--------------------------
                                                             OMB APPROVAL
                                                      --------------------------
                                                      OMB Number:      3235-0420
                                                      Expires:   August 31, 1996
                                                      Estimated average burden
                                                      hours per response..3225.0
                                                      --------------------------
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  Form 10-KSB

(Mark One)

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 [Fee Required]

                                                              December 31, 1996
                                    For the fiscal year ended___________________

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 [No Fee Required]


                                    For the transition period from_____ to _____

                                                                33-79320
                                    Commission file number______________________

                         SUNNYLAND HOLDINGS CORPORATION
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

             Delaware                                    54-1706550
-----------------------------------       --------------------------------------
  (State or other jurisdiction of          (I.R.S. Employer Identification No.)
   incorporation or organization)

6231 Leesburg Pike, Suite 308, Falls Church, Virginia               22044
-----------------------------------------------------        -------------------
      (Address of principal executive offices)                    (Zip Code)


Issuer's telephone number (703)  237-8229/30
                           --- ---------------

Securities registered under Section 12(b) of the Exchange Act:


        Title of each class            Name of each exchange on which registered

              Common
-----------------------------------    -----------------------------------------

-----------------------------------    -----------------------------------------


Securities registered under Section 12(g) of the Exchanged Act:

--------------------------------------------------------------------------------
                                (Title of class)

--------------------------------------------------------------------------------
                                (Title of class)


     Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.    Yes [X]    No [ ]

SEC 2337 (02-94)

<PAGE>

     Check if there is no disclosure of delinquent filers to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year.        -0-
                                                             -------------------

     State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. (See definition of affiliate in Rule 12b-2 of the Exchange Act).

Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.

    (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.  Yes [ ]   No [X]

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.        2,195,000
                                                 -------------------------

                      DOCUMENTS INCORPORATED BY REFERENCE

     If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.)
into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities
Act"). The listed documents should be clearly described for identification
purposes (e.g., annual report to security holders for fiscal year ended
December 24, 1990).

     Transitional Small Business Disclosure Format (Check one): Yes   ; No X
                                                                   ---    ---

                              GENERAL INSTRUCTIONS

A.   Use of Form 10-KSB.

     This Form may be used by a "small business issuer," defined in Rule 12b-2
of the Exchange Act, for its annual and transitional reports under section 13 or
15(d) of that Act. For further information as to eligibility to use this Form
see Item 10(a) of Regulation S-B (17 CFR 228.10 et seq.). Annual reports on this
form shall be filed within 90 days after the end of the fiscal year covered by
the report. Transition reports shall be filed within the time period specified
in Rules 13a-10 or 15d-10 of the Exchange Act (ss.240.13a-10 or 240.15d-10  of
this chapter).

B.   Application of General Rules and Regulations.

     The General Rules and Regulations under the Exchange Act (ss.240.0-1
et seq.), particularly Regulation 12B (ss.240.12b-1 et seq.) contain certain
general requirements for reports on any form which should be carefully read and
observed in the preparation and filing of reports on this Form.

C.   Signature and Filing of Report.

1. File three "complete" copies and five "additional" copies of the registration
statement with the Commission and file at least one complete copy with each
exchange on which the securities will be registered. A "complete" copy includes
financial statements, exhibits and all other papers and documents. An
"additional" copy excludes exhibits. One of the copies filed with the
Commission and each exchange should be manually signed; all other copies should
have typed or printed signatures.

                                       2

<PAGE>


ITEM 1.  Description of Business

         The  Company was  incorporated  in the State of Delaware on November 5,
1993. Since inception,  the principal  activity of the Company has been directed
to  organizational  efforts  and  obtaining  initial  financing,  as of the date
hereof,  the Company has not entered into any other business  activity.  Company
startup  costs have been  provided  by  financing  from the  president  and vice
president of the company, as disclosed in the financial statements herewith.  No
other initial financing has been obtained.

