<PAGE>
United States
Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Period Ended March 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From to
----------- ------------
Commission file number 0-23256
JAMESON INNS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its Articles)
Georgia 58-2079583
- - ----------------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
8 Perimeter Center East, Suite 8050,
Atlanta, Georgia 30346-1603
- - ----------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(770) 901-9020
---------------------------------------------------
(Registrant's telephone number, including area code)
---------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter periods 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
------ -------
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date - Common
Stock, $.10 Par Value - 7,248,420 shares outstanding as of May 8,
1996. <PAGE>
<PAGE>
Jameson Inns, Inc.
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of March 31, 1996
(unaudited) and December 31, 1995 . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations for the Three
Month Periods Ended March 31, 1996 and 1995 (unaudited) . . . . 4
Condensed Consolidated Statements of Cash Flows for the Three
Month Periods Ended March 31, 1996 and 1995 (unaudited) . . . . 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 13
EXHIBITS <PAGE>
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
Jameson Inns, Inc.
Condensed Consolidated Balance Sheets
March 31, December 31,
1996 1995
-----------------------------
(Unaudited)
ASSETS
Property and equipment, at cost $61,697,173 $57,369,657
Less accumulated depreciation (7,200,141) (6,589,753)
-----------------------------
54,497,032 50,779,904
Cash 261,984 235,254
Lease revenue receivable 687,726 495,855
Prepaid expenses 74,137 37,412
Deferred finance costs, net 1,523,296 1,213,396
Deferred offering costs 222,091 -
Other assets 55,532 44,036
------------------------------
$57,321,798 $52,805,857
==============================
LIABILITIES AND STOCKHOLDERS'EQUITY
Mortgage notes payable $35,272,304 $30,213,904
Accounts payable 243,236 65,948
Accounts payable to affiliates 150,998 568,661
Accrued interest 120,489 151,182
Accrued property taxes 104,802 13,533
Other accrued liabilities 33,275 38,279
------------------------------
35,925,104 31,051,507
Stockholders' equity:
Convertible preferred
stock, $1 par value, 100,000
shares authorized, no
shares issued and outstanding - -
Common stock, $.10 par value,
20,000,000 shares authorized,
3,869,937 (3,857,942 in 1995)
shares issued and outstanding 386,994 385,795
Contributed capital 22,036,691 22,395,546
Retained deficit (1,026,991) (1,026,991)
------------------------------
Total stockholders' equity 21,396,694 21,754,350
------------------------------
$57,321,798 $52,805,857
==============================
See notes to condensed consolidated financial statements.
3 <PAGE>
<PAGE>
Jameson Inns, Inc.
Condensed Consolidated Statements of Operations (unaudited)
For the Three Month Period Ended
March 31
--------------------------------
1996 1995
--------------------------------
Lease revenue $1,915,590 $1,232,195
Property tax expense 91,523 69,142
Insurance expense 50,183 42,881
Depreciation 610,389 422,712
---------------------------
1,163,495 697,460
Other expenses:
General and administrative 134,748 140,290
Interest expense, net of
capitalized amounts 690,243 213,781
---------------------------
Net income $ 338,504 $ 343,389
===========================
Funds from operations (Note 2) $ 948,893 $ 766,101
===========================
Per common and common
equivalent share:
Net income $ .09 $ .09
===========================
Dividends paid $ .21 $ .26
===========================
See notes to condensed consolidated financial statements.
