U.S. 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
                  For the fiscal year ended  December 31, 1999

   [  ]           TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934
                  For the transition period from ___________ to _______________
                  Commission file number 0-22132

                          BUCKHEAD AMERICA CORPORATION
                 (Name of small business issuer in its charter)

           Delaware                                      58-2023732
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


               7000 Central Parkway, Suite 850, Atlanta, GA 30328
               (Address of principal executive offices) (Zip Code)

Issuer's telephone number.    (770) 393-2662

Securities registered pursuant to Section 12(b) of the Act:

             None                                        None
    (Title of each class)            (Name of each exchange on which registered)
incorporation or organization)

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

                  Common stock, par value $.01 (Title of Class)

     Check  whether  the issuer (1) filed all  reports  required  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 ______

     Check  if  disclosure  of  delinquent  filers  in  response  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. $ 32,298,598

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the stock was
sold,  or the  average  bid and  asked  price  of such  common  equity,  as of a
specified date within the past 60 days. As of February 29, 2000: $ 6,049,643

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date. As of February 29, 2000:Common
Stock, par value $.01 - 2,029,313 shares outstanding

                       DOCUMENTS INCORPORATED BY REFERENCE

     No  documents  which are  required  to be listed  under  this  caption  are
incorporated by reference.

     Transitional Small Business  Disclosure Format (Check one):
     Yes _____; No ___X___

1217939v1
<PAGE>


                                     PART I


Item 1.  Description of Business.

BUSINESS DEVELOPMENT

     Form and Year of Organization.  Buckhead America Corporation ("Buckhead" or
the "Company") and most of its wholly-owned  subsidiaries  were  incorporated in
Delaware on December 17, 1992. Other  subsidiaries were subsequently  created or
purchased,  generally  for the purpose of acquiring  assets.  Unless the context
otherwise requires, references to the Company herein include the Company and its
subsidiaries.

     Material  Purchases and Sales of  Significant  Assets.  Prior to 1997,  the
Company  purchased and sold various  assets;  primarily  hotels,  mortgage notes
secured by hotels,  hotel  franchising  rights,  and other  hospitality  related
assets.  As of December  31, 1996,  the Company  owned seven  hotels,  primarily
limited service, four of which were managed by the Company, including a 150-room
hotel in Orlando,  Florida  (the"Orlando Hotel") owned by a partnership in which
the Company held a 55% interest.  The Company also owned the rights to franchise
and license  Country Hearth Inns, a modernized bed and breakfast  hotel concept.
As of December 31, 1996,  nineteen  Country  Hearth Inns were open, six of which
were Company owned.

     In May 1997,  the Company  completed  its  acquisition  of The Lodge Keeper
Group, Inc. of Prospect, Ohio ("Lodge Keeper").  Lodge Keeper operated 18 hotels
under  long-term  leases,  held  management  contracts on six Country Hearth Inn
hotels and owned a 186-room  independent  extended-stay  hotel.  Simultaneously,
Lodge  Keeper  assumed  the  management  responsibilities  of  the  four  hotels
previously owned by the Company.

     In September 1997, the Company  completed its acquisition of Hatfield Inns,
LLC.  ("Hatfield").  The  acquisition  included  eight 40-room hotel  properties
located in  Kentucky  and  Missouri . All eight  properties  were  converted  to
operate as Country Hearth Inns and are managed by Lodge Keeper.  The acquisition
also  included  the plans and design  rights  which the Company has used for the
development and construction of additional properties.

     In December  1997,  the Company  entered  into  long-term  leases with Host
Funding, Inc. ("Host") on two of the already managed Country Hearth Inn hotels.

     In May 1998,  the Company  acquired a 121-room  hotel in Norcross,  Georgia
(the "Norcross Hotel"). The hotel is managed by Lodge Keeper and was operated as
a Best  Western  -  Bradbury  Suite  until  December  1999 at which  time it was
converted to a Country Hearth Inn.

     In June 1998, the Company  entered into leases for seven  additional  hotel
properties  owned by Host.  The hotel  properties are operated under Super 8 (4)
and Sleep Inn (3) license agreements and are managed by Lodge Keeper.

     During 1998, the Company sold eight leasehold interests in hotel properties
which had been  acquired  with the Lodge Keeper  acquisition.  During 1999,  the
Company sold four more leasehold  interests in hotel  properties  which had been
acquired with the Lodge Keeper acquisition.

     In June 1999, the Company sold the Orlando Hotel to Orange County,  Florida
to make way for the planned  expansion of the Orange County  Convention  Center.
The Company  continues to operate the  property  under a lease  agreement  which
expires in January 2001.

     From 1994  through  1999,  the  Company  expanded  its  Country  Hearth Inn
franchising  operations by developing  updated prototype hotels,  implementing a
franchise  sales  and  marketing  plan,  and  establishing  a  centralized  room
reservation  system.  The Company is licensed to sell  Country  Hearth Inn hotel
franchises  in 50  states.  Presently,  49  Country  Hearth  Inns  are  open and
operating in 13 states, 24 of which are Company owned or leased.

     In addition to the Company  owned and leased  properties  described  above,
Lodge Keeper manages 19 other hotel properties which operate under various brand
names, including five Country Hearth Inns.


BUSINESS

     Principal  Products and Services.  The Company  operates in the hospitality
industry and its  principal  holdings  include  hotels,  leasehold  interests in
hotels, loans and other investments secured by hotels, franchising rights, hotel
management  contracts and other  related  assets.  Its principal  product is the
Country  Hearth Inn  mid-priced  hotel chain  which the Company  acquired in May
1994. The primary activities of the Company involve the expansion of the Country
Hearth     Inn     chain,      limited-service     hotel     management,     and
development/acquisition/sale  of  hotel  properties.  Expansion  of the  Country
Hearth Inn chain has been effected through direct  acquisition and conversion of
existing hotels,  new construction,  and through franchise sales.  Additionally,
the  Company  manages 53 hotels,  34 of which are Company  owned or leased.  For
certain further  information about the Company's hotels, see Item 2. Description
of Property."

     Segments.  The Company conducts  recurring  operations in three segments of
the limited-service  hotel industry - hotel franchising,  hotel management,  and
hotel  operations.  The company  generates  additional  revenues  and results of
operations from hotel development activities.

     Hotel franchising involves the selling and servicing of rights and licenses
comprising the Country Hearth Inn lodging system.  Revenues include initial fees
and continuing  royalty,  marketing and reservation  fees from Company owned and
leased hotels and from unaffiliated customers. Continuing fees are based on each
franchised hotel's room revenues.

     Hotel management  involves the oversight of day-to-day hotel operations and
accounting for  limited-service and some full-service  hotels.  Revenues include
continuing  fees from  Company  owned and leased  hotels  and from  unaffiliated
customers. Continuing fees are based on each managed hotel's revenues.

     Hotel  operations  involves  the  operations  of  Company  owned and leased
hotels.  Revenues are generated from unaffiliated hotel guests. Hotel operations
also includes the Company's share (equity method) of unconsolidated partnerships
which also  operate  hotels and the  minority  interests  share of  consolidated
partnerships' results which are included in hotel operations.

     Hotel development  activities  involves the development and construction or
purchase of existing hotel  properties  and  subsequent  sale thereof along with
related  activities  such as servicing  notes  receivable  generated from sales.
Corporate activities are generally  administrative and also include all interest
income  and  expense  which  does  not  specifically  relate  to  other  segment
operations.

     Franchise  and  management  fees are  charged to  Company  owned and leased
hotels at the same rates as charged to unaffiliated customers.

     Brands.  The Company's owned and leased  properties as of December 31, 1999
operate under the brand names of Country Hearth Inn (25), Super 8 (4), Sleep Inn
(3), Travelodge (2), Days Inn (1), and unbranded (1). Additionally, the Company,
through  Lodge  Keeper,  manages  other hotels which  operate  under other brand
names,  including  Holiday  Inn,  Ramada Inn,  Suburban  Lodge,  Villager,  Best
Western, and others.

     Competition.  There  is  significant  competition  in  every  phase  of the
hospitality  industry  including  development,   construction,  management,  and
franchising. There are many hotel management companies in the United States, and
many of them are significantly  larger than the Company. The continued growth of
the  Company's  hotel  management  operations  is partially  dependent  upon the
Company's  development  and  franchising  operations  as well as the  ability to
identify and successfully negotiate third party contracts.

     As a  franchisor,  the  Company  competes  with a  large  number  of  hotel
franchise  companies,  most of whom are much  larger  than the  Company  and own
brands which are more nationally  recognized than the Company's.  The Company is
somewhat disadvantaged by the larger companies' reservation systems and national
marketing efforts.

     As a hotel operator, the Company's owned and leased properties compete with
other  hotels  in each  local  market in which  they are  located.  The  Company
competes directly with these other hotels for hotel guests.  The Company's rates
and occupancies are directly impacted by activities of these other hotels and by
additions to the supply of competing rooms in each local market.

     The Company is a relatively new entrant in the hotel industry.  It believes
that its management is experienced in hotel development,  hotel franchising, and
hotel management.  In addition,  the Company may identify other opportunities in
the hospitality industry.  However, existing hotel companies and new entrants to
the hotel  industry  in  markets  which the  Company  may  pursue  will  present
significant competition which may have an adverse effect on the Company.

     Regulation.  Sales of franchises are principally  regulated  through fairly
uniform  state  laws.  Such  laws  generally  provide  for  registration  by the
franchisor  of  standardized  offering  documents and  compliance  with numerous
financial   qualifications.   The  Company  undertook  substantial  registration
activities and is presently licensed to sell Country Hearth Inn franchises in 50
states.

