U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Quarterly Report Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1999
Commission File No. 0-25582
GRACE DEVELOPMENT, INC.
(Exact Name of Registrant as Specified in its Charter)
Colorado 84-1110469
- --------------------------------- ---------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
1690 Chantilly Road, Atlanta, Georgia 30324
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
(678) 222-3030
---------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
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 |_| No |X|
There were 73,846,895 shares of the Registrant's common stock, no par
value (the "Common Stock") outstanding as of September 30, 1999. For purposes of
this Report, the number of outstanding shares of the Registrant's Common Stock
assumes that all shares issuable in connection with the Merger (as hereinafter
defined), are outstanding. In addition, the number of outstanding shares
includes 410,000 shares of the Registrant's Common Stock that the Registrant
considers not to have been validly issued (the "Disputed Shares"). In January
1995, the Registrant issued 80,000 shares of the Disputed Shares to an
unaffiliated third party in exchange for the recipient's contractual obligation
to identify an acquisition candidate and
<PAGE>
consummate a merger between the Registrant and such candidate. No such merger
was consummated. In April, 1995, the Registrant issued 330,00 shares of the
Disputed Shares to an unaffiliated third party as a finders fee with respect to
two transactions which were never consummated. In May 1995, the Registrant
issued to its transfer agent a stop transfer order for all of the Disputed
Shares. Based upon the foregoing, the Registrant deemed 330,000 of the Disputed
Shares to have been canceled in its financial statements for the Company's
fiscal year ended December 31, 1995 and thereafter, as reflected in the
Registrant's annual and quarterly reports on Forms 10-KSB and 10-QSB, filed on
July 29, 1999. The Registrant is seeking a judicial determination as to the
validity of the Disputed Shares. The Registrant is treating the Disputed Shares
as outstanding in its financial statements presented in this report, and will so
treat the Disputed Shares in all subsequent reports until a judicial
determination as to the validity of the Disputed Shares is made.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
<PAGE>
INTRODUCTORY NOTE
The Registrant is amending its Quarterly Report on Form 10-QSB for the
Quarter Ended September 30, 1999 (the "3rd Quarter 10-QSB") in order to (a)
clarify certain information concerning the determination of the accounting
treatment of the Disputed Shares as discussed on the cover page to the 3rd
Quarter 10-QSB and (b) amend Item 1, Notes to Financial Statements for the Nine
Months Ended September 30, 1999 to remove the reference to organizational costs
in Footnote 1, Goodwill.
---------
<PAGE>
GRACE DEVELOPMENT, INC.
FORM 10-QSB/A
INDEX
Page
----
Part I: Financial Information
Item 1. Consolidated Financial Statements
Balance Sheet (unaudited) at September 30, 1999 and
December 31, 1998
Statement of Operations (unaudited) for the Three and
Nine Months ended September 30, 1999
Statement of Cash Flow (unaudited) for the Nine Months
Ended September 30, 1999
Statement of Shareholders Equity for the Nine Months
Ended September 30, 1999
Notes to Financial Statements for the Nine Months
Ended September 30, 1999
<PAGE>
GRACE DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Predecessor
Company
SEPTEMBER 30, DECEMBER 31,
1999 1998
----------- ---------
( UNAUDITED ) ( AUDITED )
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 828,787 $ 3,719
Investment in certificates of deposit 2,650,000
Accounts receivable, net of $ 0 allowance 10,045
Prepaid expenses and other assets 200,000 820
Officer advances 17,420
----------- ---------
Total current assets 3,706,252 4,539
Property and equipment
Leasehold improvements 19,371
Furniture and fixtures 83,620
Equipment and software 2,833,320 13,117
Less: Accumulated depreciation and amortization (54,151) (506)
----------- ---------
2,882,160 12,611
Goodwill, net of amortization of $ 42,497 490,487
Idle Equipment 4,292,360
Other non-current assets 41,389
----------- ---------
Total assets $11,412,648 $ 17,150
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable 82,905 5,391
Deferred revenues 150,000
Accrued liabilities 290,829
Lines of credit 1,630,484
Current portion of obligations under capital lease 2,185,905
----------- ---------
Total current liabilities 4,340,123 5,391
Obligations under capital leases, net of current portion 4,645,905
----------- ---------
Total liabilities 8,986,028 5,391
----------- ---------
Stockholders' equity
Grace Common stock; no par value; 800,000,000 4,260,195
shares authorized; 73,846,895 issued and
outstanding as of September 30, 1999
NMM Common Stock, $1 par value; 1,000,000 32,500
shares authorized; 32,500 shares issued
and outstanding at December 31, 1998.