4 <PAGE>
<PAGE>
Jameson Inns, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
For the Three Month
Period Ended
March 31
-----------------------
1996 1995
-----------------------
Net income $ 338,504 $343,389
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 647,650 434,695
Stock option and other expenses 19,096 14,020
Changes in assets and liabilities
increasing (decreasing) cash:
Lease revenue receivable (191,871) 87,051
Prepaid expenses and other assets (48,221) (21,765)
Accounts payable 177,288 406
Accounts payable to affiliates (417,663) -
Accrued interest (30,693) 43,894
Accrued property taxes and
other accrued liabilities 86,265 38,114
-------------------------
Net cash provided by operating activities 580,355 939,804
Investing activities
Additions to property and equipment (4,327,516) (3,913,225)
-------------------------
Net cash used in investing activities (4,327,516) (3,913,225)
Financing activities
Common stock dividends paid (811,399) (833,997)
Preferred stock dividends paid - (489,949)
Proceeds from issuance of common stock 24,002 -
Proceeds from exercise of stock options 72,141 -
Change in deferred offering costs (222,091) -
Proceeds from long-term debt 8,994,309 4,633,349
Payment of deferred finance costs (347,162) (105,668)
Payments on long-term debt (3,935,909) (35,459)
-------------------------
Net cash provided by financing activities 3,773,891 3,168,276
Net increase in cash 26,730 194,855
Cash at beginning of period 235,254 353,387
-------------------------
Cash at end of period $ 261,984 $ 548,242
========================
See notes to condensed consolidated financial statements.
5 <PAGE>
<PAGE>
Jameson Inns, Inc.
Notes to Condensed Consolidated Financial Statements
1. Business and Basis of Financial Statements
Jameson Inns, Inc. (the "Company") is a self-administered real
estate investment trust ("REIT") headquartered in Atlanta which
develops and owns limited service hotel properties ("Inns")
operating in the southeastern United States under the trademark
"The Jameson Inn." At March 31, 1996, the Company had a total of
47 Inns either in operation or under development, including 33
Inns in operation (1,617 available rooms), 11 Inns under
construction and contracts to acquire three parcels of land on
which additional Inns are expected to be constructed during 1996.
In addition, at that date, two of the Inns in operation were
undergoing 20-room expansions. Upon completion of these
projects, the Company expects to have 2,217 available rooms.
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. The condensed consolidated balance sheet at
December 31, 1995 has been derived from the audited consolidated
financial statements at that date. Operating results for the
three month period ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1996 or any other interim period. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the annual report on Form 10-K for
the year ended December 31, 1995.
2. Funds from Operations
Industry analysts generally consider funds from operations (FFO)
an appropriate measure of an equity REIT's performance.
Effective the second quarter of 1995, the Company adopted the
March 1995 interpretation of the NAREIT definition of funds from
operations which is calculated (in the Company's case) as net
income plus depreciation and extraordinary items, if applicable.
The following FFO calculations for both periods follow the new
interpretation. Other non-cash expenses such as amortization and
stock option expense have not been added back in FFO. Funds from
operations should not be considered an alternative to net income
as an indicator of the Company's operating performance or to cash
flow as a measure of liquidity.
6<PAGE>
<PAGE>
2. Funds from Operations (continued)
Three months ended
March 31
1996 1995
-------------------------
Net income $338,504 $343,389
Depreciation 610,389 422,712
-------------------------
Funds from operations, per March 1995
NAREIT interpretation $948,893 $766,101
=========================
3. Subsequent Events
On April 22, 1996 and May 6, 1996, the Company completed the sale
of 3,000,000 and 375,000 shares, respectively, of newly issued
common stock at $10 per share. Net proceeds of approximately
$30,887,500 were used to repay existing mortgage indebtedness at
that date. Simultaneous to the closing of the equity offering,
the Company received a commitment to modify its lines of credit
and certain long-term mortgages into new lines of credit with
terms more favorable to the Company.
On April 17, 1996, the Company and Thomas W. Kitchin, its
Chairman, Chief Executive Officer and President agreed to amend
the Employment Agreement with Mr. Kitchin to cancel his stock
appreciation rights effective March 31,1996. The Company's Board
of Directors unanimously approved the amendment, as being in the
best interest of the Company.
7<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Jameson Inns, Inc. condensed consolidated financial statements
and notes thereto appearing elsewhere in this quarterly report.
Jameson Inns, Inc. (the "Company") is a self-administered real
estate investment trust ("REIT") headquartered in Atlanta which
develops and owns limited service hotel properties ("Inns")
operating in the southeastern United States under the trademark
"The Jameson Inn." At March 31, 1996, the Company had a total of
47 Inns either in operation or under development, including 33
Inns in operation (1,617 available rooms), 11 Inns under
construction and contracts to acquire three parcels of land on
which additional Inns are expected to be constructed during 1996.
