SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2001, COMMISSION FILE NUMBER 0-1957
UPTOWNER INNS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
West Virginia 55-0457171
-------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1415 4th Avenue, Huntington, West Virginia 25701
------------------------------------------ ----------
Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code (304) 525-8162
--------------
Securities registered pursuant to 12(g) of the Act:
1,583,563 shares of common stock - $0.50 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 X No
---- ----
The aggregate market value of the voting stock held by non-affiliates
of the registrant, as of the 30th day of June 2001, was $791,782.
As of June 30, 2001, the close of the period covered by this report,
the registrant had 1,583,563 shares of its common capital stock issued and
outstanding. The registrant has issued no other stock.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
The definitive proxy statement to be filed by the registrant, pursuant
to Regulation 14A, is incorporated herein by reference in Part III, Items
10 and 11.
-1-
UPTOWNER INNS, INC.
For the Year Ended June 30, 2000
Table of Contents
PART I
Page
----
<s> <c> <c>
Item 1: Business 3-4
Item 2: Properties 4-5
Item 3: Legal Proceedings 6
Item 4: Submission of Matters to a Vote of Security Holders 6
Part II
-------
Item 5: Market for Registrant's Common Stock and Related
Security Holder Matters 6
Item 6: Selected Financial Data 6-7
Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
Item 8: Financial Statements 13-29
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 30
Part III
--------
Item 10: Directors and Executive Officers of the Registrant 30
Item 11: Executive Compensation 30
Item 12: Security Ownership of Certain Beneficial Owners
and Management 30-31
Item 13: Certain Relationships and Related Transactions 31-32
Part IV
-------
Item 14: Exhibits, Financial Statement Schedules and
Reports on Form 8-K 33
Signatures 34
-2-
PART I
Item 1. BUSINESS.
--------
(a) Uptowner Inns, Inc., (the "Company" or "registrant"), was
incorporated in the State of West Virginia on July 1, 1961. The registrant
operates a 137 room, full service hotel, the Uptowner Inn, built in 1962 by
the registrant and operated by the registrant. In January 1997, the Holiday
Inn franchise under which it had been operating was terminated. In July
1999, the Company entered into a franchise agreement with Travel Lodge for
the facility. This agreement was terminated in June 2001. In late August
1998, the registrant opened a 135 room Holiday Inn Hotel & Suites facility
adjacent to the Huntington Civic Arena. The franchise agreement under
which it operates generally requires standard fees for advertising,
reservation system, etc.
The hotel clientele are predominantly business travelers due to the
downtown location. The occupancy rate at the Uptowner Inn averaged 30% in
the fiscal year ended June 30, 2001 with an average room rate of $46.
This yielded a revenue for available rooms of $5,111 for the fiscal year.
The new Holiday Inn Hotel & Suites occupancy for the year averaged 74% with
an average room rate of $81. This yielded a revenue for available rooms of
$21,762.
A wholly owned subsidiary of the registrant, Motel and Restaurant
Supply, which was incorporated in the State of West Virginia on July 16,
1966, has had no activity since 1981.
Neither the registrant nor its subsidiary have experienced
bankruptcy, receivership or similar proceedings; has been involved in
reclassification, merger or consolidation; has acquired or, except as
hereinafter set forth, disposed of any material amount of assets otherwise
than in the ordinary course of business; or has undertaken any material
change in the mode of conducting its business.
(b) The registrant is engaged in substantially two lines of businesses,
to wit, the operation of hotels with dining and banquet facilities, and
residential/commercial rentals. The income of the registrant from rentals
did not exceed ten percent of the consolidated revenue of the registrant and
its subsidiaries for years ended June 30, 2001, 2000 and 1999. Consolidated
revenue did not exceed $50,000,000. during any of the last three fiscal years.
The hotel industry is highly competitive with the registrant competing
against numerous national hotel franchises in Huntington, West Virginia. As
the Company's operations are generally one business segment, its competition
locally includes Radisson hotel, Ramada Inn, Comfort Inn, Red Roof Inn, and
Hampton Inn.
Seasonality directly affects this business as a result of people not
traveling or vacationing in large numbers in the late fall and winter because
of poor weather at these geographical locations.
-3-
ITEM 1. BUSINESS. (Continued)
--------
At June 30, 2001, the registrant and its subsidiaries employ
approximately 90 employees.
(c) The registrant has no foreign operation.
ITEM 2. PROPERTIES.
----------
(a) The registrant owns a 137 room, four-story motor hotel known
currently as the Uptowner Inn with a swimming pool and a lounge, located
in downtown Huntington, West Virginia, at 1415 Fourth Avenue. This property
is owned in fee by the registrant. The motor hotel is subject to a mortgage
in favor of the City National Bank, Huntington, West Virginia, in the
original amount of $1,648,107, payable in monthly installments of $17,268
per month, including interest at 9.42% until December 20, 2002, at which
time the variable rate may change. The original note of $2,000,000, along
with two (2) other promissory notes, were refinanced with the above mentioned
note on December 20, 1999.
(b) The registrant owns in fee two lots, used for the over-flow
parking, across the street from its main motor hotel at 1432-34 Fourth
Avenue, in Huntington, West Virginia.
(c) The registrant owns in fee an undeveloped lot acquired for future
development or parking, across an alley from its main motor hotel at 1400
Fifth Avenue in Huntington, West Virginia. The lot is available for sale.
(d) The registrant owns in fee two lots immediately west of its motor
hotel, 1401 Fourth Avenue, in Huntington, West Virginia, acquired for future
development and currently used for parking. This property is subject to a
first mortgage in favor of the City National Bank in the original amount of
$1,648,107. as noted in Item 2 (a).