     Research  and  Development.  During  1999  and 1998  the  Company  invested
approximately   $28,000   and   $42,000,   respectively,   in  market   studies,
environmental  studies,  and other  feasibility  analyses  relating to potential
hotel acquisitions and development.

     Environmental Compliance. The Company's operations and maintenance policies
and procedures at each owned,  leased,  or managed property include policies and
procedures regarding environmental  compliance.  The costs of such compliance is
not significant.

     Employees.  As of February 29, 2000,  the Company had 801  employees in the
aggregate,  including nine full-time and four part-time  corporate employees and
355 full-time and 433 part-time hotel employees.  Four full-time hotel employees
are employed under a collective bargaining agreement.

RISK FACTORS

     This Form 10-KSB contains forward looking statements that involve risks and
uncertainties.  Statements contained in this Form 10-KSB that are not historical
facts are forward looking statements that are subject to the safe harbor created
by the Private  Securities  Litigation  Reform Act of 1995. The Company's actual
results may differ  significantly  from the results  indicated  by such  forward
looking statements.

     The Company is subject to a number of risks, including the general risks of
investing in real estate, the illiquidity of real estate,  environmental  risks,
possible uninsured or underinsured losses, fluctuations in property taxes, hotel
operating risks,  the impact of competition,  the difficulty of managing growth,
seasonality, the risks inherent in operating a hotel franchise business, and the
risks involved in hotel renovation and  construction.  For a discussion of these
and other risk factors, see the "RISK FACTOR" section contained in the Company's
Registration Statement on Form S-3 (File No. 333-37691).



Item 2.  Description of Property.

CORPORATE OFFICES

     The Company's  corporate  headquarters are located at 7000 Central Parkway,
Suite 850, Atlanta,  Georgia. The Company leases approximately 4,900 square feet
as its corporate  headquarters.  The lease term extends through December 2002 at
an annual rate of approximately  $96,600.  The Company believes its headquarters
are adequate for its current needs.

     Hotel  management  and  accounting  functions are conducted by Lodge Keeper
which  operates in leased  office  space  located in Prospect,  Ohio.  The Lodge
Keeper  leased  space  includes  approximately  16,800  square  feet and extends
through  November 2006 at an annual rate of approximately  $60,000.  The Company
believes  that these offices are adequate for its current needs and provide room
for moderate expansion.




<PAGE>


OWNED REAL PROPERTIES

     Land.  As  of  February  29,  2000,  the  Company  owned  five  parcels  of
undeveloped and unencumbered land, with an aggregate book value of $200,889. All
of such parcels are held for sale.

     Owned and Leased Hotel  Properties.  The following table sets forth certain
1999 information for each of the Company's owned and leased hotels:
<TABLE>
<CAPTION>
<S>                                <C>       <C>       <C>         <C>            <C>          <C>          <C>


                                                                                                 Revenue
                                                                      Average       Average        per
                                    No. of     Year       Year       Occupancy       Daily      Available       Total
           Properties               Rooms     Built     Acquired      Rate(a)       Rate(a)     Room (a)     Revenue(b)
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Days Inn
 Daytona, FL                         180       1972       1993         40.7%      $53.86       $21.94          $1,920,054
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Country Hearth Inn
 Orlando, FL                         150       1985       1995         76.7%      $69.13       $53.02          $3,466,067
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Country Hearth Inn
  Mason, OH                           93       1997       1999         46.9%      $70.28       $32.96          $1,189,158
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Country Hearth Inn
  Atlanta, GA                         82       1971       1996         57.3%      $58.88       $33.74          $1,074,621
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Rural Gold Country Hearths (14)              1993-1999 1997-1999
in GA, KY, MO, OH                     559                              53.0%      $48.60       $25.76          $4,752,275
 KY, MO, OH, GA
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
St. Louis NW Inn                             1964-1968
 St. Louis, MO                       186                  1997         92.5%      $21.34       $19.74          $1,373,360
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Host Funding Leases (8) in                   1985-1993 1997-1998
 FL, MS, KY,  MO, IL,  IN             565                              56.2%      $46.83       $26.32          $5,643,244
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Other Leased Properties (4)                  1968-1975
   in OH                              262                 1997         43.0%      $50.16       $21.57          $2,150,504

                                    12126    1987         1998         50.1%      $53.36       $26.74          $5,643,244

                                     2262    1985-1993                                                           $906,628
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Travelodge
 Coshocton, OH                        50       1974       1997         45.1%      $38.47       $17.35         $   324,553

                                    61450    1985-1993    1998         63.2%      $47.68       $30.12          $4,695,328

                                                       1997-1998
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Properties Held for Sale (4)                 1967-1987 1995-1998
   in GA & TX                        291                               43.0%      $50.16       $21.57          $2,571,345
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
Other (c)                                                                                                      $1,421,413
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
   Total                                                                                                      $25,886,594
---------------------------------- --------- --------- ----------- -------------- ------------ ------------ --------------
</TABLE>


<PAGE>



     (a) Statistical information represents full year of operation.

     (b) Total revenue represents revenues earned during ownership period.

     (c) Represents revenues earned from properties prior to their sale in 1999.

     Daytona  Hotel.  The  Company  owns a 180-room  Days Inn hotel in  Daytona,
Florida (the  "Daytona  Hotel") which was acquired by the Company in March 1993.
The hotel secures a mortgage note with a December 31, 1999 balance of $2,242,162
which bears interest at 8.5% and is due in monthly installments of $19,960 until
October 2018.

     The market for comparable  rooms is extremely  competitive due to the large
number of  hotels/motels  in the Daytona area.  The area does benefit,  however,
from certain event  related  demand  peaks.  Average room  occupancy and average
daily rate during 1999 was 40.7% and $53.86, respectively.

     Differences  between financial  reporting asset bases and federal tax bases
are not significant. Straight-line depreciation methods are used based on useful
lives of 40 years for  depreciable  real  property  and 5-10 years for all other
depreciable property. Property taxes in 1999 were approximately $62,000.

     Orlando  Hotel.  In May 1995, the Company  acquired the majority  ownership
(55%) in a  partnership  which owned a 150-room  hotel in Orlando,  Florida (the
"Orlando  Hotel").  The hotel was immediately  converted to operate as a Country
Hearth Inn which it presently continues to operate as. During 1998 and 1999, the
Company purchased additional interests in the partnership and as of December 31,
1999 held an approximate 73% interest.

     In June 1999, the Company sold the Orlando Hotel to Orange County,  Florida
to make way for the planned  expansion of the Orange County  Convention  Center.
The Company  continues to operate the  property  under a lease  agreement  which
initially expires in January 2001. The rent obligation under the initial term is
nominal. Orange County, the lessor, may grant an extension to the lease for rent
of approximately  $30,000 per month. The Company is not obligated to accept such
extension.

     The market for hotel rooms in Orlando is extremely  competitive  due to the
multitude of  properties  in the area.  The Orlando  Hotel does benefit from the
large  number  of  local  attractions  and from the  Orlando  Convention  Center
activities.  The hotel is  positioned  as a lower  priced  alternative  property
situated among  mega-room high rises.  Occupancy and room rates in 1999 averaged
76.7% and $69.13, respectively.

     Environmental  programs are  continuously  ongoing and the Company believes
adequate funds are available for these purposes.  Renovation  programs have been
scaled back due to the impending  demolition of the property.  In the opinion of
management,  the property is adequately covered by insurance and is suitable and
adequate  for  its  present  use.  Property  taxes  in 1999  were  approximately
$126,000.

     Mason  Hotel.  The 93-room  Country  Hearth Inn in Mason,  Ohio (the "Mason
Hotel") was  constructed in 1996 and 1997 and opened in June 1997. The Company's
investment in the partnership which owns the hotel increased from 27.5% to 44.5%
in May 1997 in connection with the Lodge Keeper acquisition.

     The property is subject to a first  mortgage  loan which was  refinanced in
1999.  The new loan with a  December  31,  1999  balance  of  $2,508,827,  bears
interest at 8.53%, and is due in monthly installments of $23,490 through October
2001, at which time the remaining balance is due. The partnership also has notes
payable to certain partners  including $237,151 to the Company and $266,463 to a
minority partner as of December 31, 1999. The note to the minority partner bears
interest at 8.53% and is due in monthly  installments of $3,326 through November
2009.

     The  property is  positioned  to compete with  existing low and  moderately
priced hotel  properties in the area. It is adjacent to and visible from a major
interstate highway in a highly developed  commercial and retail area.  Occupancy
and room rates in 1999 averaged 46.9% and $70.28, respectively.

     Differences  between financial  reporting asset bases and federal tax bases
are not significant. Straight-line depreciation methods are used based on useful
lives of 40 years for  depreciable  real  property  and 5-10 years for all other
depreciable property. Property taxes in 1999 were approximately $47,000.

     Atlanta  Hotel.  In March 1996,  the Company  acquired an 82-room  hotel in
Atlanta,  Georgia (the  "Atlanta  Hotel").  During the latter half of 1996,  the
hotel was  renovated  and  refurbished  for  conversion  to operate as a Country
Hearth Inn which it presently continues to operate as. The Atlanta Hotel secures
a first mortgage loan with a December 31, 1999 balance of  $2,039,452.  The loan
bears  interest at 9.5% and requires  monthly  payments of $20,350  until August
2016.

     The market for hotel rooms in Atlanta is extremely  competitive  due to the
multitude of  properties  in the area.  The hotel is  positioned as a moderately
priced property  targeted  primarily at business  travelers.  Occupancy and room
rates averaged approximately 57.3% and $58.88 during 1999.