Subscriptions receivable (978,374)
Accumulated deficit (855,201) (20,741)
----------- ---------
Total stockholders' equity 2,426,620 11,759
----------- ---------
Total liabilities and stockholders' equity $11,412,648 $ 17,150
=========== =========
</TABLE>
See notes to consolidated financial statements
<PAGE>
GRACE DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1999
------------------ -----------------
( UNAUDITED ) ( UNAUDITED )
<S> <C> <C>
Revenues $ 307,515 $ 500,431
Cost of revenues (246,440) (293,388)
------------ ------------
Gross profit 61,075 207,043
------------ ------------
Operating expenses
Sales and marketing expenses 54,836 67,635
General and administrative expenses 363,952 676,947
Depreciation and Amortization 90,271 96,288
------------ ------------
Total operating expenses 509,059 840,870
------------ ------------
Loss from operations (447,984) (633,827)
------------ ------------
Other income (expense)
Interest income 4,737 5,078
Interest expense (201,558) (205,711)
------------ ------------
Total other income (expense) (196,821) (200,633)
Loss before income taxes (644,805) (834,460)
------------ ------------
Income tax expense -- --
------------ ------------
Net loss $ (644,805) $ (834,460)
============ ============
Basic and diluted net loss per common share $ (0.02) $ (0.02)
============ ============
Weighted average common shares outstanding 36,352,318 36,352,318
============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE>
GRACE DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1999
-----------
<S> <C>
Cash flows from operating activities
Net loss $ (834,460)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization 96,288
Issuance of common stock for services 174,375
Changes in assets and liabilities from operations
Accounts receivable (9,845)
Prepaid expenses and other assets (199,180)
Officer advances (17,420)
Other non-current assets (33,772)
Accounts payable 7,116
Deferred revenues (24,812)
Accrued liabilities 290,829
-----------
Net cash used in operating activities (550,881)
-----------
Cash flows from investing activities
Acquisition of property and equipment (257,882)
Investments in Certificates of Deposits (2,650,000)
Acquisition of business unit (359,314)
-----------
Net cash used in investing activities (3,267,196)
Cash flows from financing activities
Net proceeds from lines of credit 1,630,484
Proceeds from note payable 450,000
Repayment of note payable (450,000)
Repayment on obligations under capital leases (18,263)
Net proceeds from issuance of common stock 3,030,924
-----------
Net cash provided by financing activities 4,643,145
-----------
Increase in cash and cash equivalents 825,068
Cash and cash equivalents at beginning of period 3,719
-----------
Cash and cash equivalents at end of period $ 828,787
===========
Supplemental disclosure of cash flow information
Cash paid for interest $ 16,936
===========
Supplemental activities of Non-Cash Transactions:
During the third quarter of 1999 the Company
acquired equipment under several capital
lease obligations totaling $ 6,850,073
Acquisition of business unit:
Goodwill $ 532,984
Assets acquired 115,561
Liabilities acquired (245,210)
Stock issued (44,021)
-----------
Net cash $ 359,314
===========
</TABLE>
See notes to consolidated financial statements
<PAGE>
GRACE DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Additional Stock
Common Stock Paid-in Accumulated Subscription
Shares Amount Capital Deficit Receiveble Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Predecessor balance at December 31, 1998 $ 32,500 $ (20,741) $ 11,759
Shares issued in repayment of
Shareholder debt 31,000 31,000
Shares issued as compensation
to New Millennuim shareholders (Note 10) 174,375 174,375
Shares issued for Avana acquisition (Note 2) 44,021 44,021
Private Placement of New
Millennium shares (Note 9) 777,600 777,600
Private Placement of New
Millennium shares (Note 9) 3,459,319 (978,374) 2,480,945
Warrants exercised (Note 11) 147,000 147,000
Warant cancellation fees (Note 11) (395,620) (395,620)
Assumed purchase of net assets of
Grace at Predecessor cost 66,246,933 4,270,195 (4,270,195) --
Reverse acquisition of Grace
