-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BNNhH8DwGnRr8oX5MeQYqY7FGtlUTMUqg5jDKuUd/rVIpRmLeLX4qQJx59nZd+/D rfNOj3YAjJvo1QLov/U30Q== 0000859747-96-000001.txt : 19960802 0000859747-96-000001.hdr.sgml : 19960802 ACCESSION NUMBER: 0000859747-96-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960628 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHSHORE CORP /CO CENTRAL INDEX KEY: 0000859747 STANDARD INDUSTRIAL CLASSIFICATION: 7990 IRS NUMBER: 841153522 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19949 FILM NUMBER: 96587462 BUSINESS ADDRESS: STREET 1: 10750 E BRIARWOOD AVE CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 3036499875 MAIL ADDRESS: STREET 1: 10750 EAST BRIARWOOD CITY: ENGLEWOOD STATE: CO ZIP: 80112 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year 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 0-19949 ------- THE SOUTHSHORE CORPORATION ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Colorado 84-1153522 - - ---------------------------- ---------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 10750 East Briarwood, Englewood, Colorado 80112 - - ----------------------------------------- ----------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 649-9875 -------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None ------ ------ Securities registered pursuant to Section 12(g) of the Act: Common Stock - $.001 Par Value -------------------------------------------------------------------------- (Title of class) 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 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 The aggregate market value of the voting stock held by non-affiliates of the Registrant as of June 15, 1996 was approximately $222,000. The number of shares outstanding of the Registrant's $.001 par value common stock as of June 15, 1996 was 2,590,475 shares. INDEX Page No. PART I Item 1. Business 2 Item 2. Properties 5 Item 3. Legal Proceedings 5 Item 4. Submission of matters to a vote of security holders 5 Item 5. Market for the company's common stock and related stockholder matters 5 Item 6. Selected financial data 6 Item 7. Management's discusstion and analysis of financial condition and results of operations 7 Item 8. Financial statements and supplementary data 9 Item 9. Changes in and disaggreements with accountants on accounting and financial disclosure 9 Item 10. Directors and executive officers of the company 10 Item 11. Executive compensation 10 Item 12. Security ownership of certain beneficial owners and management 13 Item 13. Certain relationships and related transactions 14 Item 14. Exhibits, financial statement schedules, and reports on form 8-K 14 Signatures 16 Index to Financial Statements F-1 PART I ITEM 1. BUSINESS - - ----------------- General The Company was incorporated under the laws of Colorado on March 26, 1990. It has broad corporate powers; however, since inception the Company has been engaged in the development, construction and operation of a water park to be located in the Southeast Denver Metropolitan Area. The park was completed in 1992 and it operates from Memorial Day Weekend through Labor Day Weekend annually. Southshore Water Park - Arapahoe County, Colorado The 16-acre park, located near I-25 and East Arapahoe Road in Southeast Metro Denver, includes a Children's Pool, Wave Pool, and various Water Slides. The Wave Pool covers approximately 23,000 square feet and the six water slides are up to 350 feet long. The park also contains a volleyball area, miniature golf course, covered group pavilion areas, picnic areas, gift shop, video arcade and food service facilities. Free parking for approximately 700 cars is provided. The Company uses local radio and television for advertisement and also makes use of coupons for reduced admission charges. General Park Policy for Operations Management stresses park safety and cleanliness. The Company utilized the latest design engineering with respect to construction of rides and attractions with safety as a prime consideration. The park is operated with trained certified lifeguards and park security personnel in adequate numbers to keep accidents, disruptive activity and similar incidents at a minimum. The park maintains a first aid station for treatment of minor injuries. Construction Creditor Matters Resolved In the Fall of 1992, the Company experienced a financial crisis due to construction cost overruns of approximately $1,000,000 and the lack of funds to pay many of the contractors and subcontractors which provided materials and labor to construct the Company's water park. Construction creditors of the Company filed documents with the Arapahoe County, Colorado clerk and recorder relating to approximately $900,000 in claims under the Colorado mechanic's lien provisions. During fiscal 1996, the Company resolved the remainder of these creditor matters and obtained releases of liens on its park property. Adverse Current Ratio At March 31, 1996, the Company's current liabilities exceeded its current assets by $1,362,589. At March 31, 1996, the Company was 2 partially delinquent in paying its property taxes, which were $384,275. The Company's auditors state in their report at June 6, 1996 that the working capital deficiency raises substantial doubt as to the Company's ability to continue as a going concern. Default on Indenture of Trust During the quarter ended September 30, 1992, the Company sold $975,000 in 10% secured promissory notes to 27 persons pursuant to an indenture of trust. Subject to the first lien on a portion of the Company's water park property securing a $121,122 note to the person from whom the Company acquired the property, the water park property is collateral under the indenture of trust to secure payment of the 10% promissory notes. The indenture of trust provides in pertinent part that it will constitute an event of default to fail to keep the Company's water park property free and clear of liens of contractors, subcontractors, mechanics, laborers and materialmen. The filing of documents by construction creditors of the Company as described above under the caption "Financial Crisis" constitutes a default. In November 1994 the trustee under the indenture resigned and no successor trustee has been selected. The Company has made all required payments on the notes except principal payments for June 30, 1994 and June 30, 1995, for which payments the Company has obtained waivers through June 30, 1997 from noteholders holding $852,500 in such notes. The remaining $117,500 of these notes are in default and accounted for as current liabilities. Changes in Control In February and April 1995, Kenneth M. Dalton, President of the Company, purchased 424,250 shares and 75,750 shares, respectively, of common stock of the Company at $1.00 per share. At June 15, 1996 he owned 668,419 shares of the Company's common stock. Government Regulation and Approvals The Tri-County Health Department administers extensive regulations relating to safety and sanitation aspects of operating the water parks public swimming areas (i.e., chlorinated water testing, pool personnel and bather controls). The Company's water facilities as well as its food concession areas are subject to inspection by Tri- County Health Department officials. Such regulations are often complex, subject to differing interpretations and expensive to comply with; however, the Company is committed to operating a clean, safe park and thus intends to fully comply with these requirements. 