     Differences  between financial  reporting asset bases and federal tax bases
are not significant. Straight-line depreciation methods are used based on useful
lives of 40 years for  depreciable  real  property  and 5-10 years for all other
depreciable property. Property taxes in 1999 were approximately $59,000.

     Rural Gold Country  Hearths.  In September 1997, the Company acquired eight
40-room hotel properties  located  primarily in smaller  communities of Kentucky
(5) and Missouri (3). All eight were converted to Country Hearth Inns which they
presently  continue  to  operate  as.  During  1998  and 1999  three  additional
Company-owned  40-room  Country  Hearth  Inns  were  constructed  and  opened in
Kentucky(2) and Ohio(1).

     These  eleven  wholly-owned  properties  (the  owned  "Rural  Gold  Country
Hearths")  secure first and second mortgage notes payable with December 31, 1999
balances  aggregating  $9,829,982.  Three of the mortgage  notes with  aggregate
December 31, 1999 balances of $2,974,040 bear interest at prime plus 1%, require
aggregate monthly payments of $32,916, and mature at various dates through 2015.
The remaining mortgage notes bear interest at rates ranging from 8.25% to 9.18%,
require  aggregate  monthly  payments  of $64,130,  and mature at various  dates
through 2018.

     The Company also operates  three 40-room  properties in Georgia (the leased
"Rural Gold Country Hearths") under long term triple-net lease agreements.  Each
lease has an initial  term of 15 years and  options for up to an  additional  15
years.  Each lease  requires  annual  base rent of  $150,000  and  provides  for
additional percentage rent based on hotels revenues over certain levels.

     The Rural Gold  Country  Hearths  are  generally  limited  service  40-room
interior  corridor  properties  located in smaller  communities where they enjoy
limited competition in their selected markets.  Occupancy and room rates in 1999
averaged approximately 53.0% and $48.60, respectively.

     Differences  between personal property financial  reporting asset bases and
federal tax bases are not significant.  Federal tax bases of owned real property
are  approximately  $2.4  million  less than  financial  reporting  asset bases.
Straight-line  depreciation  methods are used based on useful  lives of 40 years
for depreciable real property and 5-10 years for all other depreciable property.
Aggregate property taxes in 1999 were approximately $146,000.

     St. Louis NW Inn. The Company  acquired the 186-room  Northwest  Inn in St.
Louis,  Missouri  (the  "NW  Inn"),  as  part  of  the  May  1997  Lodge  Keeper
acquisition.  The property is an  extended-stay  facility which is positioned to
compete with existing low priced  extended-stay  properties in the area. It will
also compete with new  extended-stay  properties  presently under development in
the area.  Occupancy  and room rates in 1999  averaged  approximately  92.5% and
$21.34, respectively.

     The property secures a first mortgage loan with a December 31, 1999 balance
of $1,709,307.  The loan bears interest at 8.5% and requires monthly payments of
$13,178 until February 2004.

     Differences  between personal property financial  reporting asset bases and
federal tax bases are not  significant.  Federal tax bases of real  property are
approximately   $1.7  million  less  than  financial   reporting   asset  bases.
Straight-line  depreciation  methods are used based on useful  lives of 40 years
for depreciable real property and 5-10 years for all other depreciable property.
Property taxes in 1999 were approximately $84,000.

     Host Funding  Leases.  During 1997 and 1998,  the Company,  in two separate
transactions,  entered into long term lease  agreements for four Super 8 Motels,
three  Sleep  Inns,  and two Country  Hearth  Inns owned by Host  Funding,  Inc.
("Host").  One of the  Country  Hearth Inn leases was  terminated  in 1999.  The
leased   properties  (the  "Host  Funding   Leases")  are  located  in  Florida,
Mississippi,  Missouri,  Illinois,  Kentucky,  and Indiana.  Lease terms are for
fifteen (15) years with two  extension  options of five years each,  and provide
for contingent  payments  based on a percentage of revenues.  Base rents for the
eight  properties  aggregates  $2,246,841  per  year.  Host is  responsible  for
property taxes and capital expenditures.

     The leased  properties are generally located along highways and interstates
and compete with similarly situated budget properties. Seven of the eight leases
provide  for  reductions  in base  rent as a result of  additional  competition.
Occupancy and room rates in 1999 averaged 56.2% and $46.83, respectively.

     Other Leased Hotels. In addition to the Rural Gold Country Hearths and Host
lease properties described above, the Company leases four other  limited-service
hotels which are located in Ohio (the "Other Leased  Hotels").  Three properties
operate as Country  Hearth Inns and one as a Travelodge.  Lease terms range from
10 to 30 years with  options to renew at  varying  terms.  Certain of the leases
provide for  contingent  payments  based upon a  percentage  of  revenues.  Base
rentals on the four properties aggregates $268,747.

     The  Other  Leased  Hotels  are  generally   located  along   highways  and
interstates and compete with similarly situated budget properties. Occupancy and
room rates in 1999 averaged 43.0% and $50.16,  respectively.  Aggregate property
taxes in 1999 were approximately $87,000.


     Coshocton Hotel. The Company  acquired  fee-simple  interest in the 50-room
Travelodge in Coshocton,  Ohio (the  "Coshocton  Hotel") in September  1998. The
hotel was  previously  operated  by the  Company  under a lease  agreement.  The
Coshocton  Hotel  secures a mortgage  note with a December  31, 1999  balance of
$675,319 which bears interest at 8.75% and requires  monthly  payments of $7,009
until December 2013.

     The Coshocton Hotel is an older limited service 50-room  interior  corridor
property  located  in an area  which is facing new  competition  in its  market.
Occupancy  and room  rates in 1999  averaged  approximately  45.1%  and  $38.47,
respectively.

     Differences  between financial  reporting asset bases and federal tax bases
are not significant. Straight-line depreciation methods are used based on useful
lives of 40 years for  depreciable  real  property  and 5-10 years for all other
depreciable property. Property taxes in 1999 were approximately $7,000.

     Properties  Held for Sale. As of December 31, 1999,  the Company owned four
hotel  properties  which were being marketed for sale (the  "Properties Held for
Sale"). Two properties are located in Texas and two in Georgia.

          Wharton, TX. This 40-room Country Hearth Inn was sold in January 2000.
     A portion  of the  proceeds  was used to payoff a $600,000  mortgage  note.
     Occupancy and room rates in 1999 averaged  approximately  47.9% and $51.21,
     respectively.

          Angleton,  TX. This 40-room Country Hearth Inn secures a mortgage note
     with a December 31, 1999 balance of $1,073,147. Occupancy and room rates in
     1999 averaged approximately 56.2% and $47.30, respectively.

          Dalton, GA. This 90-room Country Hearth Inn secures two mortgage notes
     with a combined December 31, 1999 balance of $1,235,772. Occupancy and room
     rates in 1999 averaged approximately 63.8% and $26.76, respectively.

          Norcross, GA. This 121-room Country Hearth Inn secures a mortgage note
     with a December  31, 1999  balance of  $3,709,761  and is  presently  under
     contract for sale. No  assurances  can be made that such  transaction  will
     close.  Occupancy and room rates in 1999 averaged  approximately  54.1% and
     $42.78, respectively.

     Differences  between financial  reporting asset bases and federal tax bases
are not significant. Straight-line depreciation methods are used based on useful
lives of 40 years for  depreciable  real  property  and 5-10 years for all other
depreciable property. Property taxes in 1999 aggregated approximately $117,000.

     Unless  otherwise  indicated,  renovation  and  environmental  programs are
continuously  ongoing  at all  Company  owned and leased  hotels and  management
believes  adequate  funds are  available for these  purposes.  In the opinion of
management,  the properties are adequately covered by insurance and are suitable
and adequate for their present use.


<PAGE>


INVESTMENT POLICIES

     Most  of the  Company's  initial  real  estate  holdings  were  principally
hospitality   related.   Asset  acquisitions  since  inception  have  also  been
predominately hospitality related and made for the primary purpose of generating
additional  income.  Further,  management's  experience  and expertise is in the
hospitality  business.  Accordingly,  the  Company has  determined  that it will
primarily seek out investments in the hospitality  industry. In that regard, the
Board of Directors has determined  that the Company will focus upon  investments
in hospitality related companies with income growth potential.  Such investments
could  take  the  form of (a)  hotel  property  purchases,  (b)  hotel  mortgage
purchases,  (c) hotel mortgage servicing,  (d) hotel management and/or (e) hotel
franchising.  The  Board  of  Directors  has  not  set  any  limitations  on the
percentage of assets which may be invested in any one investment. These policies
may be changed without a vote of security holders.


Item 3.  Legal Proceedings.

     The  Company is not a party in any  pending  legal  proceedings  other than
routine litigation that is incidental to its business.


Item 4.  Submission of Matters to a Vote of Security Holders.

     None.

<PAGE>


                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

MARKET INFORMATION

     The  Company's  Common  Stock  trades on The Nasdaq  Stock Market under the
symbol: BUCK.

     The following  table  presents the high and low sales prices for the Common
Stock for each quarter of 1998 and 1999.

                                                             ($ Per Share)
                                                             -------------
                                                              High    Low
                                                             -------------

         Quarter ended March 31, 1998                         7.88    6.00
         Quarter ended June 30, 1998                          7.75    6.50
         Quarter ended September 30, 1998                     7.50    5.38
         Quarter ended December 31, 1998                      6.75    4.75
         Quarter ended March 31, 1999                         6.12    4.25
         Quarter ended June 30, 1999                          6.50    4.75
         Quarter ended September 30, 1999                     6.12    5.50
         Quarter ended December 31, 1999                      6.00    5.37

     The sales price  amounts have been  supplied by The Nasdaq Stock Market and
do not include retail  mark-up,  mark-down,  or commission and may not represent
actual transactions.