by New Millennium (Note 2) 7,599,962 (10,000) (10,000)
Net loss for the nine months ended
September 30, 1999 (834,460) (834,460)
------------------------------------------------------------------------------------
Balance at September 30, 1999 73,846,895 $ 4,260,195 $ -- $ (855,201) $(978,374) $2,426,620
====================================================================================
</TABLE>
See notes to the Consolidated Financial Statements
<PAGE>
GRACE DEVELOPMENT, INC. And Subsidiaries
Notes to the Consolidated Financial Statements
(Unaudited)
For the Nine Months Ended September 30, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of the Company and Basis of Presentation:
Grace Development, Inc., is an Integrated Communications Provider offering
telecommunication and Internet services (ISP) to business and residential
customers. Telecommunication services currently offered are local and long
distance, frame relay, ATM, data private lines and calling cards.
The ISP operation focuses on serving individuals and small business. The
Company's service offerings include dial-up Internet access and business
services which are offered in various price and usage plans designed to
meet the need of our subscribers. Business services include web hosting,
which entails maintaining a customer's web site; high speed, dedicated
Internet access; web page design; domain name registration and customer
web server co-location.
Principles of consolidation and basis of financial reporting:
The consolidated financial statements include the accounts of Grace
Development, Inc. ("Grace") and its wholly owned subsidiaries
(collectively the "Company"). All significant intercompany accounts and
transactions have been eliminated.
The financial statements of the Predecessor are the accounts of New
Millenium Multimedia, Inc., a Georgia corporation ("NMM").
In the opinion of management, the accompanying financial statements
reflect all adjustments, consisting of normal, recurring adjustments,
necessary for a fair presentation of results of operations, financial
position, and cash flows. The results of operation of the interim periods
are not necessarily indicative of the results of operations, which might
be expected for the entire year. The condensed consolidated financial
statements should be read in conjunction with the Company's 1998 annual
report on Form 10-KSB, which was filed on July 29, 1999.
Cash and Cash Equivalents:
Cash and cash equivalents consist of cash and other highly liquid debt
instruments with an original maturity of three months or less.
Property and Equipment:
Property and equipment is carried at cost. Depreciation is computed using
the straight-line method based on estimated useful lives of the assets,
generally three to ten years. For income tax purposes, depreciation is
calculated using accelerated methods.
<PAGE>
Goodwill:
The Company amortizes goodwill on a straight-line basis over a period of
five years.
Revenue Recognition:
The Company recognizes revenues as they are earned. Some customers pay an
annual fee for Internet services and the revenues are recognized on a
straight-line basis over the service period. Deferred revenue represents
the portion of unearned Internet service fees.
Income Taxes:
Income taxes are based on the loss for financial reporting purposes and
reflect a current liability [asset] for the estimated taxes payable
[recoverable] in the current year tax return and changes in deferred
taxes. Deferred tax liabilities and assets are recognized for the
estimated tax effects of temporary differences between financial reporting
and taxable income [loss] for the loss carryforwards based on enacted tax
laws and rates. A valuation allowance is used to reduce deferred tax
assets to the amount that is more likely than not to be realized.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of certain assets,
liabilities, and disclosures including the allowance for doubtful
accounts, useful lives and recoverability of long-term assets. Actual
amounts could differ from those estimates. Any adjustments applied to
estimated amounts are recognized in the year in which such adjustments are
determined.