3 Competition and Marketing Plans In general, the Company will be in competition for entertainment dollars in the Denver Metro Area. There are various broad forms of such entertainment, at various costs, appealing to a broad mass of the some 2,200,000 people who live in the area and tens of thousands of summer visitors. These include warm weather activities such as amusement parks, Lakeside and Elitch's, water recreation areas such as Cherry Creek Reservoir and Chatfield Recreation Area, many local swimming pools, golf, tennis and similar activities. However, the most significant direct competition is expected to be from Water World, a 60-acre water park located in the north part of the Denver Metro Area approximately 21 miles from the Company's park. Water World is owned and operated by Hyland Hills Metropolitan Parks and Recreation District. It typically operates from Memorial Day Weekend through Labor Day Weekend, and reported average attendance in the past five summers through 1993 of approximately 350,000, with 1994 attendance at approximately 500,000. For the 1996 season it is charging $15.95 for children ages 4 to 12 years, $16.95 for adults and admits free of charge children under 4 years of age and senior citizens. It also offers family and individual season passes. Residents of the Hyland Hills Park and Recreation District and the cities of Westminster and Federal Heights may obtain admission to Water World at discounted prices, $8.00 for children and $9.00 for adults. Water World advertises through television, radio and newspaper media in the Denver area and offers a variety of group discount programs. Thus the Company faces competition from an established larger water facility which has more attractions than those offered by the Company. Notwithstanding the foregoing the Company believes it can find a niche in this competitive arena. It utilizes admission charges of $11.95 for adults and $9.95 for children which are less than those of Water World. In addition, it has various discount programs, including discounts for rainy and/or cloudy days, and group sales. In addition the Company intends to operate a first rate park in terms of safety, maintenance of rides, park cleanliness, friendliness and competence of park staff. The Company also offers quality food and beverages at competitive prices. Further, an assortment of beach items such as swim wear, towels, suntan lotion, sunglasses, hats, t-shirts and souvenirs are offered to patrons. Management believes that the foregoing in addition to convenience of location to residents of the southern Denver Metro Area will be sufficient to permit the Company to generate sufficient revenues for profitable operations, however there is no assurance that such will be the case. Personnel At March 31, 1996, the Company had two full time employees, the Company's in-house accountant and the general manager. The Company's President serves in a part-time, as needed position. Approximately eighty full and part-time seasonal personnel, depending upon 4 attendance, including park manager, lifeguards, merchandise sales, groundskeepers, cash control, security and emergency medical personnel, are employed. The Company does not expect there to be a shortage of the required labor force. Seasonal personnel are expected to come largely from the ranks of college and high school students on summer break from school. It is not expected that any employees will be covered by a collective bargaining agreement. Liability Insurance The Company maintains a liability insurance policy with coverage in the amount of $1,000,000 per incident to cover possible claims for injury and damages from accidents. Weather Patterns The Company's business is significantly affected by Denver Area weather patterns since park attendance is expected to be reduced when temperatures do not exceed 75 degrees, there is rainfall, cloudy skies prevail, or there is low relative humidity. Other than offering discount tickets and other promotions to enhance attendance and reducing personnel on rainy or cloudy days, the Company can do little to offset the effect on operations from such weather patterns. ITEM 2. PROPERTIES - - ------------------- The Company owns 16 acres of real estate at approximately East Arapahoe Road and South Havana in the Southeast Denver metro area. The Company's water park, adjacent parking area and administrative offices are located on this property. ITEM 3. LEGAL PROCEEDINGS - - -------------------------- During the quarter ended December 31, 1992, approximately forty construction creditors of the Company filed documents with the Clerk and Recorder in Arapahoe County, Colorado under the Colorado mechanic's lien provisions relating to claims in excess of $900,000. At March 31, 1996, all lien creditors' claims had been satisfied. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - - ------------------------------------------------------------ No matters were submitted to a vote of shareholders during the quarter ended March 31, 1996. PART II ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS - - ---------------------------------------------------------- The Company's common stock was included on the NASDAQ Small-Cap Market until December 4, 1995. Thereafter, it was included on the NASD's Electronic Bulletin Board. Below are high and low bid prices for the calendar quarters indicated as reported by NASDAQ through 5 December 4, 1995. The prices for the quarters ended December 31, 1995 and March 31, 1996 have been obtained from sources believed to be reliable.