HOLDERS

     As  of  February  29,  2000,   the  Company   estimates   that  there  were
approximately 1,100 beneficial holders of its Common Stock.

DIVIDENDS

     On September 23, 1997,  the Company  issued 30,000  unregistered  shares of
$100 par value ten percent (10%) nonvoting  cumulative  Series A Preferred Stock
as partial consideration for the acquisition of Hatfield Inns, LLC. The Series A
Preferred  Stock has certain rights,  privileges and preferences  that limit and
qualify the rights of the Common  Shareholders  of the  Company.  Holders of the
Series A Preferred Stock are entitled to receive, prior and in preference to any
distribution to the holders of Common Stock, cumulative dividends at the rate of
10% per annum, to the extent declared by the Board of Directors. All accrued but
unpaid dividends of the Series A Preferred Stock must be paid in full before any
cash  dividend  may be declared  on the Common  Stock.  Further,  holders of the
Series A Preferred Stock have certain  preferential  distribution  rights in the
event of any liquidation, dissolution or winding-up of the Company.

     During 1999 and 1998, the Board of Directors declared dividends of $163,750
and $300,000  respectively,  on the Series A Preferred Stock. As of December 31,
1999,  there was $136,250 of  cumulative  preferred  dividends  in arrears.  The
holders of the Series A preferred  stock have  agreed to forgive the  cumulative
preferred  dividends in arrears in exchange for the settlement of certain claims
the Company has against them in connection with the acquisition.

     Certain of the Company's debt obligations  contain  provisions  relating to
minimum net worth and debt to equity ratios. In the opinion of management,  such
restrictions are not likely to limit the ability to pay dividends in the future.

     The  Company  has not sold any  securities  during the last  quarter of the
period covered by this report without  registering them under the Securities Act
of 1933.
<PAGE>
Item 6. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION

     The Company has continued  its expansion of the Country  Hearth Inn lodging
system. The number of Country Hearth Inns open increased by eight in 1998 and by
12 in 1999 bringing the total number of properties  open to 49. An additional 26
properties are in various stages of  development;  most of which are expected to
open within the next 12 months.  Included in these  numbers are 18 "Rural  Gold"
properties  open at the end of 1999,  up from 11 at the end of 1998.  The "Rural
Gold"  properties  are the interior  corridor  40-room  properties  designed for
smaller  communities  which have  historically  been  overlooked  by the lodging
industry.

     The Company also has continued  expansion of its hotel management  business
through it's  wholly-owned  subsidiary,  The Lodge Keeper  Group,  Inc.  ("Lodge
Keeper").  In addition to managing 34 Company owned or leased properties,  Lodge
Keeper  manages  19 other  properties  for third  parties  which  operate  under
numerous  national  brand  names.   Additionally,   Lodge  Keeper  has  executed
agreements for the management of three more hotels yet to be constructed.  Total
properties managed increased to 53 as of the end of 1999, up from 40 in 1998.

     In June 1999,  the Company  completed  the sale of the  Country  Hearth Inn
located in Orlando,  Florida for $13.5 million.  The Company held an approximate
59%  interest  in the  partnership  which owned the hotel in addition to holding
franchise  and hotel  management  contracts  relating  to the  operation  of the
property.  After  retirement of an approximate $4.4 million first mortgage loan,
payment of certain fees,  costs,  bonuses,  and minority  interest  shares,  the
Company's  share  of  net  proceeds  was  approximately   $5.5  million.   After
distributions to minority interest partners of approximately  $3.2 million,  the
Company began  soliciting for additional  partnership  units and the Company has
purchased an additional 14% of the partnership. The Company has no obligation to
continue  to operate  the  property,  but plans to continue to operate the hotel
under an agreement with Orange  County,  Florida (the  purchaser)  until January
2001 at which time the property is to be demolished to make way for expansion of
the Orange County Convention Center.

     In August 1999, the Company purchased nine hotel management agreements from
the members of Quality Lodging,  LLC ("Quality") for an aggregate purchase price
of approximately $900,000,  including the issuance of 65,378 unregistered shares
of the  Company's  common stock.  The Company has agreed to purchase  additional
contracts  from Quality when the related  hotel  properties  are  completed  and
opened.

     The Company sold its leasehold  interests in four hotel  properties  during
1999  resulting  in  aggregate  gains of  approximately  $500,000.  These  sales
represent a continuation of the Company's  previously announced desire to divest
itself of older properties.

     In July 1999,  the Company  completed  the sale of one of its three 40-room
hotel properties in Texas. A second of these properties was sold in January 2000
and the third property remains held for sale. Operating profit contribution from
these hotels has not been  significant.  Management  has estimated the losses on
sales of these three properties to aggregate  approximately  $300,000. Such loss
was recognized in the second quarter of 1999 by the recording of a provision for
impairment.

     The Company holds a 44.5%  interest in a  partnership  which owns a 93-room
Country Hearth Inn in Mason, Ohio. Due to an increase in effective control,  the
Company  consolidated  the  partnership in its 1999 financial  statements.  As a
result of the consolidation,  the Company's property and equipment  increased by
approximately $4 million and notes payable by  approximately $3 million.  During
1999, the Company loaned the partnership  approximately  $240,000  which,  along
with  $268,000  from  another  partner,  was used to reduce  the first  mortgage
obligation on the hotel.

     Capital  expenditures  during 1999 aggregated  approximately $3 million and
mostly  related to two new  Company  owned  Country  Hearth  Inns in  Eddyville,
Kentucky and Washington  Courthouse,  Ohio.  Approximately  $1.5 million of such
expenditures  was funded by construction  loan commitments and the remainder was
funded by working capital and the Company's line of credit.

     During the first half of 1999, the Company drew down $1 million on its bank
line of  credit  in  order  to  fund  working  capital  needs  and  construction
commitments. Also, the Company temporarily suspended payment of dividends on its
Series A preferred stock. As has been previously disclosed,  the Company's hotel
operations are highly seasonal.  Historically,  the Company's hotel revenues and
operating  profits have been  stronger  during the second and third  quarters as
opposed  to the first and  fourth  quarters.  Management  expects  this trend to
continue.  The line of  credit  was fully  repaid in July from a portion  of the
proceeds from the Orlando hotel sale. The Company also resumed payment of Series
A preferred  dividends.  The Company  does not  presently  have a line of credit
arrangement and does not expect to need such within the next year.

     The Company continued to acquire interests in hotel properties during 1998.
The most  significant  transaction  was the purchase of  leasehold  interests in
seven hotel  properties  owned by Host Funding,  Inc.  ("Host").  The properties
operate as Sleep Inn (3) and Super 8 (4) hotels.  The leasehold  interests  were
purchased in June 1998 for an aggregate  purchase  price of  approximately  $1.3
million,  including  approximately  $500,000 in cash, $400,000 of Company common
stock,  and  $400,000  of  notes  payable.   The  Company  committed  to  expend
approximately  $400,000 for renovations and other improvements to the properties
for which it would receive dollar for dollar  credits  against its notes payable
to  Host.  Such  expenditures  were  completed  during  1999.  The  Company  had
previously  leased two  Country  Hearth  Inns owned by Host;  such  transactions
having been  completed in October 1997.  During 1999,  one of the Country Hearth
Inn properties was sold and the lease terminated.

     The Company also acquired a 121-room  hotel in Norcross,  Georgia which was
operated as a Best Western-Bradbury  Suite. The acquisition was completed in May
1998 for an aggregate purchase price of approximately $4 million, including cash
of approximately  $200,000 and an assumed mortgage note payable of approximately
$3.8 million.  During 1999,  the property was converted to a Country  Hearth Inn
and  marketed  for sale.  The hotel is presently  under  contract  for sale;  no
assurances can be made that such transaction will close.

     In  September  1998,  the  Company  acquired a 50-room  hotel  property  in
Coshocton,  Ohio for  approximately  $725,000.  The property is operated under a
Travelodge  license  agreement.  The  Company  had  previously  held a leasehold
interest  in the  property.  The  purchase  price was  partially  financed  by a
$600,000  mortgage  note which was later paid off with the  proceeds  from a new
$700,000 mortgage note.

     The Company  completed  construction  of a 40-room hotel in  Nicholasville,
Kentucky  which opened in September 1998 and began  construction  on the 40-room
property in Eddyville, Kentucky which opened in March 1999. Construction of both
of these  properties was partially  financed by  construction  loans ($1 million
each) from a local bank and by purchase  money notes to the land  sellers for an
aggregate of $225,000.

     During 1998, the Company completed significant  renovations on three leased
hotels in Ohio which were  converted to operate as Country  Hearth  Inns.  Also,
eight 40-room hotel properties which had been acquired in 1997 were converted to
operate as Country Hearth Inns. These were the original "Rural Gold" properties.

     In the  aggregate,  the Company spent  approximately  $6 million on capital
expenditures during 1998 in addition to approximately $900,000 on the Host lease
acquisition  and  renovation  expenditures.   Proceeds  from  notes  payable  of
approximately $3 million during 1998 partially financed these expenditures.  The
remaining  proceeds  from the  Company's  December  1997 sale of $5  million  of
convertible debentures provided the additional funds needed.

     Another  source  of funds  during  1998 was the sale of  certain  leasehold
interests.  The Company had  previously  announced  its  intention to divest its
investments in older less profitable hotel properties.  During 1998, the Company
sold eight of its  leasehold  interests in hotel  properties  which  resulted in
gains of  approximately  $1.6 million.  The operating profit  contribution  from
these properties was not significant.