(e) The registrant owns in fee and operates a 40 unit, two story
apartment building within one city block of the motor hotel, at 1340 Fourth
Avenue, in Huntington, West Virginia.
(f) The registrant owns in fee a lot acquired and used for parking,
across the street from its main motor hotel at 1420 Fourth Avenue, in
Huntington, West Virginia.
(g) The registrant owns in fee an undeveloped lot acquired for
future development or for parking, across an alley from its main motor
hotel at 1438 Fifth Avenue, in Huntington, West Virginia. It is anticipated
the lot will be sold within the next fiscal year.
-4-
ITEM 2. PROPERTIES. (Continued)
----------
(h) The registrant owns in fee a lot improved by a three story
building within one city block of the main motor hotel at 1416-18 Fourth
Avenue, in Huntington, West Virginia. This property is subject to a mortgage
in favor of Betty M. Dove, in the original amount of $76,000, 10% interest,
maturing June 2002, the balance of which was $9,125 at June 30, 2001.
This property is utilized for the Corporate offices and rental units.
(i) The registrant owns in fee a vacant lot on the west side of
Huntington approximately 3 miles from the main motor hotel and at an exit
for Interstate 64. This purchase was finalized in October 1988 from an
option entered into in 1983. The property is currently used as a parking
lot until it is deemed beneficial to build and operate a motel in that
location.
(j) The registrant purchased a parcel of real estate with a
residential building in January 1990. This property is across an alley
from the main motor hotel and was acquired for future development and
parking.
(k) The registrant purchased a parcel of real estate with a
building housing residential and commercial tenants in July 1991. This
property is across the street from its main motor hotel and adjacent to
other rental properties and parking facilities. The property has been
renovated and is now fully utilized as rental property. The property is
subject to a mortgage in favor of West Virginia Housing Development Fund
in the original amount of $500,000, 5.5% rate of interest, maturing
November 2018, the balance of which is $412,310 at June 30, 2001.
(l) The registrant owns in fee a Holiday Inn Hotel & Suites, a
135 room motor hotel, located in downtown Huntington at 800 Third Avenue.
The hotel officially opened for business August 28, 1998. The property
is subject to a mortgage in favor of Huntington Urban Renewal Authority in
the amount of $540,000, 8.5% rate of interest and maturing February 2004.
The balance of the note is $445,483 at June 30, 2001. The facility is being
marketed for convention and business travelers. It is adjacent to the
Huntington Civic Arena and is used as a major part of marketing for
conventions and meetings in the Tri-State area.
(m) The registrant acquired assets from an entity that is controlled
by the Company's president and stockholder. The assets acquired are being
actively marketed for sale and are reflected in the consolidated balance
sheet as property held for sale. The carrying value is reflected at the
lower of cost or market (consisting of land and building of $59,310 and
$270,190 respectively). Liabilities were assumed of $272,935 and a
promissory note issued for $91,565. The balance of the liability assumed
is $259,200 at June 30, 2001, and the balance of the promissory note is
$66,546 at June 30, 2001.
Annual reviews of insurance coverage are done and adequate insurance
is maintained on all properties.
-5-
ITEM 3. LEGAL PROCEEDINGS:
-----------------
A $10,000,000. suit in which the Uptowner Inns, Inc. is a defendant
was previously filed by an individual, who was severely injured in an
auto accident by a patron of the lounge.
The court has issued a summary judgment in this suit and accordingly
this suit has been dismissed.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
---------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS:
---------------------------------------------------------
(a) There is presently no active trading market for the Company's
shares, nor are the prices at which common shares have been traded
published by any national securities association or quotation service.
The Company is aware of shares traded in the past two years for between
$.50 and $.65 per share.
(b) As of the 30th day of June 2001, the approximate number of
record holders of common stock securities of the registrant was 1,409.
(c ) The registrant has paid no dividends with respect to its
common stock during the past two years.
ITEM 6. SELECTED FINANCIAL DATA:
-----------------------
The following financial information of Uptowner Inns, Inc. and
Subsidiaries is for the years ended June 30, 2001, 2000, 1999, 1998
and 1997 on a scope similar to that set forth in the report included
elsewhere in this report. These summaries should be read in conjunction
with the financial statements and related notes included elsewhere in
this report.
-6-
UPTOWNER INNS, INC.
SELECTED FINANCIAL DATA
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
<s> <c> <c> <c> <c> <c>
Operating Revenues $ 4,115,146 $ 4,013,489 $ 3,357,351 $ 1,479,921 $ 1,867,013
Income from Operations 746,970 603,612 546,029 87,267 279,055
Net Income (Loss) 14,266 (97,216) 113,029 (125,643) 74,257
Net Income (Loss)
Per Share .01 (.06) .07 (.08) .05
Weighted Average
Number of Shares 1,583,563 1,583,563 1,583,563 1,583,563 1,583,563
Cash Dividends
Per Share - - - - -
Total Assets 10,899,922 11,059,140 11,141,750 10,878,715 6,535,810
Long-Term Debt 6,636,076 6,876,470 6,913,472 6,931,165 3,119,901
The 1998 decline, as compared to 1997 in operating revenues and income from operations,
was due to increased competition by operations close to the interstate. The increase in operating
revenues and income from operations in 1999, 2000 and 2001 were entirely the result of the
opening of the new Holiday Inn Hotel & Suites, which operated for over ten months in 1999
and the full year in 2000 and 2001.
-7-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS:
-------------------------------------------------
ASSETS AND LIABILITIES
-----------------------
2001 2000
---- ----
<s> <c> <c>
Current Assets $ 643,660 $ 532,993
Percentage Increase (Decrease) 20.8% (6.3)%
Total Assets 10,899,922 11,059,140
Percentage Increase (Decrease) (1.4)% (.7)%
Total Liabilities 8,783,013 8,956,497
Percentage Increase (Decrease) (1.9)% .2%
Current assets increased in 2001 due to the purchase of property for
resale. See Part III, Item 13 for a description of this transaction.