Low High Quarters Ended Bid Bid ------------------ ---- ---- June 30, 1994 1.50 1.62 September 30, 1994 .62 1.50 December 31, 1994 .62 1.00 March 31, 1995 .50 1.00 June 30, 1995 .37 1.00 September 30, 1995 .25 .78 December 31, 1995 .25 .50 March 31, 1996 .25 .50
Prices may not be an indication of actual transactions and do not necessarily include mark-ups, mark-downs or interdealer discounts. The Company is informed that there has been very little volume in trading of its common stock during the past year. On June 1, 1996, the Company had 188 shareholders of record, and management estimates there are an additional approximate 170 beneficial holders of Company shares. Dividend Policy The Company has never paid dividends on its common stock, and the Company's Board of Directors plans on distributing no dividends in the foreseeable future. ITEM 6. SELECTED FINANCIAL DATA - - -------------------------------- Following is a summary of selected financial data. See the financial statements included herein for more complete information. Summary Balance Sheet Data:
As of As of As of As of As of 3/31/96 3/31/95 3/31/94 3/31/93 3/31/92 ------- ------- ------- ------- ------- Total Assets..... $ 3,028,190 $ 3,649,607 $ 3,991,676 $ 4,279,819 $ 2,598,540 Total Liabilities.$ 2,322,158 $ 2,724,957 $ 2,545,949 $ 2,438,857 $ 216,032 Working Capital.... $(1,362,589) $(2,556,580) $(2,306,874 $(1,260,173) $ 1,898,785 Stockholders' Equity..... $ 706,032 $ 924,650 $ 1,447,727 $1,840,962 $ 2,382,508
Summary Operating Data:
Year Year Year Year Year Ended Ended Ended Ended Ended 3/31/96 3/31/95 3/31/94 3/31/93 3/31/92 ------- ------- ------- ------- ------- Sales......... $ 855,618 $1,021,747 $ 838,098 $ 52,658 $ -0- Net Loss...... $ 693,474 $1,023,077 $1,334,382 $(630,005) $(75,035) Net loss Per Share..... $ (.29) $ (.57) $ (.79) $ (.54) $ (.12)
6 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - - -------------------------------------------------------------------- Financial Condition At March 31, 1996, working capital was a negative $1,362,589 as compared to a negative $2,556,580 at March 31, 1995, a decrease of nearly $1,200,000. The principal items contributing to the working capital shortfall are operating losses, currently due promissory notes to affiliates, and currently due property taxes. At March 31, 1996, the Company's shareholders' equity was $706,032, down from $924,650 at March 31, 1995, due primarily to operating losses for fiscal 1996. Results of Operations - Fiscal 1996 Compared to Fiscal 1995 Revenues for fiscal 1996 were lower than fiscal 1995 by $166,129 largely because the Company contracted its food service for 1996 with an outside vendor and merely received a fee for the sale of food of $173,453, compared to $353,709 for food sales by the Company for 1995. However, substantial savings on the cost of sales ($11,078 for 1996 vs. $78,181 for 1995) and salaries ($270,938 for 1996 vs. $348,318 for 1995) justifies the decision which resulted in lower total revenues. Gross profits for 1996 were approximately $100,000 less than 1995 and total operating expenses for 1996 were nearly $300,000 less than 1995. Thus, net loss for 1996 was approximately $330,000 less than the loss for 1995. Of the loss of $693,474 for 1996, $560,511 represents a non- cash item, depreciation. Most of the Company's current park facilities will be fully depreciated in 1998. The month of June, 1995, which is approximately one-third of the water park's operating period, was one of the coldest, rainiest Junes ever recorded for the Denver area. This was devastating to park revenues. Thus far for June, 1996, the Denver area has experienced more typical June weather, with highs usually in the 80's and low 90's. The Company expects this to have a favorable impact on fiscal 1997 revenues. Consulting and professional fees have shown a steady decline from fiscal 1994 through fiscal 1996 as the Company's use of lawyers and other professionals has been reduced following the finalization of work-out arrangements with the Company's creditors. The Company expects such fees to remain relatively low for fiscal 1997. Interest expense reduction and interest expense forgiven for 1996 reflect results of settlements and pay-offs of construction creditors. See Note 6 to the financial statements for further explanation. 7 Results of Operations - Fiscal 1995 Compared to Fiscal 1994 Revenues for fiscal 1995 were up $183,000 or 22% and gross profit was up $179,000 or 23%. Total operating expenses were nearly the same for the two years. Among the operating expenses, advertising more than doubled as the Company sought more public awareness for its water park; consulting and professional fees were over $100,000 lower in fiscal 1994 as legal and related costs were lower. Utilities were somewhat lower in 1995 due to more efficiencies in operations and use of less gas to heat water because of warmer 1994 summer weather. Interest expense was higher because the Company increased its borrowing to pay current debt and operating expenses. Approximately 55% of the Company's 1995 losses, or $560,000, represents depreciation, a non-cash item. Results of Operations - Fiscal 1994 Compared to Fiscal 1993 Fiscal 1994 was the first year in which the Company had significant revenues from Operations. During the previous fiscal year, the park was open for only a few days. Management believes that "Outside Services" expense of $223,314 is high for the period primarily due to legal services for litigation involving creditor claims. It believes that most of these expenses are nonrecurring and should not be as high in subsequent corresponding periods. Management believes that sales of $838,098 for the inaugural year of the park are disappointing and can be improved in 1994. It is management's position that a combination of cool summertime weather, the Company's financial crises, and the difficulties encountered in the start-up of a new business, including lack of name recognition, contributed to relatively low attendance numbers at the park. Management believes that with more aggressive marketing and one year's experience in the business, attendance should be enhanced in 1994. The operating loss of $1,134,382 for Fiscal 1994 is somewhat tempered by the fact that $551,304 of the total operating expenses relate to depreciation and amortization which is a non-cash item. In addition Management believes that consulting and professional fees for 1994 are approximately $125,000 higher than they are expected to be for fiscal 1995. Liquidity and Capital Resources At March 31, 1996, the Company had $2,322,158 in current obligations, which include notes payable of $609,262, property taxes of $384,275 and amounts due trade creditors of $141,968. Except for utility companies who are