     The  Company's  balance  sheet at December 31, 1999 includes a deferred tax
asset of  $2,788,000.  In assessing  the  realizability  of deferred tax assets,
management considers whether it is more likely than not that some portion or all
of the  deferred tax assets will not be realized.  The ultimate  realization  of
deferred tax assets is dependent upon the generation of future taxable income by
the  Company  during the  periods in which those  temporary  differences  become
deductible.  Management  considers the projected  future  taxable income and tax
planning  strategies in determining  whether a valuation allowance is necessary.
Although no assurances can be made,  realization  of the Company's  deferred tax
assets  should  occur if the Company  generates  approximately  $7.1  million of
taxable income over the next 7 to 19 years.


RESULTS OF OPERATIONS

     The  Company  conducts  recurring  operations  in  three  segments  of  the
limited-service hotel industry - hotel franchising,  hotel management, and hotel
operations.  The company generates additional revenues and results of operations
from hotel development activities.

     Hotel franchising involves the selling and servicing of rights and licenses
comprising the Country Hearth Inn lodging system.  Revenues include initial fees
and continuing  royalty,  marketing and reservation  fees from Company owned and
leased hotels and from unaffiliated customers. Continuing fees are based on each
franchised hotel's room revenues.

     Hotel management  involves the oversight of day-to-day hotel operations and
accounting for  limited-service and some full-service  hotels.  Revenues include
continuing  fees from  Company  owned and leased  hotels  and from  unaffiliated
customers. Continuing fees are based on each managed hotel's revenues.

     Hotel  operations  involves  the  operations  of  Company  owned and leased
hotels.  Revenues are generated from unaffiliated hotel guests. Hotel operations
also includes the Company's share (equity method) of unconsolidated partnerships
which also  operate  hotels and the  minority  interests  share of  consolidated
partnerships' results which are included in hotel operations.

     Hotel development  activities  involves the development and construction or
purchase of existing hotel  properties  and  subsequent  sale thereof along with
related  activities  such as servicing  notes  receivable  generated from sales.
Corporate activities are generally  administrative and also include all interest
income  and  expense  which  does  not  specifically  relate  to  other  segment
operations.

     Franchise  and  management  fees are  charged to  Company  owned and leased
hotels at the same rates as charged to unaffiliated customers and are eliminated
in consolidation.

     Hotel  franchising  revenues and income before taxes amounted to $2,141,373
and $901,020,  respectively,  in 1999,  as compared to  $1,320,327  and $14,046,
respectively,  in 1998. The 1999 results  include  termination  fees of $640,895
from the Orlando hotel sale transaction. The remaining increases in revenues and
profits are attributable to the previously  discussed increases in the number of
Country  Hearth Inns opened in 1998 and 1999.  Revenues  also  include fees from
Company  owned or  leased  hotels  of  $809,624  in 1999 and  $621,119  in 1998.
Management's continued goal is the expansion of the Country Hearth Inn chain due
to the high profit margins on incremental franchise revenues.

     Hotel  management  revenues  and  income(loss)  before  taxes  amounted  to
$2,324,275  and $451,908,  respectively,  in 1999, as compared to $1,193,417 and
$(593,398),  respectively, in 1998. The 1999 results include termination fees of
$604,220 from the Orlando  hotel sale  transaction.  The remaining  increases in
revenues and profits are attributable to the previously  discussed  increases in
the number of properties managed.  Revenues also include fees from Company owned
or leased hotels of $992,252 in 1999 and $968,963 in 1998. The largest  increase
in recurring,  non-eliminating revenues in 1999 occurred in the hotel management
segment.  This is attributable to a significant increase in the number of hotels
managed for unaffiliated third parties. Management believes that a solid base of
managed properties has been established and that incremental management revenues
from  additional  management  contracts  will  provide  relatively  high  profit
margins.  The Company has significantly  increased its marketing efforts in 2000
with a goal  of the  attainment  of  additional  third  party  hotel  management
contracts.  Further,  Lodge Keeper has enhanced its  competitiveness  in seeking
additional  contracts  as a result of the  increase in the number of  nationally
recognized brands which it manages.

     Hotel revenues  amounted to  $25,886,594  in 1999 and  $25,720,086 in 1998.
Hotel earnings before interest,  taxes, depreciation and amortization ("EBITDA")
declined from $4,539,531 in 1998 to $4,257,365 in 1999. As previously discussed,
the Company has purchased and sold numerous properties during 1998 and 1999. The
changes specified above are mostly attributable to those transactions.  However,
the Company did experience  declines in revenue per available room ("REVPAR") at
several  of its  owned  or  leased  properties.  These  declines  are  primarily
attributable to new properties being opened in our markets.  A notable exception
to this  is the  Company's  "Rural  Gold"  properties  which  generally  enjoyed
increases  in REVPAR and EBITDA.  Management  continues to believe in the "Rural
Gold" concept and intends to commit additional resources to its growth.

     Management  views hotel  operations as a less  profitable,  but  necessary,
segment to support development and franchising activities. Growth of the Country
Hearth brand has been partially  effected through  development  activities which
result in hotel  ownership.  Until hotel  properties  are  eventually  sold, the
operations  of the hotels  impact the results of the  Company.  Margins on hotel
revenues  are not as  profitable  as the fee  based  segments  (franchising  and
management).  However, in order to grow the fee based segments,  the Company has
had to invest in hotel  operations  assets.  Note that  owned and  leased  hotel
operations  contributed  $1,801,876  in 1999 and  $1,590,082 in 1998, to the fee
based  segments.  Management  continues to believe that  development  activities
which  result in hotel or leasehold  ownership  will be necessary to enhance the
growth of the fee based segments.

     Other  non-segment  related  expenses in 1999 such as non-mortgage  related
interest expense and corporate expenses were comparable to 1998 and in line with
management   expectations.   Development  related  revenues  in  1999  primarily
consisted of gains on property  sales of  $3,214,110.  These gains resulted from
the Orlando hotel sale and the sale of leasehold interests previously discussed.
The 1999 gains amount is net of the provision for  impairment  recognized by the
Company  relating to properties  held for sale.  1998 results  included gains of
$1,648,894 from the leasehold sales.  Investment  income increased from $201,334
in 1998 to  $495,531  in 1999  primarily  as a result  of the  notes  receivable
generated from the leasehold sales.

     Other  income  in  1999  and  1998   amounted  to  $38,591  and   $675,167,
respectively. The 1998 amount includes a $510,000 nonrecurring item.

     Changes in interest expense and  depreciation  expense are directly related
to changes in owned hotel properties. All Company owned hotels are encumbered by
mortgage obligations,  most of which are fixed rate. The Company uses consistent
straight-line  depreciation  methods  for all  owned  hotels  which  results  in
depreciation expense recognition consistent with hotel ownership changes.

     The Company  recognized  income tax expense in 1999 of  $1,055,000.  Actual
payments are expected to be nominal due to the  utilization  for tax purposes of
net operating loss carryforwards  ("NOLs") which have previously been recognized
for financial reporting purposes.  The Company has approximately $7.1 million of
NOLs available to offset future taxable income.  These NOLs have previously been
recognized for financial reporting purposes.  In 1998, the Company recognized an
income tax  benefit  of  $901,000  resulting  primarily  from a decrease  in the
valuation allowance for deferred tax assets.

RISK FACTORS

     This report  contains  forward  looking  statements  that involve risks and
uncertainties. Statements contained in this report that are not historical facts
are forward  looking  statements  that are subject to the safe harbor created by
the Private  Securities  Litigation  Reform Act of 1995.  The  Company's  actual
results may differ  significantly  from the results  indicated  by such  forward
looking statements.

     The Company is subject to a number of risks, including the general risks of
investing in real estate, the illiquidity of real estate,  environmental  risks,
possible uninsured or underinsured losses, fluctuations in property taxes, hotel
operating risks,  the impact of competition,  the difficulty of managing growth,
seasonality, the risks inherent in operating a hotel franchise business, and the
risks involved in hotel renovation and  construction.  For a discussion of these
and other risk factors, see the "RISK FACTOR" section contained in the Company's
Registration Statement on Form S-3 (File No. 333-37691).


Item 7.  Financial Statements.

ANNUAL FINANCIAL STATEMENTS

     The Company's  consolidated financial statements with independent auditors'
report thereon are included on pages 21 through 48 which follow.

FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION


                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                        Consolidated Financial Statements

                           December 31, 1999 and 1998


                   (With Independent Auditors' Report Thereon)



<PAGE>



                          Independent Auditors' Report


The Board of Directors
Buckhead America Corporation:


We have audited the accompanying consolidated balance sheets of Buckhead America
Corporation  and  subsidiaries as of December 31, 1999 and 1998, and the related
consolidated  statements  of  income,  shareholders'  equity  and  comprehensive
income, and cash flows for the years then ended.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  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 consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Buckhead America
Corporation  and  subsidiaries as of December 31, 1999 and 1998, and the results
of their  operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.