Total assets and liabilities have remained relatively consistent from
year to year.
REVENUES
--------
2001 2000 1999
---- ---- ----
<s> <c> <c> <c>
Total Revenues $4,115,146 $ 4,013,489 $ 3,357,351
Percentage Increase (Decrease) 2.5% 19.5% 126.9%
Motor Inn Revenues 3,629,192 3,335,094 2,670,754
Percentage Increase (Decrease) 8.8% 24.9% 213.9%
Percentage of Total Revenues 88.2% 83.1% 79.5%
Food and Beverage 189,802 365,735 380,236
Percentage Increase (Decrease) (48.1)% (3.8)% 20.0%
Rents 216,496 221,608 235,270
Percentage Increase (Decrease) (2.3)% (5.8)% (8.2)%
-8-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS: (Continued)
-------------------------------------------------
The motor inn revenues increased in 2000 and 1999 due to the opening of
the new facility in late August 1998. Due to the Holiday Inn Hotel and
Suites becoming an established property within the Huntington market, the
occupancy rate at this facility increased from 67% in 2000 to 74% in 2001
which resulted in an overall increase in motor inn revenues in 2001.
Additionally, room revenues from the Uptowner Inn increased in 2001 due
to an increase in the occupancy rate attributable to increased demand
for newly renovated rooms. The acquisition of the Travelodge franchise
for this facility was expected to improve revenues, but did not
generate the expected revenues forecasted. As a result, the Travelodge
franchise was terminated in June, 2001. The Uptowner inn occupancy
rate of 30% in 2000 is expected to decline in 2001 due to new
competition in the immediate market area.
The decrease in food and beverage revenue is attributed to the
elimination of the Uptowner Inn restaurant facility in August of 2000.
Rents decreased in 1999, 2000 and 2001 due to the disposal of various
rental units during 1999 and 2000.
-9-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS: (Continued)
-------------------------------------------------
OPERATING COST AND EXPENSES AND INTEREST EXPENSES
-------------------------------------------------
2001 2000 1999
---- ---- ----
<s> <c> <c> <c>
Cost of Sales and Other
Operating Department Expenses $ 528,565 $ 546,917 $ 447,582
Percentage increase (decrease) (3.4)% 22.2% 111.0%
Salaries 939,612 1,016,332 841,724
Percentage increase (decrease) (7.5)% 20.7% 90.7%
Advertising 276,172 236,758 181,349
Percentage increase (decrease) 16.6% 30.6% 393.1%
Utilities 244,352 231,631 205,282
Percentage increase (decrease) 5.5% 12.8% 77.5%
Repairs and Maintenance 103,625 122,343 73,821
Percentage increase (decrease) (15.3)% 65.7% 65.9%
Taxes and License 397,429 419,483 367,595
Percentage increase (decrease) (5.3)% 14.1% 79.3%
Insurance and Other 70,223 66,342 63,321
Percentage increase (decrease) 5.8% 4.8% 57.3%
Total Cost and Expenses 3,368,176 3,409,877 2,811,322
Percentage increase (decrease) (1.2)% 21.3% 101.9%
Interest 732,704 700,828 677,000
Percentage increase (decrease) 4.5% 3.5% 218.0%
Cost of sales increases in 1999 and 2000 were due to the increase in
the revenues from the opening of the new hotel. Advertising increased in
1999 and 2000 due to the room revenue increase that affected the change
under the Holiday Inn franchise for advertising. Utilities increased in
1999 and 2000 due to the increased business in the fiscal year. Salaries,
repairs and maintenance, taxes and license, and insurance and other
increased in 1999 and 2000 due to adding a second property.
Total cost and expenses decreased by a modest 1.2% in 2001 compared
to 2000. Most of the individual categories of costs and expenses for 2001
are relatively consistent with 2000 due to stabilization of the new facility
which opened in August 1998. Advertising increased in 2001 due to continued
marketing efforts relating to the Holiday Inn facility.
-10-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS: (Continued)
-------------------------------------------------
INCOME (LOSS)
-------------
2001 2000 1999
---- ---- ----
<s> <c> <c> <c>
$14,266 $(97,216) $113,029
The addition of the Holiday Inn Hotel & Suites has had an obvious impact
on income resulting in an increase in revenues of $1,877,430 in 1999,
$656,138 in 2000, and $101,657 in 2001. Costs and expenses have increased
$1,418,668 in 1999 and $598,555 in 2000, while costs and expenses have
decreased $41,701 in 2001, resulting in an increase in operating income
of $458,762 in 1999, $57,583 in 2000 and $111,482 in 2001.
Management is evaluating the Uptowner facility in order to find new
alternatives of generating revenue from the older facility. Continued
monitoring of costs and expenses will be done to improve the operating
results for the Company. For further discussion, see "Liquidity and
Capital Resources", which follows. Any of the alternatives pursued could
Result in an impairment adjustment, and, or reclassification in the
balance sheet.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
2001 2000
---- ----
<s> <c> <c>
Resources available at
June 30, 2001 and 2000
Cash $186,912 $348,064
The liquidity, as measured by current assets divided by current
liabilities, has slightly increased from .25 in 2000 to .30 in 2001. This
relatively low level of liquidity is a result of continued under-utilization
of the Uptowner Inn facility coupled with the costs necessary to maintain the
operation.