Advertising:
The Company expenses advertising as incurred. The advertising costs for
the three and nine months ended September 30, 1999 were approximately
$42,000 and $47,000, respectively.
2. MERGER AND REORGINAZATION:
Avana Merger:
On May 5, 1999, NMM completed its acquisition of Avana Communications
Corporation ("Avana"). The acquisition was accounted for as a purchase
pursuant to Accounting Principles Board Statement No. 16, "Business
Combinations" ("APB 16") and the result of Avana's operations were
included in the Company's 1999 consolidated statements of operation from
the date of acquisition. Total consideration included the issuance of
6,485,858 shares of Grace stock (97,824 shares of NMM stock later
converted to Grace stock at a 66.3013:1 ratio), and cash of $364,000. As a
result of the merger, the Company recorded goodwill of approximately
$533,000, which is being amortized, on a straight-line basis over five
years.
Additionally, NMM agreed to pay contingent consideration of up to $100,000
based upon Avana maintaining a certain percentage of the acquired customer
base. The Company will record a liability when the contingency is resolved
and consideration is issued or becomes issuable.
<PAGE>
New Millennium Multimedia, Inc.:
On September 28, 1999 a wholly-owned subsidiary of the Company merged with
NMM. The shareholders of NMM exchanged 100% of the outstanding stock of
NMM in exchange for shares of Grace stock. Each share of NMM common stock
was exchanged for 66.3013 shares of Grace common stock and a total of
66,246,933 shares of Grace common stock were issued to NMM stockholders.
The merger is intended to qualify as a tax-deferred reorganization under
Section 368(a) of the Internal Revenue Code.
The acquisition set out in the preceding paragraph was accounted for as
the reverse acquisition of Grace by an "accounting entity" consisting of
NMM and its wholly-owned subsidiary, Avana, because following the
transaction, the former shareholders of NMM are in control of the Company.
Accordingly, the financial statements of the Company are the financial
statements of the "accounting entity" adjusted for the assumed acquisition
of the net assets of Grace in exchange for the issuance of Grace common
stock outstanding before the transaction. The net assets of the
Predecessor are accounted for at their historical cost.
In accordance with purchase accounting principles under APB 16, the
Company accounted for the net assets of Grace, acquired at the fair value
of such net assets as of September 28, 1999. No goodwill was recorded as a
result of this transaction.
Pro forma Financial Statements:
For the Nine Months Ended September 30, 1999
--------------------------------------------
As Reported Adjustments Pro Forma
----------- ----------- ---------
Revenues 500,431 313,908 814,339
Net income (loss) (834,460) (77,781) (912,241)
Earnings per share (.02) (.00) (.03)
3. INVESTMENTS:
The Company accounts for its investments under Financial Accounting
Standards Board ("FASB") No. 115 "Accounting for Certain Investments in
Debt and Equity Securities" as of September 30, 1999 investments consisted
of the following:
Maturity Date Interest Rate Amount
------------- ------------- ------
Certificate of Deposit March 24, 2000 4.498% $2,000,000
Certificate of Deposit August 4, 2000 5.250% $ 650,000
Total $2,650,000
4. IDLE EQUIPMENT
The Company acquired equipment under several capital lease obligations.
Included in these lease obligations was $4,292,360 of equipment not placed
in service as of September 30, 1999. Management expects this equipment to
be returned to the vendor in exchange for equipment of equal value and
with technology that better addresses the needs of the Company.
Amortization has not been recorded on this equipment.
5. COMMITMENTS AND CONTINGENCIES:
<PAGE>
Concentrations of Credit Risk:
The Company does not have a security interest in their accounts
receivable; however, they do have legal recourse for defaulted amounts.
The Company maintains the majority of its cash deposits and investments at
three financial depository institutions. The amount of the accounting loss
due to credit risk the Company would incur if the financial depository
institutions failed would be the cash deposits in excess of the $100,000
amount per depositor that is federally insured. The amount at risk totaled
approximately $3,200,000 at September 30, 1999.