                                                  /s/ KPMG LLP


Atlanta, Georgia
March 3, 2000

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES
                           Consolidated Balance Sheets
                           December 31, 1999 and 1998

<TABLE>
<CAPTION>
<S>                                                                  <C>                 <C>

                       Assets                                                1999              1998
                                                                     ------------------- --------------
Current assets:
  Cash and cash equivalents, including restricted cash of $486,160
     in 1999 and $547,695 in 1998 (note 3)                           $     2,390,856         1,604,194
  Investment securities, including restricted securities of $215,849
     in 1999 (note 4)                                                      1,312,256           120,496
  Accounts receivable, net                                                 1,857,002         1,886,341
  Current portions of notes receivable, net (note 5)                         517,870           367,017
  Property held for sale, net (note 6)                                     8,114,083              --
  Other current assets                                                       666,439           344,669
                                                                     ------------------- --------------
                 Total current assets                                     14,858,506         4,322,717
Investment securities (note 4)                                               139,977           139,977
Noncurrent portions of notes receivable, net (note 5)                      3,482,633         2,696,561
Property and equipment, at cost, net (notes 6, 8, and 9)                  31,979,242        42,306,067
Deferred costs, net (note 7)                                               2,513,249         1,892,195
Leasehold interests, net (note 7)                                          2,526,599         3,192,939
Deferred tax assets, net (note 12)                                         2,788,000         3,831,000
Other assets (note 7)                                                        426,495         1,159,662
                                                                     ------------------- --------------
                                                                     $    58,714,701        59,541,118
                                                                     =================== ==============
                Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable and accrued expenses                              $     2,634,184         3,618,621
  Current portions of notes payable (note 8)                               8,681,568         1,251,251
                                                                     ------------------- --------------
               Total current liabilities                                  11,315,752         4,869,872
Noncurrent portions of notes payable (note 8)                             24,097,774        33,357,178
Other liabilities (note 4)                                                   396,266           256,049
                                                                     ------------------- --------------
               Total liabilities                                          35,809,792        38,483,099
                                                                     ------------------- --------------

Minority interest in partnerships                                            450,290           565,694
Shareholders' equity (notes 10 and 13):
  Series A preferred stock; par value $100; 200,000 shares
     authorized; 30,000 shares issued and outstanding                      3,000,000         3,000,000
  Common stock; $.01 par value; 5,000,000 shares
     authorized; 2,094,655 and 2,003,277 shares issued
     and 2,029,313 and 1,943,935 shares outstanding in
     1999 and 1998, respectively                                              20,947            20,033
  Additional paid-in capital                                               7,854,921         7,362,487
  Retained earnings                                                       12,234,054        10,728,847
  Accumulated other comprehensive loss                                      (148,023)         (148,023)
  Treasury stock, 65,342 and 59,342 common shares
     in 1999 and 1998, respectively                                         (507,280)         (471,019)
                                                                     ------------------- --------------
               Total shareholders' equity                                 22,454,619        20,492,325

Commitments and contingency (notes 7, 9, and 15)
                                                                     $    58,714,701        59,541,118
                                                                     =================== ==============
</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES
                        Consolidated Statements of Income
                     Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S>                                                                           <C>                      <C>
                                                                                       1999                  1998
                                                                              ---------------------    ----------------
Revenues:
   Hotel revenues                                                             $       25,886,594          25,720,086
   Management fee income (note 6)                                                      1,332,023             224,454
   Franchise fee income (note 6)                                                       1,331,749             699,208
   Gains on property and leasehold interest sales, net (notes 6 and 7)                 3,214,110           1,648,894
   Investment income (note 4)                                                            495,531             201,334
   Other income, net (note 11)                                                            38,591             675,167
                                                                                   ----------------    ----------------
                  Total revenues                                                      32,298,598          29,169,143
                                                                                   ----------------    ----------------
Expenses:
   Hotel operations                                                                   21,131,049          20,795,383
   Management operations                                                                 823,644             767,347
   Franchise operations                                                                  808,909             946,834
   Other operating and administrative (note 14)                                        1,702,913           1,569,793
   Depreciation and amortization                                                       1,808,843           1,773,346
   Interest                                                                            3,299,283           2,981,945
                                                                                   ----------------    ----------------
                  Total operating, administrative, and
                    interest expenses                                                 29,574,641          28,834,648
                                                                                   ----------------    ----------------
                  Income before income taxes                                           2,723,957             334,495

Provision for income tax expense (benefit) - (note 12)                                 1,055,000             (901,000)
                                                                                   ----------------    ----------------
                  Net income                                                  $        1,668,957           1,235,495
                                                                                   ================    ================
Net income per common share (note 10):
   Basic                                                                      $               0.69                0.48
                                                                                   ================    ================
   Diluted                                                                    $               0.61                0.47
                                                                                   ================    ================
</TABLE>
            See accompanying notes to consolidated financial statements.



<PAGE>
                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES
    Consolidated Statements of Shareholders' Equity and Comprehensive Income
                     Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S>                                  <C>           <C>     <C>       <C>       <C>         <C>           <C>        <C>
                                                                                                  Accumulated
                                                                         Additional            other                   Total
                                     Comprehensive Common  Preferred paid-in   Retained    comprehensive Treasury   shareholders'
                                        income      stock    stock   capital   earnings         loss       stock        equity
                                     ------------- ------- --------- --------- ----------- ------------- ---------- -------------

Balances at December 31, 1997                      $19,496 3,000,000 6,963,024  9,793,352            --   (422,321)   19,353,551

Issuance of 53,647 common shares
  for asset acquisition                                537        --   399,463         --            --         --       400,000
Acquisition of 7,492 common shares                      --        --        --         --            --    (48,698)      (48,698)
Preferred stock dividends paid                          --        --        --   (300,000)           --         --      (300,000)
Comprehensive income:
  Net income                         $  1,235,495       --        --        --  1,235,495            --         --     1,235,495

  Unrealized loss on investment          (148,023)      --        --        --         --      (148,023)        --      (148,023)
  securities
                                     -------------
       Total comprehensive income    $  1,087,472
                                     ============= ------- --------- --------- ----------- ------------- ---------- -------------
Balances at December 31, 1998                       20,033 3,000,000 7,362,487 10,728,847      (148,023)  (471,019)   20,492,325

Issuance of 65,378 common shares
  for asset acquisition                                654        --   391,614         --            --         --       392,268
Issuance of 26,000 common shares
  pursuant to exercise of options                      260        --   100,820         --            --         --       101,080
Acquisition of 6,000 common shares                      --        --        --         --            --    (36,261)      (36,261)
Preferred stock dividends paid                          --        --        --   (163,750)           --         --      (163,750)
Comprehensive income:
  Net income                         $  1,668,957       --        --        --  1,668,957            --         --     1,668,957

  Change in unrealized loss on
    investment securities                      --       --        --        --         --            --         --            --
                                     -------------
       Total comprehensive income     $ 1,668,957
                                     ============= ------- --------- --------- ----------- ------------- ---------- -------------

Balances at December 31, 1999                      $20,947 3,000,000 7,854,921 12,234,054      (148,023)  (507,280)   22,454,619
                                                   ======= ========= ========= =========== ============= ========== =============
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                     Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S>                                                                       <C>                  <C>

                                                                                  1999               1998
                                                                          -----------------    ---------------
Cash flows from operating activities:
  Net income                                                              $      1,668,957          1,235,495
  Adjustments to reconcile net income to net cash
     (used in) provided by operating activities:
       Depreciation and amortization                                             1,808,843          1,773,346
       (Purchases) sales of trading securities, net                             (1,127,927)         2,998,950
       Realized gains on trading securities                                        (39,377)           (37,260)
       Unrealized holding (gains) losses on trading securities                     (16,033)           105,929
       Gains on property and leasehold interest sales                           (5,883,451)        (1,648,894)
       Provision for impairment on property held for sale                          373,529                 --
       Minority interest in partnership income                                   2,544,050            250,015
       Equity in joint venture losses                                              131,065            124,480
       Deferred income tax expense (benefit)                                     1,055,000           (901,000)
       Change in assets and liabilities:
          Accounts receivable, net                                                  29,339           (837,332)
          Accounts payable and accrued expenses                                   (830,826)           295,140
          Other, net                                                               (45,069)           198,690
                                                                          -----------------    ---------------
                Net cash (used in) provided by operating activities               (331,900)         3,557,559
                                                                          -----------------    ---------------
Cash flows from investing activities:
  Principal receipts on notes receivable                                           288,075            704,970
  Originations of notes receivable                                                (400,000)        (1,018,721)
  Acquisitions of businesses and hotels                                           (506,041)          (707,783)
  Capital expenditures                                                          (2,990,276)        (5,966,947)
  Investments in joint ventures                                                         --           (148,873)
  Proceeds from property and leasehold interest sales                            8,043,247            989,064
  Acquisition of additional partnership interests                                 (110,000)           (60,000)
                                                                          -----------------    ---------------
                Net cash provided by (used in) investing activities              4,325,005         (6,208,290)
                                                                          -----------------    ---------------
Cash flows from financing activities:
  Proceeds from notes payable                                                    2,762,902          2,969,091
  Repayments of notes payable                                                   (2,663,520)        (1,723,092)
  Net proceeds from refinancing of notes payable                                        --            374,440
  Distributions to minority interest partners                                   (3,206,894)          (298,590)
  Proceeds from issuance of common shares                                          101,080                 --
  Purchase of treasury shares                                                      (36,261)           (48,698)
  Preferred stock dividends paid                                                  (163,750)          (300,000)
                                                                          -----------------    ---------------
                Net cash (used in) provided by financing activities             (3,206,443)           973,151
                                                                          -----------------    ---------------
                Net increase (decrease) in cash and cash equivalents               786,662         (1,677,580)
Cash and cash equivalents at beginning of year                                   1,604,194          3,281,774
                                                                          -----------------    ---------------
Cash and cash equivalents at end of year                                  $      2,390,856          1,604,194
                                                                          =================    ===============

                                                                                                   (Continued)

</TABLE>

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                     Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S>                                                                        <C>                 <C>