-11-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS: (Continued)
-------------------------------------------------
Management is currently evaluating alternatives for the Uptowner
Inn facility, and expects to have a plan in place by the second quarter
of the fiscal year ending June 30, 2001. The alternatives being explored
include converting the facility to higher-income producing property. Two
potential alternatives include converting the facility to a multi-unit
apartment complex or to a multi-unit elderly care living center. It is
anticipated either alternative selected will require renovations of the
facility to conform to the ultimate use. It is also anticipated any
required capital will be obtained through debt financing. A third
alternative is to sell the property, as is, in an orderly liquidation.
Management is currently evaluating its current financing arrangements
regarding the Holiday Inn Hotel & Suites facility. Any potential
refinancing may provide for lower levels of debt service requirements as
well as additional working capital. Management is also evaluating its
owned rental property and other real estate for potential sale to enhance
the liquidity of the Company.
FORWARD-LOOKING STATEMENTS
--------------------------
Certain matters disclosed herein may be deemed to be forward-looking
statements that involve risks and uncertainties, including the facilities
utilization, costs associated with maintaining the operations, liquidity
issues, and other risks. Actual strategies and results in future time
periods may differ materially from those currently expected. Such forward-
looking statements represent management's judgment as of the current date.
The registrant disclaims, however, any intent of obligation to update such
forward-looking statements.
-12-
UPTOWNER INNS, INC. AND SUBSIDIARIES
Item 8. FINANCIAL STATEMENTS:
--------------------
Financial Statements:
PAGE
Uptowner Inns, Inc. and Subsidiaries
Opinion of Independent Certified Public Accountant for
The Year Ended June 30, 2001 14
Opinion of Independent Certified Public Accountant for
The Year Ended June 30, 2000 and 1999 15
Consolidated Balance Sheets as of June 30, 2001 and 2000 16
Consolidated Statement of Operations for the
Year Ended June 30, 2001, 2000 and 1999 17
Consolidated Statement of Stockholders' Equity
for the Year Ended June 30, 2001, 2000 and 1999 18
Consolidated Statement of Cash Flows for the
Year Ended June 30, 2001, 2000 and 1999 19
Notes to Consolidated Financial Statements 20-29
-13-
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Uptowner Inns, Inc. and Subsidiary
Huntington, West Virginia
We have audited the accompanying consolidated balance sheets of Uptowner
Inns, Inc. and Subsidiary as of June 30, 2001, and the related
consolidated statements of operations, stockholders' equity and
cash flows for the year then ended. 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 audit.
The consolidated financial statements of the Uptowner Inns, Inc. as of
June 30, 2000, and for the two years ended June 30, 2000, were audited
by other auditors, whose report dated November 28, 2000, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with U.S. generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Uptowner Inns, Inc. and Subsidiary as of June 30, 2001, and
the consolidated results of its operations and cash flows for the year
then ended in conformity with U.S. generally accepted accounting
principles.
J.D. CLOUD & CO. L.L.P.
Certified Public Accountants
August 27, 2001
Cincinnati, Ohio
-14-
INDEPENDENT AUDITORS' REPORT
Board of Directors
Uptowner Inns, Inc. and Subsidiary
Huntington, West Virginia
We have audited the accompanying consolidated balance sheets of Uptowner
Inns, Inc. and Subsidiary as of June 30, 2000 and June 30, 1999, and the
related consolidated statements of operations, stockholders' equity and
cash flows for the three years ended June 30, 2000. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Uptowner Inns, Inc. and Subsidiary as of June 30, 2000 and
June 30, 1999, and the consolidated results of its operations and cash
flows for the three years ended June 30, 2000 in conformity with
generally accepted accounting principles.
SOMERVILLE & COMPANY, P.L.L.C.
Certified Public Accountants
November 28, 2000
Huntington, West Virginia
-15-
UPTONWER INNS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 2001 and 2000
ASSETS
------
2001 2000
---- ----
<s> <c> <c>
Current Assets
Cash $ 152,342 $ 250,186
Cash - escrow 34,570 97,878
Accounts receivable (less allowance
for doubtful accounts of $6,000
in 2001 and 2000) 72,830 59,971
Notes receivable - 47,899
Inventories 7,715 11,966
Prepaid expenses 48,392 65,093
Property held for sale 327,811 -
---------- ----------
Total Current Assets 643,660 532,993
---------- ----------
Property and Equipment
Land 1,519,252 1,480,612
Buildings and improvements 10,680,357 10,554,474
Furniture and equipment 2,761,410 2,729,398
---------- ----------
14,961,019 14,764,484
Less accumulated depreciation and
amortization 4,846,594 4,407,744
---------- ----------
Property and Equipment - Net 10,114,425 10,356,740
Other Assets
Deposits and other 141,837 169,407
---------- ----------
$10,899,922 $11,059,140
========== ==========
UPTONWER INNS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 2001 and 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
2001 2000
---- ----
Current Liabilities
Accounts payable $ 232,588 $ 358,242
Accrued liabilities 200,484 175,045
Taxes other than federal income tax 313,480 437,520
Current portion of long-term debt 1,400,385 1,109,220
---------- ----------
Total Current Liabilities 2,146,937 2,080,027
---------- ----------
Long-Term Liabilities
Notes payable and capitalized
lease obligations 6,636,076 6,876,470
---------- ----------
Total Liabilities 8,783,013 8,956,497
---------- ----------
Commitments and Contingencies - -
STOCKHOLDERS' EQUITY
Stockholders' Equity
Common stock - $.50 par value;
authorized - 5,000,000 shares;
issued - 1,583,563 shares 791,782 791,782
Additional paid-in capital 1,032,290 1,032,290
Retained earnings 292,837 278,571
---------- ----------
Total Stockholders' Equity 2,116,909 2,102,643
---------- ----------
$10,899,922 $11,059,140
========== ==========
The accompanying notes are an integral part of these financial statements.