In addition, at that date, two of the Inns in operation were
undergoing 20-room expansions. Upon completion of these
projects, the Company expects to have 2,217 available rooms.
The Company's primary source of revenue is rent payments by
Jameson Operating Company (the "Operator") as leases under a
master lease (the "Lease") covering all of the Inns in operation.
The expenses of the Company consist of property taxes, insurance,
corporate overhead, compensation expense related to certain stock
options, interest on mortgage debt and depreciation of the Inns.
The Lease provides for the payment of Base Rent and Percentage
Rent. For the quarter ended March 31,1996, Base Rent and
Percentage Rent in the aggregate amount of $1.9 million was
earned by the Company. The principal determinant of Percentage
Rent is Room Revenues of the Inns. Therefore, management
believes that a review of the historical performance of the
operations of the 33 operating Inns, particularly with respect to
occupancy, average daily rate ("ADR") and revenue per available
room ("REVPAR") is appropriate for understanding the Lease
revenue.
The following table shows certain historical financial and other
information for the periods indicated.
Three Month Period
Ended March 31
-------------------
1996 1995
-------- ------
Occupancy rate 64.34% 68.45%
ADR $43.92 $40.57
REVPAR $28.26 $27.77
Room Revenues (000 s) $4,100 $2,596
Room nights available 140,554 90,796
Room nights occupied 90,437 62,154
Operating Inns (at period end) 33 23
Rooms available (at period end) 1,617 1,081
Results of Operations
Comparison of the Three Months Ended March 31, 1996 to the Three
Months Ended March 31, 1995.
Lease revenue for the Company for the three month period ended
March 31, 1996 increased 58% to $1.9 million as compared to $1.2
million for the same period in 1995. The increase was due to the
increase in the Operator's Room Revenues, partially offset by the
effect of a change in the Percentage Rent formula under the Lease
Amendment effective July 1, 1995.
8<PAGE>
<PAGE>
The number of room nights available increased from 90,796 in 1995
to 140,554 in 1996, or 58%, due to the opening from January 1,
1995 through March 31,1996 of 13 new 40-room Inns, six 20-room
expansions of existing Inns and one 16-room expansion of an
existing Inn. The occupancy rate decreased from 68.45% to 64.34%
for 1995 and 1996, respectively. In addition, ADR increased 9%
from $40.57 in 1995 to $43.92 in 1996. As a result of these
three factors, Room Revenues rose 58% from $2.6 million for 1995
to $4.1 million in 1996. Same Inn Room Revenues for 1996 versus
1995 grew to $2.7 million from $2.5 million, or 8%. The growth
is due to an increase in ADR from $40.46 to $43.79 for these Inns
and an increase in room nights available (due to expansions of
certain of these Inns) from 85,954 to 95,429, partially offset by
a decrease in the occupancy rate from 68.86% to 62.75% for these
Inns for 1996 compared to 1995. The decrease in the overall
occupancy rate of the Inns is attributable primarily to (i) the
expansion of several high occupancy Inns which then experienced
lower occupancy rates because of the additional rooms available
in the marketplace and (ii) more severe weather conditions in the
first quarter of 1996 versus 1995.
General and administrative expense includes overhead charges for
management, accounting and legal services for the corporate home
office. General and administrative expense for the three months
ended March 31, 1996 was $134,748, as compared to $140,290 for
the three months ended March 31,1995. The 1996 expense is
consistent with 1995 due to no significant changes in the home
office staffing.
Property taxes and insurance expenses totaled $141,706 for the
three month period ended March 31,1996 compared with $112,023 for
the same period in 1995. The increase is attributable to the
increase in number of Inns.
Interest expense increased from $213,781 for the three-month
period ended March 31, 1995 to $690,243 for the same period ended
March 31,1996, due to the greater amount of principal
indebtedness outstanding combined with higher average interest
rates in 1996. The additional debt was incurred for the
development of additional Inns and expansion of existing Inns.
Interest expense amounts exclude capitalized interest in the cost
of new Inn development.