                                                                                  1999              1998
                                                                          -----------------    ---------------
Supplemental disclosures of cash flow information:
 Cash paid during the year for interest, net of interest capitalized
   of $34,024 in 1999 and $48,542 in 1998                                 $      3,362,708          2,765,901
                                                                          =================    ===============
 Cash paid during the year for income taxes                               $         12,000                 --
                                                                          =================    ===============
Supplemental disclosures of noncash and partial cash investing
and financing  activities:  During 1999, the Company  recorded
the following  partial cash activity relating to the sale of a
150-room hotel in Orlando, Florida:
      Gross sales price                                                   $     13,500,000
      Gross sales price allocated to management and
         franchise contract termination                                         (1,446,590)
                                                                          -----------------
           Net sales price                                                      12,053,410
      Payoff of note payable                                                     4,383,335
      Other costs                                                                  330,505
                                                                          -----------------
           Net cash proceeds                                                     7,339,570
                                                                          -----------------
      Basis of assets sold:
         Property and equipment, net                                             6,191,988
         Note payable                                                           (4,383,335)
         Other                                                                     149,305
                                                                          -----------------
                                                                                 1,957,958
                                                                          -----------------
           Gain on sale                                                          5,381,612
      Minority interests' share of gain on sale                                 (2,319,182)
                                                                          -----------------
      Company share of gain on sale                                       $      3,062,430
                                                                          =================
During 1999,  the Company also recorded the following  partial
cash  activity  relating  to the sale of one  other  hotel and
leasehold interests in four hotels:
      Proceeds:
         Cash, net of closing costs                                       $        703,677
         Notes receivable                                                          825,000
                                                                          -----------------
                                                                                 1,528,677
                                                                          -----------------
      Basis of assets sold:
         Property and equipment, net                                               896,829
         Leasehold interests, net                                                  655,009
         Note payable                                                             (525,000)
                                                                          -----------------
                                                                                 1,026,838
                                                                          -----------------
           Gain on sales, net                                             $        501,839
                                                                          =================

                                                                                                 (Continued)

</TABLE>

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                     Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S>                                                                       <C>                  <C>

                                                                                  1999              1998
                                                                          -----------------    ---------------
During 1999, the Company  recorded the following  partial cash
activity  relating to the acquisition of management  contracts
on nine hotel properties:
      Costs:
         Cash                                                             $        506,041
         Common stock issued - 65,378 shares                                       392,268
                                                                          -----------------
           Allocated to deferred costs                                    $        898,309
                                                                          =================

During  1999,  the Company  acquired  additional  control in a
partnership  which owns a hotel  property  subject to mortgage
notes payable.  Prior to 1999, the Company's investment in the
partnership  had been accounted for on the equity method.  Due
to the  increase in  control,  the 1999  financial  statements
include the  accounts  of the  partnership  on a  consolidated
basis.   The  noncash   impact  on  investing   and  financing
activities of  consolidating  the  partnership  in 1999 was as
follows:
      Investing:
         Increase in property and equipment, net                          $      3,956,581
         Decrease in investments in partnerships                                  (365,907)
                                                                          -----------------
                                                                          $      3,590,674
                                                                          =================
      Financing:
         Increase in notes payable                                        $      3,091,339
         Increase in minority interests                                            502,015
         Other, net                                                                 (2,680)
                                                                          -----------------
                                                                          $      3,590,674
                                                                          =================
In May 1998, the Company  recorded the following  partial cash
activity  relating to the  acquisition  of a 121-room hotel in
Norcross, Georgia.
      Costs:
         Cash                                                                                  $      191,148
         Payables                                                                                      31,953
         Note payable assumed                                                                       3,818,798
                                                                                               ---------------
           Property and equipment                                                              $    4,041,899
                                                                                               ===============
In June 1998, the Company recorded the following  partial cash
activity relating to the acquisition of leasehold interests in
seven hotels owned by Host Funding, Inc.:
         Costs:
           Cash                                                                                $      516,635
           Common stock issued                                                                        400,000
           Notes payable issued                                                                       400,000
                                                                                               ---------------
                                                                                               $    1,316,635
                                                                                               ===============
         Allocated to:
           Lessor's common stock                                                               $      288,000
           Leasehold interests                                                                      1,028,635
                                                                                               ---------------
                                                                                               $    1,316,635
                                                                                               ===============
                                                                                                  (Continued)
</TABLE>


<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                     Years ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
<S>                                                                       <C>                  <C>
                                                                                1999                 1998
                                                                          -----------------    ---------------
In  August  and  September  1998,  the  Company  recorded  the
following partial cash activity relating to the refinancing of
four owned hotels:
         New notes payable issued                                                              $    4,885,000
         Discharge of old notes payable                                                            (4,323,476)
         Notes payable issuance costs                                                                (187,084)
                                                                                               ---------------
               Net proceeds                                                                    $      374,440
                                                                                               ===============

In 1998,  the Company  recorded  the  following  partial  cash
activity relating to the sales of leasehold interests in eight
hotels:
         Proceeds:
           Cash, net of closing costs                                                          $      989,064
           Notes receivable, net                                                                    1,655,000
                                                                                               ---------------
                                                                                                    2,644,064
                                                                                               ---------------
         Basis in leasehold interests sold:
           Leasehold interests, net                                                                   270,002
           Leasehold improvements, net                                                                725,168
                                                                                               ---------------
                                                                                                      995,170
                                                                                               ---------------
               Gains on leasehold interest sales, net                                          $    1,648,894
                                                                                               ===============


</TABLE>
See accompanying notes to consolidated financial statements.

<PAGE>


                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


(1)  The Company

     Buckhead America Corporation (the Company) was created in December 1992 and
     effectively  commenced  operations on January 1, 1993. The Company operates
     in the  hospitality  industry and its principal  holdings  include  hotels,
     loans,  leasehold interests and other investments secured by hotels,  hotel
     management  contracts,  hotel franchising rights, and other related assets.
     Its principal  product is the Country Hearth Inn midpriced  hotel franchise
     system.

     The primary  activities  of the  Company  involve  the  franchising  of the
     Country  Hearth  Inn  chain,   limited-service  hotel  management  and  the
     operation, development, and sales of hotel properties.


(2)  Summary of Significant Accounting Policies

     (a)  Principles of Consolidation

          The  accompanying  financial  statements  include the  accounts of the
          Company and its wholly owned  subsidiaries.  They also  include,  on a
          consolidated basis, the accounts of two partnerships controlled by the
          Company, each of which owns a hotel subject to a nonrecourse mortgage.
          The accounts of the  partnerships  are  consolidated  on a gross basis
          with the minority partners'  interests  reflected  separately on a net
          basis. All significant  intercompany  accounts have been eliminated in
          the consolidated financial statements.

          Management  of  the  Company  has  made  a  number  of  estimates  and
          assumptions  relating to the reporting of assets and  liabilities  and
          the disclosure of contingent  assets and liabilities as of the balance
          sheet date and revenues and expenses  during the  reporting  period to
          prepare  these  financial  statements  in  conformity  with  generally
          accepted accounting principles. Actual results could differ from those
          estimates.

     (b)  Revenue Recognition

          Hotel revenues are recognized as earned, which is generally defined as
          the date upon which a guest  occupies a room and  utilizes the hotel's
          services.

          Initial  franchise  fees are  recognized as income upon receipt as the
          Company has no future  obligations  associated  with the initial fees.
          The Company also receives  continuing  royalty,  marketing,  and other
          fees based upon a  percentage  of each hotel's  room  revenues.  These
          continuing  fees  are  recognized  when  earned.  Management  fees are
          generally based on a percentage of each managed hotel's gross revenues
          and are recognized when earned.

          Investment income is recognized as earned. Changes in the market value
          of  investments  classified  as trading  securities  are  included  in
          investment income.

     (c)  Cash and Cash Equivalents

          Cash and cash  equivalents  include  demand and savings  deposits with
          financial  institutions  and cash on hand.  Restricted  cash  includes
          funds  held  by  trustees  for  the  benefit  of  the  Company  or its
          creditors.  The Company  considers all highly liquid  instruments with
          maturities of less than three months to be cash equivalents.




<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998



     (d)  Investment Securities

          The Company has classified all of its investments as either  "trading"
          or "available-for-sale." Available-for-sale securities are recorded at
          fair value with  unrealized  gains and losses,  net of the related tax
          effect, reported as other comprehensive income. Trading securities are
          also recorded at fair value with unrealized  gains and losses reported
          as  investment  income  in  the  consolidated  statements  of  income.
          Available-for-sale  securities  are  classified  as  long-term,  while
          trading  securities  are  classified  as current  in the  accompanying
          balance sheets.

     (e)  Notes Receivable

          Notes  receivable  are  recorded  at cost,  less the  related  general
          allowance for doubtful  accounts and any allowances for impaired notes
          receivable.  The Company,  considering  current information and events
          regarding the borrowers'  ability to repay their  obligations,  values
          its notes  receivable,  for which it is probable that the Company will
          be unable to collect the full amount due in  accordance  with the note
          agreement,  at the present  value of the  expected  future cash flows,
          market price of the loan, if available, or the value of the underlying
          collateral,  if any.  The Company  does not accrue  interest for notes
          receivable considered to be impaired.  Cash receipts on impaired notes
          receivable is either applied  against  principal or may be reported as
          interest  income   depending  on  management's   judgment  as  to  the
          collectibility of principal.

     (f)  Property and Equipment

          Property   and   equipment  is  stated  at  cost,   less   accumulated
          depreciation.