-16-
UPTOWNER INNS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
For the years ended June 30, 2001, 2000 and 1999
2001 2000 1999
---- ---- ----
<s> <c> <c> <c>
Revenues
Rooms $3,629,192 $3,335,094 $2,670,754
Food and beverage 189,802 365,735 380,236
Telephone 50,489 55,534 46,040
Rent 216,496 221,608 235,270
Other 29,167 35,518 25,051
--------- --------- ---------
Total Operating Revenues 4,115,146 4,013,489 3,357,351
--------- --------- ---------
Costs and Expenses
Operating departments
Cost of sales 195,016 233,351 220,034
Salaries 939,612 1,016,332 841,724
Other 333,549 313,566 227,548
General and administrative 340,089 341,713 233,684
Advertising 276,172 236,758 181,349
Utilities 244,352 231,631 205,282
Repairs and maintenance 103,625 122,343 73,821
Taxes and licenses 397,429 419,483 367,595
Depreciation and amortization 468,109 428,358 396,964
Insurance and other 70,223 66,342 63,321
--------- --------- ---------
Total Costs and Expenses 3,368,176 3,409,877 2,811,322
--------- --------- ---------
Operating Income 746,970 603,612 546,029
--------- --------- ---------
Other Income (Expenses)
Gain on sale of assets - - 244,000
Interest expense (732,704) (700,828) (677,000)
--------- --------- ---------
Total Other Income (Expenses) (732,704) (700,828) (433,000)
--------- --------- ---------
Income (Loss) before
Income Taxes 14,266 (97,216) 113,029
Income Taxes - - -
--------- --------- ---------
Net Income (Loss) $ 14,266 $ (97,216) $ 113,029
========= ========= =========
Net Income (Loss) per Share $ 0.01 $ (0.06) $ 0.07
========= ========= =========
The accompanying notes are an integral part of these financial statements.
-17-
UPTOWNER INNS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the years ended June 30, 2001, 2000 and 1999
Additional Retained
Common Paid-in Earnings
Stock Capital (Deficit) Totals
----- ------- ------- ------
<s> <c> <c> <c>
Balance -
July 1, 1998 $791,782 $1,032,290 $262,758 $2,086,830
Net Income (Loss) - - 113,029 113,029
------- --------- ------- ---------
Balance -
June 30, 1999 791,782 1,032,290 375,787 2,199,859
Net Income (Loss) - - (97,216) (97,216)
------- --------- ------- ---------
Balance -
June 30, 2000 791,782 1,032,290 278,571 2,102,643
Net Income (Loss) - - 14,266 14,266
------- --------- ------- ---------
Balance -
June 30, 2001 $791,782 $1,032,290 $292,837 $2,116,909
======= ========= ======= =========
The accompanying notes are an integral part of these financial statements.
-18-
UPTOWNER INNS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 2001, 2000 and 1999
2001 2000 1999
---- ---- ----
<s> <c> <c> <c>
Cash Flows From Operating Activities
Net income (loss) $ 14,266 $(97,216) $113,029
------- ------- -------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities
Depreciation and amortization 468,109 428,358 396,964
Debt forgiveness - (9,000) (9,000)
Gain on sale of assets - - (244,000)
(Increase) Decrease in other assets - (51,511) 11,391
(Increase) Decrease in current assets:
Accounts receivable (12,859) 26,676 (62,921)
Inventories 4,251 (769) (3,835)
Prepaid expenses 16,701 216 (13,759)
Increase (Decrease) in current
liabilities:
Accounts payable (125,654) 86,947 (246,292)
Accrued liabilities 25,439 (4,560) 33,796
Taxes other than federal income
taxes (124,040) 125,007 112,114
------- ------- -------
Total adjustments 251,947 601,364 (25,542)
------- ------- -------
Net Cash Provided By
Operating Activities 266,213 504,148 (87,487)
------- ------- -------
Cash Flows From Investing Activities
Issuance of notes receivable - - (84,500)
Payments on notes receivable 47,899 35,372 1,229
Proceeds from sale of fixed assets - - 330,363
Capital expenditures (161,535) (330,331) (361,320)
------- ------- -------
Net cash used in
investing activities (113,636) (294,959) (114,228)
------- ------- -------
Cash Flows From Financing Activities
Issuance of long-term debt 100,000 116,400 537,546
Principal payments of long-term debt (413,729) (300,188) (278,157)
------- ------- -------
Net cash provided by (used in)
financing activities (313,729) (183,788) 259,389
------- ------- -------
UPTOWNER INNS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 2001, 2000 and 1999
(Continued)
2001 2000 1999
---- ---- ----
Net Increase (Decrease) in Cash and
Cash Equivalents (161,152) 25,401 232,648
Cash and Cash Equivalents at Beginning
of Year 348,064 322,663 90,015
------- ------- -------
Cash and Cash Equivalents at End of
Year $186,912 $348,064 $322,663
======= ======= =======
Supplemental Disclosure of Cash
Flow Information
Cash Paid During the Year for:
Interest $826,622 $700,828 $658,482
Supplemental Schedule of Noncash Investing and Financing Activities
The company purchased land and building for $364,500. In conjunction with
the acquisition, liabilities were assumed for $272,935 and a note issued for
$91,565.
-19-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
1. Summary of significant accounting policies:
A. Principles of consolidation:
The consolidated financial statements include the accounts of
Uptowner Inns, Inc. and its subsidiary after elimination of all material
intercompany balances and transactions. The wholly owned subsidiary has
had no activity since 1981.
B. Business activity:
The Company operates two (2) motor inns in Huntington, West
Virginia, known as Holiday Inn Hotel & Suites and Uptowner Inns. The Holiday
Inn Hotel & Suites includes dining and banquet facilities and both motor inns
include a lounge. In addition, the Company operates apartment buildings and
rental properties located in Huntington, West Virginia.