Operating Leases:
The Companies lease office space and equipment under several operating
lease agreements. Rent expense for the office space and equipment totaled
$42,000 and $44,000 for the three and nine months ended September 30,
1999, respectively.
At September 30 1999, future minimum lease payments under non-cancelable
leases having remaining terms in excess of one year are as follows:
September 30, Amount
------------ --------
2000 $167,790
2001 $155,658
2002 $160,326
2003 $165,138
2004 $126,621
--------
$775,533
--------
Obligations Under Capital Lease:
The Company leases equipment under capital lease obligations. $2,833,320
of the equipment is included in the property and equipment section and
$4,292,360 is included in the idle equipment section of the balance sheet.
Amortization was $38,248 and $38,248 for the three and nine months ended
September 30, 1999, respectively. The capitalized cost and accumulated
amortization at September 30, 1999 were as follows:
Total Equipment Placed in Service $ 2,833,320
Accumulated amortization $ (38,248)
-----------
Book Value $ 2,795,072
-----------
The future minimum lease payments under the capital leases at September
30, 1999:
9/30/2000 $ 2,914,383
9/30/2001 $ 2,992,477
9/30/2002 $ 2,193,453
-----------
$ 8,100,313
Less amount representing interest $(1,268,563)
-----------
$ 6,831,810
Less current portion $(2,185,905)
-----------
$ 4,645,905
Note Payable:
On April 26, 1999, the company signed a $600,000 promissory note with
Lucent Technologies,
<PAGE>
Inc. ("Lucent"). Lucent advanced the Company $450,000 and made available
an additional $150,000 based on the Company's customer list. The note bore
interest at a rate of 10% per annum, payable monthly. The note was secured
by fixed assets of the Company. The Company repaid the note in total on
September 29, 1999.
6. LINES OF CREDIT:
The Company has a line of credit with the Bank of Tennessee to provide
working capital of up to $650,000. The interest rate is 7.25% per annum
payable monthly. The balance on the line of credit was $575,900 on
September 30, 1999. The line of credit is secured by a CD and matures on
August 4, 2000.
The Company has a line of credit with Regions Bank to provide working
capital of up to $2,000,000. The interest rate is 5.998% per annum payable
monthly. The balance on the line of credit was $1,054,585 on September 30,
1999. The line of credit is secured by a CD and matures on March 24, 2000.
7. PREFERRED STOCK:
The Company is authorized to issue 10,000,000 shares of preferred stock
with no par value. The preferred stock may be issued by the Board of
Directors in one or more series. The Board of Directors shall determine
the distinguishing features of each series including preferences, rights
and restrictions, by resolution upon the establishment of such series. No
shares of preferred stock had been issued as of September 30, 1999.
8. INCOME TAXES:
The sources of temporary differences and their effect on the net deferred
taxes are as follows:
Deferred tax asset resulting from
net operating loss carryforwards $ 635,000
Less valuation allowances $(635,000)
---------
$ -0-
---------
The valuation allowance fully reserves the net deferred tax asset that
arose from the tax loss carryforwards generated.
At September 30, 1999, the Company had available for carryforward a net
operating loss of approximately $1,099,650. On September 28, 1999, the
Company had a significant change in ownership (note 2). As a result of the
ownership change, and in accordance with Section 382 of the Internal
Revenue Code, the Company's net operating loss is limited in total and
each year. The net operating loss available for the year ending December
31, 1999 is approximately $93,000. For each year thereafter, the net
operating loss will be limited to approximately $93,000 plus any unused
loss from the prior year (1999 and forward). In addition to the limitation
from Section 382 of the Internal Revenue Code, the losses are limited to a
fifteen-year carryforward, with losses from 1989 beginning to expire in
the year 2004.
9. SEGMENT REPORTING
The Company operates two business segments: telecommunications sales and
services; and Internet service including dial-up accounts, web-hosting and
web-design services.