Depreciation expense increased from $422,712 to $610,389 for the
three month periods ended March 31, 1996 and 1995, respectivly,
due to an increase in the number of operating Inns.
Liquidity and Capital Resources
From the consummation of its initial public offering in 1994
through March 31, 1996, the Company financed new Inns entirely
with bank borrowings. At March 31, 1996, the Company had
approximately $35.3 million in outstanding debt as compared to
$30.2 million as of December 31, 1995. The increase relates to
the development of additional Inns and expansion of existing
Inns.
At March 31, 1996, the Company had two lines of credit, a $6.8
million line of credit (the "First Line") convertible in April
1996 to a term note, with no remaining available credit under the
First Line, and a $3.5 million line of credit (the "Second Line")
convertible on July 15, 1997 to a term note, with $2.6 million
remaining available credit under the Second Line. In addition,
in January 1996, the Company obtained a credit facility providing
for an initial advance of $3.18 million and, if certain financial
conditions are satisfied, an additional advance of $225,000.
9<PAGE>
<PAGE>
For most new Inns developed by the Company, a construction loan
for approximately $1.05 million has been obtained usually from
community banks in the general locale of where the Inn is
located. The construction loan converts to a long-term mortgage
financing upon completion of the Inn without any further action
by the Company. On April 22, 1996 and May 6, 1996, the Company
completed the sale of 3,000,000 and 375,000 shares respectively,
of newly issued common stock at $10 per share. Net proceeds of
approximately $30,887,500 were used to repay certain existing
mortgage indebtedness at those dates. Simultaneous to the
closing of the equity offering, the Company received a commitment
to modify its lines of credit and certain long-term mortgages
into new lines of credit. In the aggregate, the modified
mortgages will provide the Company with new lines of credit of
approximately $28 million. The new lines of credit will have an
interest rate of 25 basis points over the prime rate as published
in the Wall Street Journal, which is currently 8.5%. The
interest rate adjusts annually. The average rate on the
mortgages repaid with the proceeds of the offering was 9.8%. Two
years from the closing date of the loan modification, the lines
of credit convert to 15-year amortizing loans with a ten-year
call provision. There are no prepayment penalties for early
extinguishment of the debt balances. Upon completion of the loan
modification, the Company will have four Inns unencumbered and
available to use as collateral for any additional financing.
The Company expects to continue to develop additional Inns as
suitable opportunities arise. The Company currently is
constructing new 40-room Inns in Commerce, Conyers and LaGrange,
Georgia; Decatur, Eufaula, Florence and Greenville, Alabama;
Forest City, North Carolina; and Georgetown, Simpsonville and
Union, South Carolina. The total turnkey construction price for
the Inns currently under construction is $13.7 million, of which
approximately $2.6 million had been expended at March 31, 1996.
The Company is also currently expanding Inns in Albany and
Brunswick, Georgia and may in the future expand additional Inns
if management determines that sufficient market demand exists and
financing is available for any such expansion. The Company
currently has three additional land sites under contract, subject
to varying contingencies.
As with most real estate investments, the Company's investments
in the Inns are relatively illiquid. As a result, the ability of
the Company to sell or otherwise dispose of any Inn to provide
liquidity may be very limited.
The Operator
The Company seeks to enhance Lease revenue by working in a
collaborative manner with the Operator. Presently, the Operator
also has an exclusive relationship with the Company in that the
Operator does not manage any hotel properties other than the
Inns. The Company believes this exclusive relationship ensures
that the Company's and the Operator's interests are well-aligned.
While the Company does not control the operations of the Operator
or the day-to-day operation of the Inns, and the Company's lease
revenue is not directly impacted by the Operator's expenses, the
two companies work together to enhance both occupancy and ADR.
The Lease formula allows the Company to benefit from increases in
Room Revenues, regardless of the mix between occupancy and ADR.
The following table summarizes the unaudited financial results of
the Operator. The comparison of revenues of the Operator between
the two periods is the same as that described above for the
Company.