C. Inventories:
Inventories are stated at the lower of cost or market on the
first-in, first-out method.
D. Property and equipment:
Property and equipment are stated at cost with depreciation being
provided on the straight-line method over the estimated useful lives of the
assets as follows:
Buildings and improvements 10 - 40 years
Furniture and equipment 3 - 10 years
Repairs, maintenance and renewals are charged to operations as
incurred, and expenditures for significant betterments and renewals are
capitalized.
E. Income taxes:
The income taxes are provided for the tax effects of the
transactions reported in the financial statements and consist of taxes
currently due plus deferred taxes related primarily to different methods
of depreciation for book and tax purposes and net operating loss carryovers.
The deferred tax assets and liabilities represent the future tax return
consequences of those differences, which will either be taxable or deductible
when the assets and liabilities are recovered or settled. The Company
provides a valuation allowance for deferred tax assets for which it does not
consider realization of such assets to be more likely or not.
-20-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
1. Summary of significant accounting policies (Cont'd):
F. Per share computations:
Income per share computations are based on the weighted average
number of common shares outstanding during the year. The average number of
shares outstanding was 1,583,563 for 2001, 2000 and 1999.
G. Cash and cash equivalents:
For purposes of the statement of cash flows, cash equivalents
include time deposits, certificates of deposit, and all highly liquid debt
instruments with original maturities of three months or less.
H. Use of estimates:
The preparation of financial statements in conformity with U.S.
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 these
estimates.
I. Capitalized interest:
Interest costs are capitalized when proceeds are used to finance
the construction of assets. Capitalized interest for fiscal year ending June
30, 1999 was $66,944.
J. Advertising:
Advertising costs are charged to operations as incurred.
K. Amortization:
The costs of franchise rights acquired are being amortized on
the straight-line method over their remaining contractual lives. Fees and
other expenses associated with the debt refinancing are being amortized on
the straight-line method over the life of the loan. Amortization expense
charged to operations for the fiscal years ending June 30, 2001, 2000 and
1999 was $27,571, $15,774 and $11,416, respectively.
-21-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
2. Long-term debt:
The long-term debt of the Company at June 30, 2001 and
2000 consisted of:
2001 2000
---- ----
<s> <c> <c>
Notes payable to financial institutions:
---------------------------------------
Prime plus 1% installment note due a
financial institution secured by a credit
line deed of trust, principal and interest
payable at $33,901 per month until
January 2008 $3,527,675 $3,588,850
Prime plus 1% note due a financial
institution, secured by a second deed of
trust, interest payable monthly, principal
payable upon demand 749,048 749,048
8.7% installment note due a financial
institution, secured by a vehicle,
payable at $634 per month including
interest, until July 2004 20,501 26,056
8.75% installment note due a financial
institution, secured by a vehicle,
payable at $376 per month including
interest, until April 2003 7,583 11,521
Note due a financial institution,
secured by deed of trust, payable at
$17,268 per month including interest,
current interest rate 9.42%, variable
interest rate based upon the three
year constant maturity Treasury Bill
rate (charge will not occur more
often than every three years) until
December 2014* 1,570,167 1,626,653
8.75% note due a financial institution,
secured by property owned by an officer
of the Company, payable in full by
December 2001 100,000 -
-22-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
2. Long-term debt (Cont'd):
Notes payable to financial
Institutions (Cont'd): 2001 2000
-------------------------- ---- ----
10% term loan, due a financial
institution, secured by certain assets
of an entity controlled by an officer
of the Company; payable at $1,068
per month, including interest, until
August, 2004 $ 34,669 $ -
Prime plus 1% installment note with a
floor of 8%, due a financial institution,
secured by a deed of trust, payable
at $3,342 per month, including
interest, until April, 2002 177,569 -
Prime plus 2% demand note due a
financial institution, secured by
a certain assets of an entity
controlled by an officer of the
Company, interest only payments 46,962 -
Other notes payable:
-------------------
10% mortgage note due an individual,
secured by a deed of trust, payable at
$733 per month, including interest,
until June 2002 9,125 16,602
2% note due City of Huntington, secured
by a second deed of trust, payable at
$2,024 per month, including interest,
until January 2008 151,425 174,195
8.5% note due the Huntington Urban
Renewal Authority of Huntington, secured
by a deed of trust, payable at $3,825
per month interest only, and final
installment of all principal and accrued
interest then outstanding due and payable
February 2004** 445,483 473,086
-23-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
2. Long-term debt (Cont'd):
Other notes payable (Cont'd) 2001 2000
------------------- ---- ----
5.5% mortgage note due to the West
Virginia Housing Development Fund,
secured by a deed of trust, payable
at $3,070 per month, including
interest, until November 2018** 412,310 426,065
6% note due an individual, payable
at $3,559, including interest,
until July, 2002 44,681 -
9.25% note due related company,
due October 2004 24,554 24,554
6% promissory note due a related
company, secured by a deed of
trust, due April 2002, including
interest. 66,546 -
10% note due an individual,
interest payable annually - 47,810
Capitalized lease obligations:
-----------------------------
Capital lease obligations - Note 3 648,163 821,250
--------- ---------
8,036,461 7,985,690
Less current portion 1,400,385 1,109,220
--------- ---------
$6,636,076 $6,876,470
========= =========
* As part of the debt agreement, deposit will be made monthly into
an escrow account to be used as a reserve for repairs and capital
improvements. At June 30, 2001 and 2000, the balance in the escrow
account is $5,249 and $5,169, respectively.