         The company was  organized to engage in the  acquisition,  construction
and/ or operation  of income  properties,  and any and all  business  activities
incidental thereto ("Income properties"). Initially, the Company expects to seek
out income  properties  in Seoul and Cheju Island,  South Korea.  As of the date
hereof, the Company has not acquired or entered into any definitive contracts to
acquire any income  properties.  The Company  expects to consider other areas in
the Pacific Rim for  development  at such time as, in the opinion of Management,
there are  opportunities for the Company's  involvement.  There are no immediate
plans for  evaluation  of sites in the  pacific  rim. In  addition,  the Company
intends  to seek  out  income  properties  in the  United  States.  The  Company
recognizes  that,  as a result of its limited  financial,  managerial  and other
resources,  the number of available,  suitable  income  properties from which to
choose may be limited.

         In general,  Management  intends to finance income  properties  through
debt  obligation  such as mortgages at  competitive  market  rates,  debentures,
and/or  investors'  equity.  Management  contacted  various sources for possible
financing and will continue to meet with potential private investors or lenders.
The Company has not set a time frame  within which its  financing  goals must be
met,  other than seeking to make the  arrangement  for financing at the earliest
possible  time. If such  financing is arranged,  repayment of debt and debenture
obligations  will be made from  earnings  from  operation of income  properties,
stock offerings, and/or equity interest in the Company.

         The Company will minimize its cash  requirements by deferring  salaries
to its officers  until and if  acquisition  of one or more income  properties is
accomplished.  Incidental  expenses of operation  prior to acquisition of income
properties  will be provided by loans to the company or  purchases of stock from
the company by one or more of its current shareholders. The Company expects said
current  shareholders  to  provide  such  assistance  until  an  acquisition  is
accomplished  or until the Company  changes its plan of operation or  terminates
its  activities.  There is no binding  agreement  pursuant  to which the current
shareholders must continue to make such loans.

         If income  properties  are not  available  at the time the  Company  is
prepared to make an acquisition or if on further investigation such projects are
not suitable,  the Company will continue to seek investment projects.  As of the
date  hereof,  the  Company  has not  entered  into any  binding  agreements  or
contracts, written or otherwise, for such financing; nor has management selected
any form of financing or entered into any contracts of arrangement thereof.




<PAGE>



         The Company does not plan to do any product  research or development in
the  next  twelve  months  or  thereafter,  nor  does  the  Company  expect  any
significant  changes in the number of employees.  The Company does not presently
have any expectation of purchasing any plant or significant equipment.

         The Company's  principal business objective is to seek long term growth
potential in income  properties in which it  participates  rather than immediate
short-term  earnings.  There  can  be no  assurance  that  any  of  Management's
objectives or intentions will be met.

ITEM 2.  Description of property

         The Company  does not own  property.  It leases  office space from S.D.
Sunnyland  Enterprises,  Inc., (its parent company) and is physically located in
the same offices.

ITEM 3.  Legal Proceeding

         There are no legal proceedings affecting the company to date.


<PAGE>



                                                      PART II

ITEM 6.  Management Discussion and Analysis

         At its annual  meeting on May 14, 1996 the Board of Directors  approved
         the following:

         Rescission of the June 28, 1995 public offering of 1,528,840  shares of
         common stock held by present shareholders.

         Reduction  of the number of common  shares  issued to Mira  Development
         Company, Seoul Korea from 1,000,000 to 75,000.

         Election  of Mr.  Kyung  Hoon  Pyun to the  Board  of  Directors  in an
         advisory capacity for a period of one year effective May 14, 1996.

         An increase in  outstanding  common shares by 2,500,000 for purposes of
         sale to  present  shareholders,  investors,  and/or  merger/acquisition
         transactions. To date no such increase has been made.

         Participation in the Parking Lot Joint Venture
         The company has been notified by Nambook Company, Ltd., Developer, that
it had reached an  agreement  with  the  Seoul  city  Government to transfer its
obligations to complete the Nambook Parking Facility to another Korean  company.
Sunnyland Holdings has no  agreement  with  the  new  company  nor  is  such  an
agreement anticipated.