Three Month Period
Ended March 31
------------------------
1996 1995
-------------------------
Room revenues as defined by lease $4,099,604 $2,595,899
Operating expenses (2,181,958) (1,336,176)
Lease expense to Jameson Inns, Inc. (1,915,590) (1,232,195)
-------------------------
Net income $ 2,056 $ 27,528
=========================
10<PAGE>
<PAGE>
Distributions to Stockholders
The table below sets forth, for the periods indicated, the cash
distributions declared per share for the common stock since
January 1, 1995.
First Quarter, 1995 $ .19*
Second Quarter, 1995 .21
Third Quarter, 1995 .21
Fourth Quarter, 1995 .21
First Quarter, 1996 .21**
* Includes $.07 declared for the period January 1 to February 2,
1995 and $.12 declared for the period February 3 to March 31,
1995.
** On April 29, 1996, the Company declared this dividend, which
is payable on May 22, 1996 to shareholders of record on May 9,
1996.
11<PAGE>
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits
10.1 Commitment letter from Empire Financial Services, Inc.
for $27.8 million in lines of credit
11.1 Earnings per Share
27.1 Financial Data Worksheet
The Company did not file any reports on Form 8-K during the three
months ended March 31, 1996.
12 <PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Jameson Inns, Inc.
(Registrant)
Dated: May 13, 1996 By: /s/ Thomas W. Kitchin
-------------------------
Thomas W. Kitchin
President and Chief
Executive Officer
Dated: May 13, 1996 By: /s/ Craig R. Kitchin
-------------------------
Craig R. Kitchin
Chief Financial Officer
13 <PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
Page
10.1 - Commitment letter from Empire Financial Service, Inc.
to Jameson Inns, Inc. for $27.8 million in lines of
credit ................................................
11.1 - Statement Re: Per Share Earnings ....................
27.1 - Financial Data Worksheet .............................
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 261,984
<SECURITIES> 0
<RECEIVABLES> 687,726
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,301,470
<PP&E> 61,697,173
<DEPRECIATION> (7,200,141)
<TOTAL-ASSETS> 57,321,798
<CURRENT-LIABILITIES> 652,800
<BONDS> 35,272,304
0
0
<COMMON> 386,994
<OTHER-SE> 21,009,700
<TOTAL-LIABILITY-AND-EQUITY> 57,321,798
<SALES> 1,915,590
<TOTAL-REVENUES> 1,915,590
<CGS> 141,706
<TOTAL-COSTS> 141,706
<OTHER-EXPENSES> 134,748
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 690,243
<INCOME-PRETAX> 338,504
<INCOME-TAX> 0
<INCOME-CONTINUING> 338,504
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 338,504
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
<PAGE>
EMPIRE FINANCIAL SERVICES, INC.
121 EXECUTIVE PARKWAY
Milledgeville, Georgia 31061
TELEPHONE (912) 450-9415
May 13, 1996
Mr. Thomas W. Kitchin, President FAXED TO: 404 350 2001
Jameson Inns, Inc.
8 Perimeter Center East, Suite 8050
Atlanta, GA 30346-1603
Dear Tom:
We are pleased to inform you that our lenders have approved a
line of credit of $27,800,000.00 for use by Jameson. The
following terms and conditions will apply:
BORROWER: Jameson Inns, Inc.
LOAN TYPE: During the first two years of the life of loan, it
will function as a revolving line of credit where Jameson can
draw down and pay back funds at its discretion. You will be
required to pay the accrued interest on a monthly basis during
this period. At the end of the initial two year period, the then
outstanding balance on the line will be converted to an
amortizing loan utilizing the following terms:
- One-year adjustable rate mortgage
- a margin of .25% over Prime Rate
- Indexed to the Major Lender's Prime Rate as published in
"The Wall Street Journal"
- Interest rate floor - 7%
- Interest rate ceiling - 13%
- 15 year amortization
- 10 year call provision
During the interest only period, the rate will also be Wall
Street Prime plus 1/4 of 1%. The rate will be set prior to
closing and will be adjusted on an annual basis thereafter.
LATE CHARGE: 5% of any monthly installment not received within 15
days after the installment is due.
ORIGINATION FEE: 1% of the amount of the loan.