Three Months Nine Months
Ended 9/30/99 Ended 9/30/99
------------- -------------
Revenues
Telecommunications 100,266 239,080
Internet 207,249 261,351
<PAGE>
---------- ----------
307,515 500,431
Gross Profit (Loss)
Telecommunications 87,746 226,561
Internet (26,671) (19,518)
---------- ----------
61,075 207,043
Profit (Loss)
Telecommunications (536,531) (706,156)
Internet (108,274) (128,304)
---------- ----------
(644,805) (834,460)
Depreciation and Amortization
Telecommunications 79,320 82,774
Internet 10,951 13,514
---------- ----------
90,271 96,288
Identifiable Assets
Telecommunications 11,342,573 11,342,573
Internet 70,075 70,075
---------- ----------
11,412,648 11,412,648
10. PRIVATE PLACEMENTS
During July 1999, NMM effected a private placement of shares of its common
stock. The shares were sold at $3.20 per share. For every three shares of
NMM common stock stock sold, warrants were issued to the purchaser, which
gives the purchaser the right to purchase two shares of Grace common stock
at $4.50 per share. In aggregate, 251,000 shares of NMM common stock and
167,292 warrants for Grace common stock were issued for net proceeds of
$777,600. All warrants expire July 29, 2001. The shares of NMM common
stock were converted to Grace common stock at a ratio of 66.3013:1.
During September 1999, NMM effected a private placement of shares of its
common stock. The shares were sold at $23.34 per share. In aggregate,
150,356 shares of NMM common stock were issued for net proceeds of
$3,459,319. The shares were converted to Grace stock at a ratio of
66.3013:1.
11. STOCK COMPENSATION:
NMM issued 387,500 shares of its common stock in consideration for
services rendered. The shares were valued at $174,375 and a non-cash
expense was recorded to the statement of operations. The shares were
converted to Grace common stock at a ratio of 66.3013:1.
12. Stock Warrants
On April 26, 1999, NMM entered into several capital lease agreements (note
4) and a secured note payable agreement (note 5) with Lucent. As part of
these financing agreements, NMM issued a warrant to purchase a maximum of
200,000 shares of NMM stock at a price of $3 per share. In September 1999,
Lucent exercised the warrant and purchased 49,000 shares of NMM stock
(later converted to 3,248,764 shares of Grace stock) for $147,000. The
warrants were valued at $0 based on the following assumptions:
Risk free interest rate 5.5%
Life 7 years
FMV of stock on date of grant $.45 per share
Volatility Not applicable
On September 27, 1999, NMM paid Lucent $395,620 to cancel the remaining
151,000 warrants issued.
13. SUBSEQUENT EVENTS:
<PAGE>
Acquisitions
On November 8, 1999 the Company acquired substantially all the business
assets of Rob Ballard and Sabrina Ballard d/b/a Northwest Georgia Internet
for $160,000 in cash and 25,000 shares of the Company's common stock. The
transaction will be accounted for as a purchase under APB 16. The fair
market value of the consideration and the resulting goodwill has not yet
been determined. If any goodwill is booked as a result of this transaction
it will be amortized over five years. Northwest Georgia Internet provides
Internet access, web hosting and web design to businesses and individuals
located in areas northwest of Atlanta, Georgia.
Letter of Intent:
On October 14, 1999, the Company executed a letter of intent to acquire
100% of the outstanding stock of The Telephone Company of Central Florida
("TCCF") from TCCF's parent company, Phoenix International Industries,
Incorporated ("Phoenix"). The terms of the agreement, including payment
terms, are still being negotiated. The Company advanced $100,000.00 to
TCCF, which advance is guaranteed by the Chief Executive Officer of
Phoenix.
Notes Receivable:
The Company loaned a corporation $250,000. The note is due on demand and
bears interest at a rate of 9% payable annually. The note is secured by
stock of the corporation.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GRACE DEVELOPMENT, INC.
Date: December 28, 1999 /s/ James M. Blanchard
---------------------------------
James M. Blanchard
President
Date: December 28, 1999 /s/ Ronald R. McCallum
---------------------------------
Ronald R. McCallum
Chief Financial Officer