         Hotel Project
         While the Company continues to have interest in hotel acquisitions,  it
does not have an option or agreement to purchase  hotel  property at the present
time.  The Company  also has an interest in  acquiring a building  site on Cheju
Island for purposes of constructing a hotel.  The acquisition or construction of
hotel  properties  will depend on the company's  ability to raise capital in the
future.

         In accordance with the Exchange Act, this report has been signed by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

                                              /s/Syung D. Han
                                       By________________________________
                                              Syung D. Han, President, CEO


                                              March 21, 1997
                                       Date______________________________

                                              /s/Albert L. Stewart
                                       By________________________________
                                              Albert L. Stewart, Vice President
                                              Secretary

                                              March 21, 1997
                                       Date______________________________


<PAGE>



                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                        DECEMBER 31, 1996, 1995 AND 1994
                        AND NOVEMBER 5, 1993 (INCEPTION)
                              TO DECEMBER 31, 1996



                           These financial statements
                             may be reproduced only
                               in their entirety.



<PAGE>

                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

          FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 AND THE
         PERIOD FROM NOVEMBER 5, 1993 (INCEPTION) TO DECEMBER 31, 1996




TABLE OF CONTENTS


INDEPENDENT AUDITOR'S REPORT                                                   2


EXHIBIT A        Balance Sheets
                   December 31, 1996 and 1995                                  3


EXHIBIT B        Statements  of Changes  in  Stockholders'
                   Deficit  For the Years  Ended  December  31,
                   1996,  1995 and 1994 and For the Period From
                   November 5, 1993 (Inception) to December 31, 1996           4


EXHIBIT C        Statements of Operations
                   For the Years Ended December 31, 1996,  1995
                   and 1994 and For the Period From November 5,
                   1993 (Inception) to December 31, 1996                       5


EXHIBIT D        Statements of Cash Flows
                   For the Years Ended December 31, 1996,  1995
                   and 1994 and For the Period From November 5,
                   1993 (Inception) to December 31, 1996                       6


NOTES TO FINANCIAL STATEMENTS                                               7-11


<PAGE>

<TABLE>
<S> <C>
                                                                                                    THOMAS P. LANGAN, CPA, CFP
                                                                                                    KENNETH C. McKENDREE, CPA
                                                                                                    KAREN L. IOFFREDO, CPA
                                                                                                    JEFFREY P. HAYDEN, CPA
                    ROSS, LANGAN &                                                                  MARY F. CONVERSE, CPA
[Ross, Langan &     McKENDREE, L.L.P.                                                               FRANK G. LANGAN, CPA
McKendree, L.L.P.   CERTIFIED PUBLIC ACCOUNTANTS                                                    MARK D. MYERS, CPA
Logo]               6829 ELM STREET o McLEAN, VIRGINIA 22101 o (703) 893-2660 o FAX (703) 893-2123      ------
                                                                                                    IRVING B. ROSS, CPA, Consultant
                                                                                                    DORIS COOK ROSS, CFP, Consultant
</TABLE>


                          INDEPENDENT AUDITOR'S REPORT



Board of Directors and Stockholders
Sunnyland Holdings Corporation
Falls Church, Virginia


We have  audited  the  accompanying  balance  sheets of the  Sunnyland  Holdings
Corporation (a  development  stage company) as of December 31, 1996 and 1995 and
the related statements of changes in stockholders' deficit,  operations and cash
flows for the years ended  December 31, 1996,  1995 and 1994, and for the period
from  November  5, 1993  (inception)  to  December  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  Sunnyland  Holdings
Corporation  as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years ended  December  31, 1996,  1995 and 1994,  and
from November 5, 1993  (inception),  to December 31, 1996,  in  conformity  with
generally accepted accounting principles.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 4 to the  financial
statements,  the Company has not  commenced  operations  or obtained any outside
financing or capital. These conditions raise substantial doubt about its ability
to continue as a going concern.  Management's plans regarding those matters also
are described in Note 4. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



                                           /s/ Ross, Langan & McKendree, L.L.P.

