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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 1, 1998
Date of Report
(Date of Earliest Event Reported)
CAPITOL COMMUNITIES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Nevada 0-23450 88-0361144
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
25550 Hawthorne Boulevard, Suite 207, Torrance, CA 90505
(Address of Principal Executive Offices)
Registrant's Telephone Number: 310-375-2266
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 9, 1997, the Company's wholly-owned subsidiary, Capitol
Resorts of Florida, Inc. ("the Florida Resorts Subsidiary"), acquired the lease
rights to Ocean Palms Resort pursuant to the provisions of a Purchase Agreement
dated December 9, 1997, between the Florida Resorts Subsidiary and Ocean Palms
Resort, Inc. ("OPRI"), and Ocean Palms Development Corporation ("OPDC"),
unaffiliated third parties. The Ocean Palms Resort lease consist of 120 feet of
beachfront land and improvements located in Pompano Beach, Florida. The ground
lease rights to the Ocean Palms Resort property is for a period of 99 years, of
which as of December 9, 1997, 66 years and 3 months remain (the "Ocean Palms
Ground Lease"). The improvements include a 53 LTL unit complex, and other common
area facilities. The Company also acquired the interest in several long term
tenant leases, approximately $2,500,000 in the Ocean Palms Resort Promissory
Notes arising out of the sale of the Ocean Palms Resort LTL units, and the right
to manage and operate the on-going rental of the LTL units as hotel rooms on
behalf of the LTL owners. As of March 31, 1998, the outstanding book value of
the Ocean Palms Resort Promissory Notes amounted to $2,286,009, net a discount
of $245,064. The Ocean Palms Resort Promissory Notes are pledged, as additional
collateral, to certain debt on the property assumed by the Company, and
discussed below.
The acquisition of the Ocean Palms Resort assets was accounted for using
the purchase method of accounting. The assets acquired at the December 9, 1997
closing totaled $2,420,499, including $2,286,009 in Promissory Notes Receivable,
net of a discount of $255,852, escrowed funds in the amount of $53,843 for taxes
and ground lease payments, $13,491 in Prepaid Ground Lease Payments and $27,156
in Accrued Interest Receivable on the Promissory Notes. Liabilities totaled
$1,232,641, and are comprised primarily of a First Leasehold Mortgage of
$1,158,000 and $56,000 in Accounts Payable. Net Assets acquired total $1,187,859
and are accounted for in cash and the 33,500 shares of stock of the Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
The following Exhibits are incorporated by reference from the Company's
Annual Report on Form 10-KSB filed with the Commission on December 29, 1997.
10.28 Agreement, dated December 9, 1997, between Capitol Resorts of Florida,
Inc. and Ocean Palms Development Corporation and Ocean Palms Resort, Inc.
10.29 Ground Lease, dated February 10, 1996, between Lighthouse Point
Construction Corp. and Nancy H. Newell and Jane H. Tubbs.
10.30 Assignment of Ground Lease and Tenant Leases, dated December 9, 1997,
between Capitol Resorts of Florida Inc., and Ocean Palms Development
Corporation.
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10.31 Assignment of Leasehold Improvements, dated December 9, 1997, between
Capitol Resorts of Florida Inc., and Ocean Palms Development
Corporation.
10.32 Mortgage and Note Modification and Assumption Agreement, dated
December 9, 1997, between Capitol Resorts of Florida Inc., and the
Trustee of the M.B. Co., Inc. Pension Plan, the Trustee of the
Domenick Greco Revocable Trust, Stanley Elkman, the Trustee of the
Arthur A. Kober Co., Inc., Employees Profit Sharing Fund, and Morton
J. Berman ("Ocean Palms Resort Morgagee").
10.33 Collateral Assignment and Pledge of Agreements and Conditional
Assignments of Lease and Purchase Money Promissory Note, dated
December 9, 1997, between Capitol Resorts of Florida Inc., and jointed
by Ocean Palms Development Corporation and assigned to the Ocean Palms
Resort Mortgagee.
10.34 Assignment of Agreements and Conditional Assignments of Lease and
Purchase Money Promissory Notes, dated December 9, 1997, between
Capitol Resorts of Florida Inc., and Ocean Palms Development
Corporation and Ocean Palms Resort, Inc.
10.35 Purchase Money Leasehold Mortgage and Security Agreement, dated
February 2, 1992, between Lucaya Beach Hotel Corporation and Del-Aire
Management Co., Inc.
10.36 Mortgage and Note Modification Agreement, dated January 22, 1997,
between the Ocean Palms Resort Mortgagee and Ocean Palms Cooperative
Association, Inc.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on is
behalf by the undersigned hereunto duly authorized.
Dated: June 30, 1998 CAPITOL COMMUNITIES CORPORATION
BY: /s/ Michael G. Todd
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Michael G. Todd
President and Chairman of
the Board