** As part of the debt agreement, the Company shall deposit any
proceeds from the sale of surplus real estate into an escrow account.
At the end of each quarter, 75% of proceeds will remain in the escrow
account for working capital, and 25% will be sent to the Huntington
Renewal Authority to reduce the debt. At June 30, 2001 and 2000, the
balance in the escrow account is $-0- and $68,086, respectively.
-24-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
2. Long-term debt (Cont'd):
*** As part of the debt agreement, various escrows are
required to cover real estate taxes, hazard insurance, replacement
reserve, other interest and replacement reserve interest. At
June 30, 2001 and 2000, the balance in the escrow is $29,321 and
$24,623, respectively.
Maturities of long-term debt, including debt to related parties
and capital lease obligations during the next five years ending
June 30 and thereafter are as follows:
<s> <c>
2002 $1,400,385
2003 432,728
2004 833,788
2005 245,918
2006 3,516,088
Thereafter 1,607,554
---------
$8,036,461
=========
3. Capital leases:
The Company is the lessee of building, furniture and equipment under
capital leases expiring in various years through September 2004. The assets
and liabilities under capital leases are initially recorded at the lower of
the present value of the minimum lease payments or the fair value of the
assets. The assets are depreciated over their estimated productive lives.
Amortization of assets under capital leases is included in depreciation
expense for the years ended June 30, 2001, 2000 and 1999.
-25-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
3. Capital leases (Cont'd):
Following is a summary of property held under capital leases at June
30:
2001 2000
---- ----
<s> <c> <c>
Building improvements $ 109,461 $ 109,461
Furniture and equipment 973,703 973,703
--------- ---------
1,083,164 1,083,164
Less accumulated depreciation 311,092 205,826
--------- ---------
$ 772,072 $ 877,338
========= =========
Minimum future lease payments under capital leases as of June 30,
2001 for each of the next five years and in the aggregate are as follows:
<s> <c>
2002 $269,130
2003 264,666
2004 210,304
2005 34,939
-------
779,039
Less amount representing
interest 130,876
-------
Present value of net
minimum lease payment $648,163
=======
Interest rates on capitalized leases vary from 11.4% to 22.7% and are
imputed based on the lower of Company's incremental borrowing rate at the
inception of each lease or the lessor's implicit rate of return.
-26-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
4. Related party transactions:
During the year ended June 30, 2001, the Company acquired assets from
an entity that is controlled by the Company's chief executive officer and
stockholder. The assets acquired are being actively marketed for sale and
are reflected in the consolidated balance sheet as property held for sale.
The carrying value is reflected at the lower of cost or market consisting of
land and building of $59,310 and $270,190, respectively. In addition, an
investment was acquired in the amount of $35,000. Liabilities were assumed
of $272,935 and a promissory note issued for $91,565. As of June 30, 2001,
the balance of the promissory note is $66,546 and is included in Note 2.
During the year ended June 30, 2001, the Company renegotiated a loan
with a former stockholder. The refinancing of this debt resulted in a waiver
of interest of $60,161 and is reflected in the statement of operations for
the year ending June 30, 2001. As of June 30, 2001 and 2000, the balance of
the note payable is $44,681 and $47,810, respectively and is included in Note
2.
In addition, the Company has a note payable due an entity that is
controlled by a major stockholder. The note is due October 2004 at an
interest rate of 9.25%. The balance of this note at June 30, 2001 and 2000
is $24,554. and is included in Note 2.
Interest expense relating to the above debt for the years ended June
30, 2001, 2000 and 1999 is $3,753, $4,781, and $4,781, respectively.
5. Income taxes:
The Company did not provide any current or deferred federal or state
income tax provision or benefit for all periods presented. This differs from
applying the federal statutory rate of 34% to income (loss) before income
taxes. The difference represents the recognition of a full valuation
allowance on the deferred tax asset, consisting primarily of net operating
losses, because of uncertainty regarding its realizability.
The Company has utilized the operating loss carryforward, and has
reduced the unused operating loss carryforwards due to expire in June 30,
2002.
The Company has available at June 30, 2001, unused operating loss
carryforwards that may be applied against future taxable income and that
expire as follows:
-27-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
5. Income taxes (Cont.'d)
Unused Operating Loss
Expiration Date Carryforwards
--------------- -------------
<s> <c>
June 30, 2002 $ 7,578
June 30, 2003 433,830
June 30, 2004 245,295
June 30, 2005 128,142
June 30, 2006 147,900
June 30, 2007 78,505
June 30, 2008 18,147
June 30, 2009 70,932
June 30, 2010 -
June 30, 2011 3,816
June 30, 2012 1,150
June 30, 2013 199,619
June 30, 2019 54,375
June 30, 2020 165,986
June 30, 2021 1,341
Significant components of the Company's deferred tax assets and
liabilities as of June 30, 2001 and 2000 are as follows:
2001 2000
---- ----
<s> <c> <c>
Deferred tax assets:
Net operating loss $ 529,249 $ 533,352
Contribution carryforward 1,634 965
------- -------
Total deferred tax assets 530,883 534,317
Deferred tax liabilities:
Depreciation and amortization (472,828) (470,259)
------- -------
Net deferred tax assets 58,055 64,058
Valuation allowance for deferred
tax assets (58,055) (64,058)
------- -------
Net deferred tax assets $ - $ -
======= =======
-28-
UPTOWNER INNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
6. Contingencies, risks and uncertainties:
A $10 million suit in which the Uptowner Inns, Inc. was a defendant
was previously filled by an individual who was severely injured in an auto
accident by a patron of the lounge. During the year ended June 30, 2001, the
court has issued a summary judgment in this suit and accordingly this suit
has been dismissed.
The Company is involved in various other claims and legal proceedings
in the ordinary course of business, the resolution of which management
believes will not have a material effect on the Company's business or
financial condition.