                                           CERTIFIED PUBLIC ACCOUNTANTS




McLean, Virginia
March 7, 1997

                                                              Page 2 of 11 Pages

<PAGE>


                                                                       EXHIBIT A
                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEETS


                                     ASSETS
<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                 --------------------------------------
                                                                       1996                    1995
                                                                 ---------------        ---------------
<S><C>
CURRENT ASSETS
  Cash and cash equivalents (Note 1)                             $           112        $           431
                                                                 --------------------------------------

TOTAL ASSETS                                                     $           112        $           431
                                                                 ======================================



       LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accrued expenses (Note 4)                                      $        25,000        $        25,000
  Current portion of related party
   notes payable (Note 2)                                                 39,077                  -
                                                                 --------------------------------------

TOTAL CURRENT LIABILITIES                                                 64,077                 25,000

LONG TERM LIABILITIES
  Related party notes payable - net
   of current portion (Note 2)                                            27,526                 54,249
                                                                 --------------------------------------

TOTAL LIABILITIES                                                         91,603                 79,249
                                                                 - - - - - - - - - - - - - - - - - - - -

COMMITMENTS AND CONTINGENCIES (Note 4)                                     -                      -

STOCKHOLDERS' DEFICIT (Exhibit B)
  Common stock; $.00001 par value;
   100,000,000 shares authorized;
   2,195,000 and 3,120,000 shares issued and
     outstanding as of December 31, 1996 and
     1995, respectively                                                      22                      31
  Additional paid-in-capital                                            224,753                 154,967
  Deficit accumulated during development stage                         (316,266)               (233,816)
                                                                 --------------------------------------

TOTAL STOCKHOLDERS' DEFICIT                                             (91,491)                (78,818)
                                                                 --------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                      $          112         $           431
                                                                 ======================================
</TABLE>

See independent auditor's report. The accompanying notes are an integral part of
these financial statements.

                                                              Page 3 of 11 Pages

<PAGE>



                                                                       EXHIBIT B
                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                 STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
            FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 AND
     FOR THE PERIOD FROM NOVEMBER 5, 1993 (INCEPTION) TO DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                                      Common Stock              Additional        Deficit                Total
                                                -----------------------           Paid-in     Accumulated During     Stockholders'
                                                Shares           Amount          Capital      Development Stage         Deficit
                                                ------           ------         ----------    ------------------     -------------
<S><C>
BALANCE AT NOVEMBER 5, 1993                         -          $    -         $     -             $     -              $    -

    Original common stock issue
    ($.00001 per share, February 5, 1994)
    (Note 3)                                   3,120,000             31             -                    -                    31

    Contributed services and
    facilities (Note 5)                             -               -               85,230               -                85,230

    Net loss (Exhibit C)                            -               -               -              (149,162)            (149,162)
                                             -----------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1994                   3,120,000             31             85,230         (149,162)             (63,901)

    Contributed services and
    facilities (Note 5)                             -               -               69,737               -                69,737

    Net loss (Exhibit C)                            -               -               -               (84,654)             (84,654)
                                             -----------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1995                   3,120,000             31            154,967         (233,816)             (78,818)

    Cancellation of common stock (Note 3)     (1,000,000)           (10)                10               -                  -

    Contributed services and
    facilities (Note 5)                             -               -               69,777               -                69,777

    Common stock issue (Note 3)                   75,000              1                 (1)              -                  -

    Net loss (Exhibit C)                            -               -               -               (82,450)             (82,450)
                                             -----------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1996                   2,195,000        $    22          $ 224,753        $(316,266)           $ (91,491)
                                             ===================================================================================
</TABLE>

See independent auditor's report.  The accompanying notes are an integral part
of these financial statements.