creditors of the Company, most trade creditors of the Company are non-essential and can be replaced by other vendors of similar products. Many of the Company's 8 vendors require payment on delivery of goods and services and it is expected that such practices will continue so long as the Company remains in a financially weak position. Most of the Company's vendors, including the utility companies which still supply power, gas and water, continue to work with the Company notwithstanding delays in being paid or fully paid. Obviously, there is no assurance creditors will continue in their credit leniency. The Company is appealing its property tax assessment with county officials; however, there is no assurance it will be successful in reducing this item. The Company has been able to continue, notwithstanding past financial difficulties, only as a result of sales of common stock to and loans primarily from management and affiliated entities. While the Company believes that these persons and entities may again be sources of funding in the future, there is no assurance of such availability nor are any terms assured. Although the Company has made substantial inroads toward establishing financial stability, it has not yet achieved it. Management's objectives for fiscal 1997 are for the Company to experience positive cash flow, if not profitable operations, and to restructure its short-term debt and other obligations. There is no assurance that these objectives will be achievable, and failure to obtain refinancing and to meet its obligations could result action against the Company by creditors. In general, the Company is on good terms with its creditors. Trends The industry in which the Company operates depends considerably on disposable income of potential park patrons and is thus more affected by the condition of the local and, to a very limited extent the national economy. The economy in the Denver area is currently relatively strong, which means that more disposable monies would be available for recreational activities such as those available at the Company's facilities. Based on this economic indication, management is hopeful the local economy will provide a good environment for the Company to operate. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - - ---------------------------------------------------- Attached hereto are financial statements responsive to this Item. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE - - ------------------------------------------------------ None. 9 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY - - --------------------------------------------------------- Set forth below are all directors and executive officers of the Company. Officers serve at the pleasure of the Board of Directors. Kenneth M. Dalton, age 48. President of the Company since October, 1993. Director of the Company since March 16, 1992. President of Meridian Medical Corp., an Englewood, Colorado distributor of medical products (1985-March 1994). In March 1994 the assets of Meridian were sold to Lincare, Inc. of Clearwater, Florida, and Mr. Dalton has been the Denver Metro Area Manager of Lincare, Inc., which provides medical home health care and supplies. On April 1, 1994 the Board of Directors authorized a salary of $15,000 per year for Mr. Dalton, who provides services on an as needed basis. Rod K. Barksdale, age 47. Vice President of the Company since october, 1993. Director of the Company since March 16, 1992. Employed as an administrator for Public Service Company of Colorado, Glenwood, Springs, Colorado (1977-Present). Mr. Barksdale receives no salary from the Company and provides services on an as needed basis. Ren Berggren, age 47. Secretary of the Company since October, 1993. Director of the Company since March 16, 1992. Employed as Vice President of Vancol Industries, Inc., Denver, Colorado, a distributor of beverages (1988-Present). Controller of Worldwide Corporate Services, a Denver, Colorado company engaged in support services for automobile dealerships (1985-1988). Mr. Berggren receives no salary from the Company and provides services on an as needed basis. Arthur K. Biddle, age 56. Director of the Company since June, 1995. Assistant City Attorney, Denver, Colorado (1987-1995). Assistant General Attorney, AMAX Inc., Golden, Colorado (1970-1987). Key Personnel Eric Nelson is the Company's principal accounting and financial officer. He has been employed by the Company since 1994 and previously was employed in as controller with Meridian Medical Corp., Englewood, Colorado (1988-1994). He is a graduate of Colorado State University, with a degree in accounting. John Janness is the Company's general manager. He worked on the construction of the park in 1991 and was in charge of park maintenance from 1992 to 1995, when he was promoted to general manager. ITEM 11. EXECUTIVE COMPENSATION - - -------------------------------- The following tabular information includes all plan and non-plan compensation paid to the Company's president and to all other executive officers whose total annual salary and bonus is $100,000 or more. 10 Summary Compensation
Annual Compensation Long-Term Compensation ------------------- ---------------------- Awards Payouts Other ------------------ ------------- Name Annual Restricted All Other and Compen- Stock LTIP Compen- Principal Salary Bonus sation Award(s) Options/ Payouts sation Position Year ($) ($) ($) ($) SARs(#) ($) ($) - - -------- ---- ------ ----- ------- -------- --------- ------- ------ Kenneth M. 1996 15,000 -0- -0- -0- -0- -0- Dalton 1995 15,000 -0- -0- -0- 30,000 -0- -0- President(1) shares at $2.50 per share 177,777 shares at $2.25 per share 61,250 shares at $1.10 per share
(1) Mr. Dalton became President of the Company in October, 1993. The Company's Board of Directors has no compensation committee. Stock Options Held by Executive Officers and Value Thereof at June 1, 1995
Value of Unexercised Number of In-the-Money Unexercised Options at Shares Options 6/1/96 Acquired Value 6/1/96 All All Name on Exercise (#) Realized($) Exercisable Exercisable(1) - - ----------------- --------------- ----------- ----------- -------------- Kenneth M. Dalton, -0- -0- 279,027 -0- President Rod K. Barksdale, -0- -0- 5,000 -0- Vice President