The Company maintains cash balances at a bank. Accounts at the
institution are insured by the Federal Deposit Insurance Corporation up to
$100,000. At times, cash balances were in excess of federally insured
limits.
Included in the accompanying balance sheet is net property and
equipment related to the Uptowner Inn facility with a carrying value of
approximately $1.9 million at June 30, 2001. Due to the underutilization of
the facility resulting, in part, from increased competition, management is
evaluating alternative uses for the facility. In the event an acceptable
alternative use cannot be implemented, management may opt to sell the
property. Any of the alternatives pursued could potentially result in an
impairment adjustment, and/or reclassification in the consolidated balance
sheet.
7. Commitments:
On June 28, 2000, the Uptowner Inns, Inc. entered into a franchise
agreement for the construction of a new Holiday Inn Express Hotel & Suites in
the amount of $50,000. This agreement states specific requirements for
completion of the hotel and approval before opening no later than June 28,
2002.
-29-
UPTOWNER INNS, INC. AND SUBSIDIARIES
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES:
----------------------------------------------------------
Information required by Part III, Item 9 is included in Form 8-K
filed by the registrant on March 30, 2001. In July the registrant
engaged J.D. Cloud & Co. L.L.P., Cincinnati, Ohio as the certifying
accountant.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
--------------------------------------------------
The information required by Item 10, Part III, will be set forth in
the definitive proxy statement to be filed by the registrant, pursuant to
Regulation 14A, under the captions "Election of Directors" and "Executive
Officers of the Company" and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION:
----------------------
The information required by Item 11, Part III, will be set forth in
the definitive proxy statement to be filed by the registrant, pursuant to
Regulation 14A, under the caption "Remuneration of Directors and Executive
Officers", and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
--------------------------------------------------------------
(a) The registrant has issued only one type of security, namely,
common capital stock. The following table sets forth certain information
as to the persons and groups who are known to the registrant to be the
beneficial owners of more than five percent of its voting securities.
Title of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
----- ------------------ -------------------- --------
<s> <c> <c> <c>
Common Violet Midkiff 567,562 Direct and 35.8%
922 Eleventh Street Indirect
Huntington, West Virginia
Common Carl Midkiff 75,318 Direct and 4.8%
2619 Raceview Drive Indirect
Ona, West Virginia
-30-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(Continued)
--------------------------------------------------------------
(b) The following table sets forth certain information as to
each class of equity securities of the registrant beneficially owned
by all directors and officers of the registrant as a group.
Title of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
----- ------------------ -------------------- --------
<s> <c> <c> <c>
Common Violet Midkiff 567,562 Direct and 35.8%
Indirect
Common Louis Abraham 3,656 Direct 4.8%
Common Carl Midkiff 75,318 Direct and .2%
Indirect
Common Five Officers and 646,536 Direct and 40.8%
Directors as an Indirect
Group
(c) There is no arrangement, known to the registrant, the
operation of which may at a subsequent date result in a change in
control of the registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
----------------------------------------------
During the year ended June 30, 2001, the registrant acquired assets
from an entity that is controlled by the registrant's president and
stockholder. The assets acquired are being actively marketed for sale and
are reflected in the consolidated balance sheet as property held for sale.
The transfer price of these assets was based on an independent appraisal
obtained earlier in the year discounted for changes in market conditions.
The carrying value as reflected at the lower of cost or market (consisting
of land and building of $59,310 and $270,190, respectively). In addition,
an investment was acquired in the amount of $35,000. Liabilities were
assumed of $272,935 and a promissory note issued for $91,565. As of
June 30, 2001, the balance of the promissory note is $66,546.
-31-
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: (Continued)
----------------------------------------------
During the year ended June 30, 2001, the registrant renegotiated
a loan with a former stockholder. The refinancing of this debt resulted
in a waiver of interest of $60,161 and is reflected in the statement of
operations for the year ending June 30, 2001. As of June 30, 2001 and
2000, the balance of the note payable is $44,681 and $47,810,
respectively.
In addition, the registrant has a note payable due an entity that
is controlled by a major stockholder. The note is due October 2004 at
an interest rate of 9.25%. The balance of this note at June 30, 2001
and 2000 is $24,554.
Interest expense relating to the above debt for the years ended
June 30, 2001, 2000 and 1999 is $3,753, $4,781 and $4,781, respectively.
During the year ended June 30, 2001, the registrant paid Insurance
Systems, Inc. a total of $79,911. A board member is part owner of
Insurance Systems, Inc.
-32-
PART IV
UPTOWNER INNS, INC. AND SUBSIDIARIES
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(A)(1) Financial Statements - See Index to Consolidated Financial
Statements on page 13 of this Form 10-K:
(A)(2) Financial Statement Schedules:
None
(A)(3) Exhibits:
(21) Subsidiaries of Uptowner Inns, Inc.
All other required exhibits are incorporated in the Registration
Statement Number 2-90194 of Uptowner Inns, Inc.
A Form 8-K was filed on March 30, 2001 regarding a change in
independent accountants.
-33-
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.
(Registrant) UPTOWNER INNS, INC.
By /s/ Violet Midkiff
---------------------------------
Violet Midkiff, President
October 31, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By /s/ Louis Abraham
---------------------------------
Louis Abraham, Vice President
and Director
November 2, 2001
By /s/ David Robinson
---------------------------------
David Robinson, Treasurer and
Director
November 2, 2001
By /s/ Carl E. Midkiff
---------------------------------
Carl E. Midkiff, Secretary and
Director
November 2, 2001
By /s/ Hobart Adkins
---------------------------------
Hobart Adkins, Director
November 2, 2001
-34-