                                                              Page 4 of 11 Pages

<PAGE>



                                                                       EXHIBIT C

                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF OPERATIONS
        FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 AND FOR THE
         PERIOD FROM NOVEMBER 5, 1993 (INCEPTION) TO DECEMBER 31, 1996

<TABLE>
<CAPTION>

                                                                          Years Ended December 31,                 November 5, 1993
                                                                  -------------------------------------------       (Inception) to
                                                                  1996             1995             1994           December 31, 1996
                                                                  ----             ----             ----           -----------------
<S><C>
REVENUE                                                        $     -          $     -          $     -           $       -
                                                               - - - - - - -   - - - - - - -    - - - - - - -     - - - - - - -

EXPENSES
    Salaries - related parties                                      65,000           65,000           64,997             205,830
    Payroll taxes - related parties                                  4,777            4,737            4,972              15,314
    Rent and telephone - related parties (Note 4)                    8,400            7,500            7,200              24,300
    Professional fees                                                3,150            3,371           52,628              59,149
    Office expense                                                     233            1,007              753               1,993
    Travel                                                           -                2,762            4,041               6,803
    Fees and licenses                                                  768            -                  690               1,458
    Printing                                                         -                   69              832                 901
    Bank charges                                                       122              108              151                 381
    Miscellaneous                                                    -                  100               37                 137
                                                               -----------      -----------      -----------       -------------

    Total expenses                                                  82,450           84,654           136,301            316,266
                                                               -----------      -----------      ------------      --------------


NET LOSS                                                      ($    82,450)    ($    84,654)    ($    136,301)     ($    316,266)
                                                               ===========      ===========      ============       ============


NET LOSS PER SHARE                                            ($      0.03)    ($      0.03)    ($       0.04)     ($       0.11)
                                                               ===========      ===========      ============       ============


WEIGHTED AVERAGE NUMBER OF SHARES                                2,541,875        3,120,000         3,120,000          2,937,434
                                                               ===========      ===========      ============       ============
</TABLE>

See independent auditor's report. The accompanying notes are an integral part of
these financial statements.

                                                              Page 5 of 11 Pages

<PAGE>



                                                                       EXHIBIT D

                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS
        FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 AND FOR THE
         PERIOD FROM NOVEMBER 5, 1993 (INCEPTION) TO DECEMBER 31, 1996

                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
                                                                         Years Ended December 31,                  November 5, 1993
                                                                  -------------------------------------------       (Inception) to
                                                                  1996             1995             1994           December 31, 1996
                                                                  ----             ----             ----           -----------------
<S><C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss (Exhibit C)                                       $   (82,450)      $  (84,654)    $   (136,301)      $    (316,266)
    Adjustments to reconcile net loss to net
      cash used by operating activities:
        Contributed services and facilities -
        related parties                                             69,777           69,737           72,400             224,775
        Increase in accrued expenses                                 -                -               25,000              25,000
                                                               -----------      -----------      -----------       -------------

        Net cash used by operating activities                      (12,673)         (14,917)         (38,901)            (66,491)


CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from related party notes payable                       12,354           15,025           39,224              66,603
                                                               -----------      -----------      -----------       -------------

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS                                                      (319)             108              323                 112

CASH AND CASH EQUIVALENTS -
BEGINNING OF THE YEAR                                                  431              323            -                   -
                                                               -----------      -----------      -----------       -------------

CASH AND CASH EQUIVALENTS -
END OF THE YEAR                                                $       112      $       431      $       323       $         112
                                                               ===========      ===========      ===========       =============
</TABLE>


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

    The  Company  issued  3,120,000  shares of common  stock at  inception,  and
    received  contributed  capital in exchange for services  rendered and office
    facilities from various related  parties.  The value of the common stock and
    contributed capital totals $224,775.

    During 1996,  the Company  acquired  and  cancelled,  at no cost,  1,000,000
    shares of  previously  issued  common stock in exchange for 75,000 shares of
    common stock.


See independent auditor's report. The accompanying notes are an integral part of
these financial statements.

                                                              Page 6 of 11 Pages

<PAGE>


                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS


NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES

    Development Stage Operations

    Sunnyland Holdings Corporation (the Company) was incorporated on November 5,
    1993 for the purpose of acquiring,  constructing  and  operating  hotels and
    parking  facilities  in South  Korea and its  Cheju  Island  territory.  The
    Company is currently in the  development  stage of  operations.  Efforts are
    currently concentrated in the areas of marketing and raising equity capital.
    The Company has registered with the Securities and Exchange Commission.