(1) Based on the average closing bid price of the Company's common stock at June 1, 1996 of $.25 as reflected on the NASD's Electronic Bulletin Board. 11 Director's Fees The Company has authorized director's fees of $100 per meeting for each director who is not a salaried officer of the Company, however no director's fees were paid during the year ended March 31, 1996. Incentive Stock Option Plan Effective January 7, 1991, the Company adopted an Incentive Stock Option Plan (the "Plan"). The purpose of the Plan is to secure and retain key employees of the Company. The Plan authorizes the granting of options to officers, directors and employees of the Company to purchase 200,000 shares of the Company's $.001 par value common stock subject to adjustment for various forms of recapitalization that may occur. No option may be granted after January 7, 2001, and the fair value of an option to each optionee cannot exceed $100,000 per year. An employee must have six months of continuous employment with the Company before he or she may exercise an option granted under the Plan. The option exercise price may not be less than 100% of the fair market value of the shares at the time of the granting of such options except in the case of an option granted to a stockholder who owns 10% or more of the Company's shares at the time of the grant in which case the option price must be at least 110% of the fair market value of the shares at the time of the grant of such option, and options must be exercised within five years after the date of grant. Options granted under the Plan are non-assignable and terminate three months after employment by the optionee ceases, except in the case of employment termination due to disability of the optionee, in which event the option expires twelve months from the date employment ceases. The Plan is to be administered by a committee selected by the Company's Board of Directors. It may be expected that any option granted will be exercised only if it is advantageous to the option holder. It may also be expected that if any option granted is exercised, and the book value is below the exercise price, the book value of the Company's stock held by the Company's then shareholders will be minimally increased; however, the voting power of the then shareholders will be decreased. If the book value of the stock is above the exercise price, then exercise of the option will dilute the book value to other shareholders. One option for 61,250 shares exercisable at $1.10 per share has been granted under the Company's Incentive Stock Option Plan to the Company's President. The Company has no other bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation or other incentive plans nor present plans with respect to these matters; however, it is possible that the Board of Directors will adopt such plans in the future. 12 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - - --------------------------------------------------------- Beneficial ownership of any person or persons means direct or indirect voting or investment power and does not include shares which may be acquired pursuant to warrants, stock options or similar rights. (See "Stock Options" below). The following table sets forth the name and business address of each officer and director and each person whose ownership of the Company's common stock exceeds 5% based on 2,590,475 shares outstanding at June 15, 1996:
Name of Amount and Nature of Percentage Beneficial Owner Beneficial Ownership of Class - - ------------------ -------------------- ---------- Kenneth M. Dalton(1)(2) 668,419 25.8% 26 Tamarade Drive Littleton, CO 80127 Rod K. Barksdale(1)(2) 84,882 3.3% 2921 Sopris Avenue Glenwood Springs, CO 81601 Ren Berggren(1)(2)(3) 0 0% 1700 E. 68th Ave. Denver, CO 80229 Arthur K. Biddle(1) 115,000(4) 4.4% 1905 Zinnia Golden, CO 80401 James F. Silliman, M.D. 192,142 7.4% 7408 Greenbriar Dallas, TX 75225 Keith A. Lowery 145,629 5.6% 7477 Singing Hills Drive Boulder, CO 80301 Officers and Directors 887,610(5) 34.3% as a Group (5 Persons) ____________________
(1) Directors of the Company. (2) Officers of the Company (3) Mr. Berggren is an officer, director and shareholder of Vancol Industries, Inc. which company owns 44,309 shares of common stock of the Company. He disclaims personal beneficial ownership of the shares of common stock of the Company owned by Vancol Industries, Inc. (4) Included in this amount are 60,000 shares held by Biddle Investments, a partnership of which Mr. Biddle is a general partner. 13 (5) For purposes hereof the shares held by Vancol Industries, Inc. (19,309) are included in the calculation. Stock Options The control reflected in the foregoing table may be subject to further changes by reason of exercise of certain stock options. Keith Lowery, formerly President of the Company, holds an option for up to 30,000 shares at $3.00 per share through January 25, 1998. Rod K. Barksdale holds a similar option for 5,000 shares. Dr. Silliman holds an option for 29,375 shares at $1.75 per share through June 30, 1997, which option is subject to adjustment by reason of certain anti- dilution provisions. Mr. Dalton holds an option to purchase 30,000 shares at $2.50 per share through September 30, 1996. Mr. Dalton also holds a $400,000 convertible note of the Company whereby he can convert the note balance to up to 177,777 shares of common stock at $2.25 per share. Mr. Dalton also holds an option to purchase 61,250 shares at $1.10 per share through December 25, 1999. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - - -------------------------------------------------------- In April, 1994, the Company issued a $400,000 convertible promissory note to Mr. Dalton pursuant to an arrangement whereby Mr. Dalton personally obtain a $400,000 bank line of credit, the proceeds of which were made available to the Company. The note is convertible into up to 177,777 shares of common stock of the Company at $2.25 per share. At March 31, 1996, the balance on the note was $400,000. Mr. Dalton was also granted an option to acquire 30,000 shares at $2.50 per share through September 30, 1996. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K - - ------------------------------------------------------- (a) (1) Financial Statements: Report of Independent Accountants: Balance Sheets at March 31, 1996 and 1995 Statements of Operations for Years Ended March 31, 1996, 1995 and 1994 Statements of Shareholders' Equity Statements of Cash Flows for Years Ended March 31, 1996, 1995 and 1994 Notes to Financial Statements 14 (b) Exhibits: 3.1 Articles of Incorporation(1) 3.2 Bylaws(1) 10.1 Underwriter's Warrants to Purchase Common Stock(1) 10.3 Incentive Stock Option Plan(1) 10.11 Warranty Deed and Deed of Trust - Park Site(2) 10.12 Indenture of Trust and 10% Secured Promissory Note(3) 10.25 Promissory Note - Vancol Industries, Inc.(4) 10.26 Convertible Promissory Note for $400,000 - Kenneth M. Dalton(5) 10.27 Stock Option for 30,000 shares - Kenneth M. Dalton(5) EX-27 Financial Data Schedule ______________________ (1) Incorporated by reference to Form S-18 Registration Statement, File No. 33-42730-D, filed September 11, 1991 (2) Incorporated by reference to Form 10-K for the year ended March 31, 1992 filed June 29, 1992, SEC File No. 0-19949 (3) Incorporated by reference to Form 10-K for year ended March 31, 1993 filed July 16, 1993, File No. 0-19949 (4) Incorporated by reference to Form S-1, SEC File No. 33-73774, filed February 9, 1994 (5) Incorporated by reference to Form 8-K, SEC File No. 0-19949, filed May 6, 1994 (c) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended March 31, 1996. 