utah 84101
Common All Executive Officers and 191,523 69.5%
Stock Directors as a Group
.001 Par Value (Three persons)
----------------- ----------------------------------- ------------------------------- -----------------------
</TABLE>
---------------
(5) Richard Surber owns 25,000 shares of common stock and is also President
and Director of Diversified Holdings I, Inc. which owns 163,523. As a result of
his position he has voting control over a total of 188,523 shares of common
stock.
(6) The natural person with voting/investment power over Diversified
Holdings I, Inc. is Richard Surber.
(7) The natural person with voting/investment power over the Smith Family
Trust is Brad Smith.
(8) The natural person with voting/investment power over San Pedro
Securities, Ltd. is Laura Olsen.
(9) The natural persons with voting/investment power over A-Z Oil, LLC.,
are BonnieJean C. Tippetts and Allen Wolfson.
19
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 16th, 1999, the Company issued of 112,523 common shares to Innovative
Property Development Corporation f/k/a TAC, Inc. at $2.00 per share for payment
of $293,686.11 in debt owed to Innovative Property Development Corporation f/k/a
TAC, Inc. by the Company. At the time of the transaction Innovative Property
Development Corporation was a 59.4% shareholder of the Company(10).
On April 30th, 1999 the Company entered into a Management Agreement with the
Parent Company. Richard D. Surber acts as President and Director of both the
Parent Company and the Company. The Company agreed to compensate Diversified
Holdings I, Inc. $10,000 per month plus 5% of net income, if any, in excess of
$5,000 in return for management services provided by Diversified Holdings I,
Inc.(11)
Ownership of the Company is multi-layered. Accordingly, CyberAmerica Corporation
is the parent company of Diversified Holdings 1, Inc. CyberAmerica owns 90% of
Diversified Holdings 1, Inc.'s common stock. In turn, Diversified Holdings 1,
Inc. is the beneficial owner of 59.4% of the Company.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits beginning on page 23 of this
Form 10-KSB, which is incorporated herein by reference.
(b) Reports on Form 8-K: During the year 1999, the Company did not file
any Form 8-K's.
----------------------
(10) The issuance of 112,523 shares to Innovative Property Development
Corporation, a related party, on March 16, 1999 has been valued at the market
value of $2.00 per share. The remaining debt owed by the Company to Innovative
Property Development Corporation, $68,640 was recorded as contributed capital.
(11) Richard Surber was not the sole or direct beneficiary of the $10,000.
Canton Financial Services Corporation, a sibling corporation to the Company,
pays Mr. Surber a salary. The $10,000 went directly to Diversified Holdings I,
Inc. to cover management expenses.
20
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Form 10- KSB to be signed on its behalf by the
undersigned, thereunto duly authorized, this 23rd day of June, 2000.
Golden Opportunity Development Corporation
/s/ Richard Surber
--------------------------
Name: Richard D. Surber
Title: President and Director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Richard Surber
--------------------------
Richard D. Surber President and Director June 23, 2000
/s/ Svetlana Senkovskaia
--------------------------
Svetlana Senkovskaia Secretary and Director June 23, 2000.
/s/ John Fry
--------------------------
John Fry Director June 23, 2000.
22
<PAGE>
ITEM 2. DESCRIPTION OF EXHIBITS.
INDEX TO EXHIBITS
Exhibit Page
No. No. Description
------- ---- -----------
2(i) * Articles of Incorporation of the Company dated May 7, 1997.
(Incorporated by reference filed with the Company's For
10-SB/A-1on March 23, 2000).
2(ii) * Amended Articles of Incorporation of the Company dated April
26, 1999. (Incorporated by reference filed with the
Company's Form 10-SB/1 on March 23 2000).
2(iv) * By-laws of the Company. (Incorporated by reference filed
with the Company's Form 10-SB/A-1on March 23, 2000).
23 24 Consent Of Independent Public Accountants
27 * Financial Data Schedule "CE" (Incorporated by reference
filed with the Company's Form 10-SB/A-1 on March 23, 2000 ).
Material Contracts
Exhibit Page
No. No. Description
------- ---- -----------
6(i) * Management Agreement between the Company and Diversified
Holdings, I, Inc. dated April 30, 1999. (Incorporated by
reference filed with the Company's For 10-SB/A-1on March 23,
2000).
6(ii) * Franchise Agreement between the Compan and Villager
Franchise Systems, Inc. (Incorporated by reference filed
with the Company's Form 10-SB/A-1on March 23, 2000).
23
<PAGE>