    Cash and Cash Equivalents

    The Company  considers all highly liquid debt instruments  purchased with an
    original maturity of three months or less to be cash equivalents.

    Estimates

    The  preparation  of  financial  statements  in  conformity  with  generally
    accepted  accounting  principles  requires  management to make estimates and
    assumptions  that affect the reported  amounts of assets and liabilities and
    disclosure of contingent assets and liabilities at the date of the financial
    statements  and the reported  amounts of revenues  and  expenses  during the
    reporting period. Actual results could differ from those estimates.


NOTE 2 - RELATED PARTY NOTES PAYABLE

    The  Company's  related  party  notes  payable at  December  31, 1996 are as
follows:

    Company's President and Board Member

    Note payable executed on February 5, 1994
    in the amount of $25,000; non-interest bearing;
    due in full within three years from March 5, 1994.  $    25,000

    Notes payable executed on various dates
    in 1994; non-interest bearing; due in full on
    various dates in 1997.                                    8,755

    Notes payable executed on various dates
    in 1995; non-interest bearing; due in full on
    various dates in 1998.                                    6,718

    Notes payable executed on various dates
    in 1996; non-interest bearing; due in full on
    various dates in 1999.                                    3,200      $43,673
                                                        -----------


See independent auditor's report. The accompanying notes are an integral part of
these financial statements.

                                                              Page 7 of 11 Pages

<PAGE>


                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS


NOTE 2 - RELATED PARTY NOTES PAYABLE (continued)

  Company's Vice-President and Board Member

  Notes payable executed on various dates in 1994;
  non-interest bearing; due on various dates in 1997
  and 1998.                                              $    603

  Notes payable executed on various dates in 1995;
  non-interest bearing; due on various dates in 1998
  and 1999.                                                   619

  Notes payable executed on various dates in 1996;
  non-interest bearing; due on various dates in 1999
  and 2000.                                                   714    $   1,936
                                                         --------

  S.D. Sunnyland Enterprises, Inc. (shareholder)

  Notes payable executed on various dates in 1994;
  non-interest bearing; due on various dates in 1994
  and 1995                                                  4,866

  Notes payable executed on various dates in 1995;
  non-interest bearing; due on various dates in 1998
  and 1999                                                  7,688

  Notes payable executed on various dates in 1996;
  non-interest bearing; due on various dates in 1999
  and 2000                                                  8,440       20,994
                                                          -------    ---------

         Total                                                          66,603
         Less:  current portion                                        (39,077)
                                                                     ---------
         Long-term portion                                           $  27,526
                                                                     =========

    Future maturities at December 31, 1996 are as follows:

        December 31,                              Amount

            1997                               $     39,077
            1998                                     14,354
            1999                                     12,337
            2000                                        835
                                               ------------

            Total                              $     66,603
                                               ============


See independent auditor's report. The accompanying notes are an integral part of
these financial statements.

                                                              Page 8 of 11 Pages

<PAGE>


                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS


NOTE 2 - RELATED PARTY NOTES PAYABLE (continued)

    All of the  related  party note  obligations  are  unsecured  and  contain a
    provision by which any principal  outstanding after the due date will accrue
    interest at the highest rate allowed by law.


NOTE 3 - COMMON STOCK - RELATED PARTIES

    The Board of Directors  authorized the issuance of common stock to the Board
    Members, and to two companies of which Board Members serve as President,  in
    exchange for services rendered related to formation of the Company.

    During 1996, the Company  acquired and cancelled  1,000,000 shares of common
    stock from a shareholder,  and reissued 75,000 shares of common stock to the
    same shareholder. There was no cash exchanged in the transaction.


NOTE 4 - COMMITMENTS AND CONTINGENCIES

    Contracts

    The  Company  is  contingently  liable  to its law  firm  for  $25,000  upon
    commencement of public trading of the Company's  securities.  The contingent
    liability has been accrued at December 31, 1996 and 1995.