15 SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) THE SOUTHSHORE CORPORATION BY (Signature) /s/ Kenneth M. Dalton (Date) June 25, 1996 (Name and Title) Kenneth M. Dalton, President and Principal Executive Officer BY (Signature) /s/ Eric Nelson (Date) June 25, 1996 (Name and Title) Eric Nelson, Principal Accounting Officer and Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. BY (Signature) /s/ Kenneth M. Dalton (Date) June 25, 1996 (Name and Title) Kenneth M. Dalton, Director BY (Signature) Rod K. Barksdale (Date) June 25, 1996 (Name and Title) Rod K. Barksdale, Director BY (Signature) /s/ Ren Berggren (Date) June 25, 1996 (Name and Title) Ren Berggren, Director BY (Signature) /s/ Arthur K. Biddle (Date) June 25, 1996 (Name and Title) Arthur K. Biddle, Director (ss10k.96) 16 INDEX TO FINANCIAL STATEMENTS THE SOUTHSHORE CORPORATION FINANCIAL STATEMENTS with REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS March 31, 1996 and 1995 Page Report of Independent Certified Public Accountants F-2 Financial Statements: Balance Sheets F-3 Statements of Operations F-4 Statement of Changes in Stockholders' Equity F-5 Statements of Cash Flows F-6 Notes to Financial Statements F-7 F-1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors The Southshore Corporation Englewood, CO We have audited the accompanying balance sheets of The Southshore Corporation as of March 31, 1995 and 1996, and the related statements of operations, changes in stockholders' equity and cash flows for the three years ended March 31, 1996. 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 audits 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 audits provide 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 The Southshore Corporation as of March 31, 1995 and 1996, and the results of its operations, its cash flows and its changes in stockholders' equity for the three years ended March 31, 1996, 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 7 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Schumacher & Associates, Inc. 12835 East Arapahoe Road Tower II, Suite 110 Englewood, CO 80112 June 6, 1996 F-2 THE SOUTHSHORE CORPORATION BALANCE SHEETS
March 31, 1996 1995 -------------------------- Current Assets Cash $ 1,625 $ 539 Other 4,846 22,207 ----------- ----------- Total Current Assets 6,471 22,746 ----------- ----------- Other Assets Property and equipment, net of accumulated depreciation (Note 2) 2,943,837 3,526,169 Deposits 48,485 50,245 Debt and other offering costs, net of accumulated amortization 29,397 50,447 --------- --------- Total Other Assets 3,021,719 3,626,861 ----------- ----------- Total Assets $ 3,028,190 $ 3,649,607 =========== =========== Current Liabilities Notes payable, current portion (Note 3) $ 609,262 $ 1,389,055 Notes and advances payable, officer 153,400 92,400 Property taxes payable (Note 8) 384,275 297,181 Accrued interest 49,164 166,573 Accounts payable and accrued expenses 141,968 252,152 Accounts payable, construction contractors - 368,472 Deferred income 30,991 13,492 --------- --------- Total Current Liabilities 1,369,060 2,579,325 Notes payable, net of current portion (Note 3) 953,098 145,632 --------- --------- Total Liabilities 2,322,158 2,724,957 --------- --------- Commitments and contingencies (Notes 3, 4, and 7) - - Stockholders' Equity Preferred stock, $.01 par value 25,000,000 shares authorized, none issued and outstanding - - Common stock, $.001 par value 100,000,000 shares authorized, 2,610,470 issued and outstanding as of March 31, 1996 and 2,137,613 shares as of March 31, 1995 2,611 2,138 Additional paid-in capital 4,377,574 3,903,191 Accumulated (deficit) (3,674,153) (2,980,679) ----------- ----------- Total Stockholders' Equity 706,032 924,650 ----------- ----------- Total Liabilities and Stockholders' Equity $ 3,028,190 $ 3,649,607 =========== ===========
The accompanying notes are an integral part of the financial statements. F-3 THE SOUTHSHORE CORPORATION STATEMENTS OF OPERATIONS
Years Ended March 31, 1996 1995 1994 Revenue ------- ------- -------- Sales - gate admissions $ 682,165 $ 668,038 $ 559,861 Sales - food, beverages and merchandise 173,453 353,709 278,237 --------- --------- ------- Total sales 855,618 1,021,747 838,098 Cost of sales - food, beverages and merchandise 11,078 78,181 73,652 --------- -------- -------- Gross Profit 844,540 943,566 764,446 ---------- --------- --------- Operating Expenses Salaries 270,938 348,318 305,223 Advertising 125,425 139,443 57,086 Depreciation 560,511 560,091 551,304 Consulting and professional fees 42,037 120,292 223,314 Other 390,342 514,080 551,678 --------- ---------- --------- Total Operating Expenses 1,389,253 1,682,224 1,688,605 ---------- ---------- ---------- Net (loss) before other income (expense) (544,713) (738,658) (924,159) Interest expense forgiven (Note 6) 57,540 - - Interest (expense) (185,251) (263,369) (189,173) Amortization of debt offering costs (21,050) (21,050) (21,050) ---------- --------- -------- Net (loss) $(693,474) $(1,023,077) $(1,134,382) ========== ============ ============= Per Share (Note 6) $ (.29) $ (.57) $ (.79) =========== ============ =========== Weighted Average Number of Shares Outstanding 2,374,042 1,804,280 1,433,937 ========= ========= =========
The accompanying notes are an integral part of the financial statements. F-4 THE SOUTHSHORE CORPORATION STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY From March 31, 1993 through March 31, 1996
Additional Number of Common l Paid- Deficit Shares Stock in capital Accumulated Total --------- ------- ---------- ----------- ------- Balance at March 31, 1993 $1,230,261 $1,230 $2,586,640 $(823,220) $1,764,650 Stock issued 407,352 408 817,051 - 817,459 (Loss) for the year ended March 31, 1994 - - - (1,134,382) (1,134,382) Balance at March 31, 1994 1,637,613 1,638 3,403,691 (1,957,602) 1,447,727 Stock issued 500,000 500 499,500 - 500,000 (Loss) for the year ended March 31, 1995 - - - (1,023,077) (1,023,077) ----------- --------- ---------- ---------- ----------- Balance at March 31, 1995 2,137,613 2,138 3,903,191 (2,980,679) 924,650 Stock issued 472,857 473 474,383 - 474,856 (Loss) for the year ended March 31, 1996 - - - (693,474) (693,474) ----------- -------- ---------- --------- --------- Balance at March 31, 1996 $2,610,470 $2,611 $4,377,574 $(3,674,15) $706,032 ========== ====== ========== =========== ========