CLOSING COSTS: Empire will absorb all cost of closing to include
attorney fees, title company cost, recording fees, etc.
SECURITY: Jameson Inn properties located in Calhoun, Americus,
Anderson, Hartwell, Statesboro, Washington, Covington, Thomaston,
<PAGE>
<PAGE>
Winder, Carrollton, Greenwood, Arab, Valdosta, Jesup, Selma,
Waycross, Bainbridge, Albertville and Alexander City.
PREPAYMENT PENALTY: This loan may be prepaid in part or whole at
any time without penalty.
HAZARD INSURANCE: An original policy in the minimum amount of the
loan must be available to the lender at the time of closing. The
mortgagee or loss payee clause of the policy must read, "Empire
Financial Services, Inc. Its Successors and Assigns, 121
Executive Parkway, Milledgeville, Georgia 31061."
FLOOD INSURANCE: If the security property is ever determined to
be located in a HUD designated flood hazard area, the purchase of
flood insurance at your expense will be required.
TITLE INSURANCE: Title insurance protecting the lender shall be
required and will be provided through the closing attorney at the
lender's expense.
SURVEY: None required
CORPORATE AND PARTNERSHIP REQUIREMENTS: If a commitment is issued
to a corportation, limited partnership or general partnership,
counsel for such entity must represent and warrant that, on and
as of the date of the commitment, and on and as of the date of
the closing of the loan:
1. Said entity is and will be an entity duly organized and
validly existing under the laws of the State in which the
loan is originated, or if it has been organized under the
laws of any other state, it is and will be qualified to
transact business in the State in which the loan is
originated.
2. Said entity: (1) is and will be the bona fide owner of the
property to be mortgaged in its own right; or (2) has
contracted to purchase the property from the present owner
thereof for a good and valuable consideration and will be
the bona fide owner thereof on the date of the closing of
the loan and execution of the note and mortgage.
3. There is not, and will not be, any contract or other
obligation providing for or requiring said entity to convey
said property or any interest or estate therein to any
party, and no party other than said entity has any
beneficial or equitable right, title or interest in said
property or any part thereof.
4. In the case of a construction loan, the proceeds of the
mortgage loan shall be paid directly to said entity, and
will be used solely for the proper business purposes of said
entity.
5. On the date of the closing of the loan, there shall be
delivered to us appropriate resolutions and an affidavit by
one or more partners or officers and stockholders, and such
other proof as we shall require, to establish that all of
<PAGE>
<PAGE>
the foregoing representations and warranties are true. If we do
not obtain such affidavit and other proof, including, but
not limited to, a current certificate of good standing issued by
the Secretary of State, we may refuse to make the loan and
retain any payments made by the Borrower upon acceptance of
the commitment.
LEASE-UP REQUIREMENTS: None
APPRAISAL: Borrower agrees to furnish Empire with a new appraisal
should the loan be classified by any regulatory agency for any
reason in the future, at its own expense, if deemed necessary to
comply with any law or regulation. The appraiser must be
approved by Empire.
FINANCIAL STATEMENTS: You will provide us with copies of your
quarterly Shareholder's reports and a copy of your audit report
annually.
In the event that closing does not occur prior to June 15, 1996,
Empire reserves the right to cancel this commitment at its sole
discretion.
THIS AGREEMENT WILL SURVIVE CLOSING
Very truly yours,
/s/ J. David Dyer, Jr.
- - -------------------------
J. David Dyer, Jr
President
I hereby agree with the above terms and conditions:
JAMESON INNS, INC.
By:/s/ Thomas W. Kitchin
-----------------------------
Thomas W. Kitchin, President
May 13, 1996
_____________________
Date
<PAGE>
Exhibit 11.1 Statement Re: Per-Share Earnings
Three Month Period
Ended March 31
------------------------
1996 1995
------------------------
Average shares and common stock
equivalents outstanding 3,864,797 3,852,192
Net effect of dilutive stock options
based on the treasury stock method 29,696 30,037
------------------------
3,894,493 3,882,229
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Net income $ 338,504 $ 343,389
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Per common and common equivalent share:
Net income $ .09 $ .09
========================