    Leases

    For the period from November 5, 1993 to April 30, 1994,  the Company  shared
    rent free office  space with S.D.  Sunnyland  Enterprises,  Inc., a majority
    shareholder.  The  fair  market  value of the  rent  has  been  recorded  as
    contributed capital. Effective May 1, 1994, the Company entered into a lease
    agreement  with the  aforementioned  related  party.  The lease was  renewed
    effective May 1, 1996, and provides for monthly  payments of $600 for office
    space,  and $100 for  telephone  and fax service.  The lease  expires in May
    1997.  Future  minimum lease  commitments at December 31, 1996 total $2,800.
    Total rent expense consists of the following:

<TABLE>
<CAPTION>
                                                  Years Ended December 31,                  November 5, 1993
                                        ---------------------------------------------        (Inception) to
                                           1996             1995             1994           December 31, 1996
                                           ----             ----             ----           -----------------
<S><C>
Rent expense                            $     7,200      $     6,300      $     6,000         $      20,500
Telephone and fax services                    1,200            1,200            1,200                 3,800
                                        -----------      -----------      -----------         -------------

Total                                   $     8,400      $     7,500      $     7,200         $      24,300
                                        ===========      ===========      ===========         =============
</TABLE>


See independent auditor's report. The accompanying notes are an integral part of
these financial statements.

                                                              Page 9 of 11 Pages

<PAGE>


                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS


NOTE 4 - COMMITMENTS AND CONTINGENCIES (continued)

    Going Concern

    The Company's financial  statements have been presented on the basis that it
    is a  going  concern.  The  Company's  ability  to  commence  operations  is
    dependent on  developing  its business  activities  and raising the required
    capital.  The Company  intends to raise capital through  conventional  means
    such as debt financing or private placements for use in acquiring its income
    properties.  The Company is  currently  seeking such  financing  and has not
    established  a deadline  for  accomplishing  the  financing.  The  Company's
    operations  will  continue to be financed  through  stockholder  loans until
    planned acquisitions generate revenues.

    Joint Venture Agreement

    The Company  entered  into a joint  venture  agreement  with a South  Korean
    Company for the  construction and management of a public parking facility in
    Seoul,  South Korea in April 1994. In 1996, the joint venture  agreement was
    terminated.


NOTE 5 - CONTRIBUTED SERVICES AND FACILITIES

    The services and facilities  contributed by the Company's  shareholders have
    been recorded as an expense and a contribution of capital.  The services and
    facilities have been recorded at their fair market value.


NOTE 6 - FAIR VALUES OF FINANCIAL INSTRUMENTS

    Based on existing rates and economic conditions, the carrying amount of cash
    and cash equivalents at December 31, 1996 and 1995 is assumed to approximate
    fair market value. The Company's other financial instruments include related
    party notes  payable for which it is not  practicable  to estimate  the fair
    value.  None of the  Company's  financial  instruments  are held for trading
    purposes.




See independent auditor's report. The accompanying notes are an integral part of
these financial statements.

                                                             Page 10 of 11 Pages

<PAGE>


                         SUNNYLAND HOLDINGS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS

NOTE 7 - INCOME TAXES

    At  December  31,  1996  and  1995,  the  Company  had  net  operating  loss
    carryforwards of  approximately  $67,000 and $55,000,  respectively.  Due to
    conditions  that raise  substantial  doubt  about the  Company's  ability to
    continue as a going concern,  a valuation  allowance has been applied to the
    entire carryforward  amount. No current or deferred tax benefit or provision
    has been recorded on the Company's financial statements.

    The amounts and expiration dates of the operating loss  carryforwards are as
follows:

            Expiration Date                                            Amount

           December 31, 2009                                        $     40,000
           December 31, 2010                                              15,000
           December 31, 2011                                              12,000
                                                                    ------------

                 Total                                              $     67,000
                                                                    ============

See independent auditor's report. The accompanying notes are an integral part of
these financial statements.


                                                             Page 11 of 11 Pages