The accompanying notes are an integral part of the financial statements. F-5 THE SOUTHSHORE CORPORATION STATEMENTS OF CASH FLOWS
Years Ended March 31, 1996 1995 1994 ------------ ------------ -------------- Cash Flows from Operating Activities: Net (loss) $(693,474) $(1,023,077) $(1,134,382) Adjustments to Reconcile Net Income to Net Cash (Used in) Operating 560,511 560,091 551,304 Activities: Depreciation Amortization debt offering cost 21,050 21,050 21,050 and bond discount Increase (decrease) in accounts payable and accrued expenses (109,326) 152,611 418,183 and other Net Cash --------- --------- ---------- (Used in) Operating Activities (221,239) (289,325) (143,845) Cash Flow from Investing ----------- ----------- ----------- Activities: - - 4,214 Deposits (paid) returned Land, property and equipment acquired 9,941 (200,853) (339,190) (Decrease) in accounts payable, construction (368,472) (339,451) (491,317) -------- -------- -------- Net Cash (Used in) Investing Activities (358,531) (540,304) (826,293) Cash Flows from -------- -------- -------- Financing Activities: Advances and loans from 71,000 - 179,629 related parties Proceeds from notes 55,000 433,550 - payable Payments made on notes (20,000) (107,733) (15,019) payable Issuance of stock and warrants, net of offering costs 474,856 500,000 806,329 Net Cash Provided ------- ------- ------- by Financing Activities 580,856 825,817 970,939 ------- ------- ------- Increase (Decrease) in Cash 1,086 (3,812) 801 Cash, Beginning of Period 539 4,351 3,550 ------- ------- ------- Cash, End of Period $1,625 $539 $4,351 ======= ======= ====== Income Taxes Paid $ - $ - $ - ======== ======== ======== Interest Paid $113,101 $113,605 $229,375 ======== ======== ======== The accompanying notes are an integral part of the financial statements. F-6 THE SOUTHSHORE CORPORATION NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ----------------------------------------------------------- Organization ------------ The Southshore Corporation (the "Company") was incorporated under the laws of the state of Colorado on March 26, 1990. The Company owns 16 acres of land in Arapahoe County, Colorado, upon which it has constructed and is operating a water park. The Company has selected March 31 as its fiscal year end. Property and Equipment and Related Depreciation ----------------------------------------------- Property and equipment are carried at cost. The cost of property and equipment is depreciated on a straight-line basis over the estimated useful lives of the related assets, which are 20 years for buildings and 7 years for the remaining assets which consist principally of equipment and facilities. Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized. When property and equipment is sold or otherwise disposed of, the asset and related accumulated depreciation account is relieved, and any gain or loss is included in operations. Concentrations of Credit Risk ----------------------------- The Company has no material amounts or concentrations of credit risks. Debt Offering Costs ------------------- The Company incurred $105,250 in debt offering costs related to a successful private placement of secured notes. These offering costs are being amortized on a straight-line basis over the five year term of the notes. Per Share Information ---------------------- Per share information is computed based upon a weighted average number of shares outstanding. Geographic Area of Operations and Interest Rates ------------------------------------------------ The Company operates a water park in Englewood, Colorado. The potential for severe financial impact can result from negative effects of economic conditions within the market or geographic area. Since the Company's business is in one area, this concentration of operations results in an associated risk and uncertainty. F-7 THE SOUTHSHORE CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued ---------------------------------------------------------------------- Use of Estimates in the Preparation of Financial Statements ------------------------------------------------------------ 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 assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Advertising Costs ----------------- Advertising costs are expensed as incurred. 2. PROPERTY AND EQUIPMENT ---------------------- Property and equipment is summarized as follows:
March 31, ------------------- 1996 1995 -------- ------- Buildings $ 743,978 $ 740,682 Recreational park facilities 3,614,157 3,638,184 Office furniture and equipment 10,284 10,284 Equipment 101,367 101,367 Land 435,173 435,173 Vehicles - 2,615 --------- --------- 4,904,959 4,928,305 Less accumulated depreciation 1,961,122 1,402,136 ----------- ----------- $ 2,943,837 $ 3,526,169
3. NOTES PAYABLE ------------- Notes payable are summarized as follows:
March 31, ------------------ 1996 1995 ---- ---- Note payable to individual, collateralized by 7 1/2 acres of real estate, $2,957 per month with interest at 8%, due March 20, 2000 $ 121,122 $ 145,833 Note payable, interest at prime, renewable annually (see below *). 400,000 400,000
F-8 THE SOUTHSHORE CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 3. NOTES PAYABLE, Continued
Various notes payable, interest rate of 12% per annum, collateralized junior liens on real property, due September, 1996 55,000 - Notes payable, interest at 10% payable semiannually, due in three installments, $10,000 due June 30, 1995 and 1996, and $13,550 due June 30, 1997. 23,550 33,550 Notes payable, private offering of $970,000, collateralized through an indenture of trust by all of the Company's real property and improvements subject to a second deed of trust on the 7 1/2 acres above, interest at 10% payable quarterly which commenced June 30, 1993 and four equal installments of principal which were scheduled to commencing June 30, 1994 net of unamortized discount of $7,312 at March 31, 1996 and $14,696 at March 31, 1994 (see below **) 962,688 955,304 --------- --------- 1,562,360 1,534,687 Less current portion (609,262) (1,389,055) ---------- ----------- Long-term portion $ 953,098 $ 145,632 ========= ==========
* In April, 1994, the Company issued a $400,000 convertible promissory note to the Company's President pursuant to an arrangement whereby the President personally obtained a bank line of credit, the proceeds of which were made available to the Company. The note is convertible into up to 177,777 shares of common stock of the Company at $2.25 per share. Maturities of notes payable after giving effect to the default provisions are summarized as follows:
1996 $ 609,262 1997 887,721 1998 31,388 1999 33,989
F-9 THE SOUTHSHORE CORPORATION NOTES TO FINANCIAL STATEMENS(continued) 3. NOTES PAYABLE, continued ------------------------ ** The provisions of indenture relating to the 10% secured notes contain various covenants pertaining to limitations on restricted payments (such as dividens, aggregate officers' compensation in excess of defined limits, ect.) based on maintenence of working capital and tangible stockholders' equity parameters. There are also limitations on total debt allowed. Also, the Company failed to make required 25% repayments of the $970,000 of notes payable outstanding in 1994 and 1995. The Company was able to obtain extension agreements on $852,500 of these notes until September, 1997. The remaining $117,500 and accounted for as current liabilities. As of March 31, 1995, prior to obtaining extension agreements, the entire balance of these notes payable were shown as a current liability in the financial statements. 4. STOCKHOLDERS' EQUITY -------------------- Common Stock Options -------------------- A shareholder of the Company has loaned $153,400 to the Company with interest rates ranging from prime to 12% per annum. Of the note payable $97,400 is convertible at the shareholders option into common stock of the Company since the balance was not paid when due. The remaining $56,000 is due September 30, 1996. The payable to the shareholders are uncollateralized. The President was granted an option to acquire 30,000 shares at $2.50 per share through September 30, 1996, and an option for 61,250 shares at $1.10 through October 28, 1999. Warrants Issued with 10% Secured Notes -------------------------------------- The Company sold 195 units of $5,000 each of 10% secured notes in a private placement. Each unit also included 625 warrants. Each warrant entitles the holder to purchase one restricted common share at $6.00 per share through June 30, 1997. The Company has reserved 121,875 common shares for issuance for the exercise of these warrants. The warrants were deemed to have an aggregate value of $36,563 which was recorded upon their issuance as additional paid in capital and as a discount on the notes payable. As of March 31, 1996, 7,917 warrants have been exercised through the issuance of 27,146 shares of restricted common stock after adjustment for dilution. F-10 THE SOUTHSHORE CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 4. STOCKHOLDERS' EQUITY, Continued ------------------------------- Incentive Stock Option Plan --------------------------- During January of 1991, the Company adopted an incentive stock option plan for employees of the Company. The Company reserved 200,000 shares of its common stock for this plan. The option price shall be determined by the Company but shall not be less than fair market value on the date of grant. Options may be granted under the plan for terms up to January of 2001. Stock Options and Warrants Outstanding -------------------------------------- In addition to other options and warrants described elsewhere in the notes to the financial statements, the Company at March 31, 1996, had outstanding the following stock options and warrants:
No. of Shares Exercise Price Expiration Date ------------- -------------- ---------------- 50,000* $7.30 October 11, 1996 30,000** $3.00 January 25, 1998 5,000*** $3.00 January 25, 1998
*Granted to the underwriter of the public offering **Granted to the former President of the Company ***Granted to a director of the Company 5. INCOME TAXES The Company uses the straight-line depreciation method for financial reporting purposes over 20 and 7 year estimated useful lives. The Company has elected to use the straight-line method over the Modified Accelerated Cost Recovery System ("MACRS") recovery periods of 31.5 and 7 years for income tax reporting purposes. As of March 31, 1996, there are no current or deferred income taxes payable. As of March 31, 1996, the Company has total deferred tax assets of approximately $1,286,000 due to operating loss carryforwards and the depreciation timing differences described above. However, because of the uncertainty of potential realization of these tax assets, the Company has provided a valuation allowance for the entire $1,286,000. Thus, no tax assets have been recorded in the financial statements as of March 31, 1996. F-11 THE SOUTHSHORE CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 5. INCOME TAXES ------------ The Company has available at March 31, 1996, unused operating loss carryforwards of approximately $3,675,000 which may be applied against future taxable income, expiring in various years through 2011. 6. RENEGOTIATED DEBT AND INTEREST ------------------------------ During the year ended March 31, 1996 the Company renegotiated the balance of a debt and accrued interest to a creditor downward from $278,214 to $190,000, an adjustment of $88,214. Of this amount $30,674 was principal and $57,540 of accrued interest. The $30,674 reduction of principal was accounted for as a reduction in the cost of the related constructed property asset and the $57,540 reduction in accrued interest was accounted for as other income in the statement of operations and amounted to a reduction of the net loss per share of $.02. The source of the repayment of the renegotiated debt was principally from proceeds of notes payable to shareholders and others. 7. CONTINGENCIES, GOING CONCERN ---------------------------- As of March 31, 1996, the Company has accumulated losses aggregating $3,674,153 and had a working capital deficiency of $1,362,589. The Company has negotiated payment terms and settlement agreements with certain creditors and is in the process of seeking additional capital from its shareholders. Management believes that this additional funding plus results of negotiations with creditors will allow the continued operation of the park and the revenue generated from the subsequent seasonal operations of the park will allow the Company to continue as a going concern. The Company's ability to continue as a going concern depends upon its success in raising additional capital, increasing its debt financing and/or improving its operating results. There is no assurance that the Company will be successful in these efforts. Thus, there is substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 8. DELINQUENT PROPERTY TAXES ------------------------- As of March 31, 1996 the Company had $384,275 property taxes payable, the majority which are delinquent. In addition, included with other accrued interest in the financial statements is $43,101 of accrued interest on delinquent property taxes. Failure to pay these taxes and accrued interest could eventually result in loss of ownership of the property. F-12 EX-27 2
5 YEAR MAR-31-1996 MAR-31-1996 1,625 0 0 0 0 6,471 4,904,959 1,961,122 3,028,190 1,369,060 0 2,610,470 0 0 0 3,028,190 855,618 855,618 11,078 1,400,331 0 0 185,251 (693,474) 0 0 0 0 0 (693,474) (.29) (.29)
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