          Depreciation   on  property  and   equipment  is   calculated  on  the
          straight-line  method over the  estimated  useful lives of the assets.
          Property  and  equipment  held  under  capital  leases  and  leasehold
          improvements  are  amortized  over the  shorter  of the lease  term or
          estimated useful life of the asset. Estimated useful lives of property
          and equipment are as follows:

              Buildings                              25 to 40 years
              Furniture, fixtures, and equipment      5 to 10 years
              Leasehold improvements                  5 to 20 years

     (g)  Property Held for Sale

          Property  held for sale is stated  at the lower of cost or fair  value
          less  costs to sell.  Fair  value of  property  held for sale has been
          determined by the Company based upon current  market  information.  At
          the date on which a decision  is made to dispose  of a  property,  any
          amount by which the carrying amount of an asset exceeds the fair value
          less cost to sell is  reported as a provision  for  impairment  and is
          reflected as a component  of gains on sales.  Due to the intent of the
          Company  to  dispose  of  such  properties  in  the  short-term,   the
          properties  and all  related  notes  payable  have been  reflected  as
          current  in the  accompanying  balance  sheets.  The  Company  has the
          ability to remove such properties from operations at the current time.

     (h)  Deferred Costs

          Deferred costs include the costs  associated  with the  acquisition of
          trademark  rights and  franchise  licenses  which are  amortized  on a
          straight-line  basis over the  estimated  useful  lives of the assets,
          which  range  from  10  -  20  years.   Deferred  costs  also  include
          unamortized  note payable  issuance costs which are amortized over the
          term of the related debt. Deferred costs also include the acquisition

<PAGE>


                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                       Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998



          costs of long-term hotel management contracts which are amortized over
          the related terms of the contracts.

     (i)  Leasehold Interests

          Leasehold  interests are intangible assets that represent the right to
          operate  certain hotel  properties,  inclusive of the right to use the
          properties  under existing lease  agreements,  and are stated at cost,
          less  accumulated  amortization.  Amortization  is  calculated  on the
          straight-line method over the terms of the related leases.

     (j)  Other Assets

          Other  assets  primarily   consist  of  deposits  and  investments  in
          partnerships  or corporate  joint  ventures other than those which are
          consolidated  due to control.  Investees  in which the Company has the
          ability to exercise significant  influence are accounted for using the
          equity method.

     (k)  Treasury Stock

          Treasury  stock is stated at cost.  In noncash  exchanges,  fair value
          represents cost.

     (l)  Marketing Costs

          The  Company  incurs  costs  for  various  marketing  and  advertising
          efforts.  All costs related to marketing and  advertising are expensed
          in the period  incurred.  Marketing  costs  amounted to $1,156,983 and
          $1,114,777   for  the  years  ended   December   31,  1999  and  1998,
          respectively,   and  are  included  in  franchise  operations  expense
          ($101,161 and $123,625,  respectively) and in hotel operations expense
          ($1,055,822   and   $991,152,   respectively)   in  the   accompanying
          consolidated statements of income.

     (m)  Income Taxes

          Income taxes are accounted  for under the asset and liability  method.
          Deferred tax assets and  liabilities are recognized for the future tax
          consequences   attributable  to  differences   between  the  financial
          statement  carrying  amounts of existing  assets and  liabilities  and
          their   respective  tax  bases  and  operating  loss  and  tax  credit
          carryforwards.  Deferred tax assets and liabilities are measured using
          enacted tax rates  expected to apply to taxable income in the years in
          which those  temporary  differences  are  expected to be  recovered or
          settled. The effect on deferred tax assets and liabilities of a change
          in tax rates is  recognized  in income in the period that includes the
          enactment date.

          A valuation  allowance is recognized when it appears it is more likely
          than not that some or all of deferred tax assets will not be realized.

     (n)  Fair Value of Financial Instruments

          Management  believes  that  the  carrying  amounts  of cash  and  cash
          equivalents,  accounts  receivable,  other  current  assets,  accounts
          payable and accrued expenses, and current portions of notes receivable
          and payable are reasonable  approximations of their fair value because
          of the short-term nature of these instruments.


<PAGE>


                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                        Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998

          The  fair  value  of  noncurrent   portions  of  notes  receivable  is
          determined  as  the  present  value  of  expected  future  cash  flows
          discounted  at the  interest  rate  currently  offered by the Company,
          which   approximates   rates   currently   offered  by  local  lending
          institutions  for loans of similar terms to companies with  comparable
          credit risk. Based on this valuation methodology,  management believes
          that  the  carrying  amount  of  the  noncurrent   portions  of  notes
          receivable is a reasonable approximation of its fair value.

          Investment securities (both trading and available-for-sale) are stated
          at fair value in the accompanying  consolidated  balance sheets. These
          fair values are based on quoted market  prices at the  reporting  date
          for those or similar investments.

          The fair value of the Company's  noncurrent  portions of notes payable
          is estimated by discounting  the future cash flows of each  instrument
          at rates currently offered to the Company for similar debt instruments
          of  comparable  maturities  by the  Company's  bankers.  Based on this
          valuation methodology, management believes that the carrying amount of
          the noncurrent portions of notes payable is a reasonable estimation of
          its fair value.

     (o)  Stock Options

          The  Company  accounts  for  its  stock  options  in  accordance  with
          Statement  of  Financial   Accounting   Standards  ("SFAS")  No.  123,
          Accounting for Stock-Based Compensation,  which encourages entities to
          recognize  as expense  over the  vesting  period the fair value of all
          stock-based awards on the date of grant.  Alternatively,  SFAS No. 123
          allows  entities  to continue to apply the  provisions  of  Accounting
          Principles  Board ("APB") Opinion No. 25,  Accounting for Stock Issued
          to  Employees,  and record  compensation  expense on the date of grant
          only if the current market price of the  underlying  stock exceeds the
          exercise  price.  In  addition,  pro  forma net  income  and pro forma
          earnings per share  disclosures  for employee stock option grants must
          be provided as if the fair-value-based  method defined in SFAS No. 123
          had been applied. The Company continues to apply the provisions of APB
          Opinion No. 25 and provides the pro forma disclosures required by SFAS
          No. 123.

     (p)  Impairment of Long-Term Assets

          Property and  equipment,  deferred  costs and leasehold  interests are
          reviewed for impairment  whenever  events or changes in  circumstances
          indicate  that  the  carrying  amount  of  these  assets  may  not  be
          recoverable.  Recoverability  is  measured  by  a  comparison  of  the
          carrying  amount of an asset to future net cash flows  expected  to be
          generated by the asset. If an asset is considered to be impaired,  the
          impairment  to be  recognized  is  measured by the amount by which the
          carrying amount of the asset exceeds the fair value of the asset.

     (q)  Comprehensive Income

          Comprehensive  income of the  Company  consists  of net income and net
          unrealized   gains   (losses)   on   investment    securities   (Other
          Comprehensive Income) and is presented in the consolidated  statements
          of shareholders' equity and comprehensive  income. Other Comprehensive
          Income   does  not  affect  the   Company's   financial   position  or
          consolidated results of operations.

     (r)  Reportable Segments

          The Company is required to report both  quantitative  and  qualitative
          information  regarding its reportable  operating  segments.  Operating
          segments are determined by assessing  what  information is reviewed by
          the chief  operating  decision maker in evaluating the  performance of

<PAGE>


                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998

          the  Company.  The Company has  determined  its  reportable  operating
          segments to be hotel operations,  management,  and franchising and has
          presented the required information for each of these segments.

     (s)  Reclassifications

          Certain  reclassifications  have  been  made to the 1998  balances  to
          conform with classifications adopted in 1999.

(3)  Cash and Cash Equivalents

     Cash and cash  equivalents  at  December  31,  1999 and 1998  included  the
     following:


                                                             1999           1998
                                                       ----------     ----------
     Unrestricted cash:
          Operating accounts, money market funds,
          and overnight investments                    $  961,989        550,855
     Hotel operating accounts, savings
          accounts, and cash on hand                      942,707        505,644
                                                       ----------     ----------
                                                        1,904,696      1,056,499
                                                       ----------     ----------
     Restricted cash:
          Unsettled claim reserves (a)                       --              609
          Mortgage-related escrows (b)                    436,160        494,596
          Insurance deposits (c)                           50,000         52,490
                                                           ------         ------
                                                          486,160        547,695
                                                       ----------     ----------
                                                       $2,390,856      1,604,194
                                                       ==========     ==========

          (a)  The Company acted as a trustee and  administered  certain aspects
               of claims asserted in the bankruptcy of the entity formerly known
               as Days Inns of America, Inc. (the Days Bankruptcy). The residual
               amounts,  if any,  in certain  of the  related  reserve  accounts
               inured to the  benefit of the  Company  (note  11).  Accordingly,
               these accounts, along with the related liabilities, are reflected
               in   the   accompanying   consolidated   balance   sheets.   Such
               liabilities,  which  equal  the  restricted  cash  balances,  are
               included in accounts payable and accrued expenses.

          (b)  Mortgage-related escrows are standard reserve accounts held by or
               on  behalf  of  the  holders  of  mortgages  on  certain  Company
               properties  (note 8). Such amounts are  restricted to the payment
               of  insurance,  property  taxes,  and/or  property and  equipment
               replacements   and   enhancements   relating  to  the   mortgaged
               properties.

          (c)  The Company is self-insured for workers' compensation liabilities
               relating to certain employees in certain  locations.  Some states
               require  deposits  be  made  by  self-insuring  companies.   Such
               deposits are  restricted to the payment of workers'  compensation
               claims which are otherwise not settled.
<PAGE>


                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998



(4)  Investment Securities

     The amortized  cost,  gross  unrealized  holding  gains,  gross  unrealized
     holding  losses,   and  fair  value  for  trading  and   available-for-sale
     securities by investment  type and class of investment at December 31, 1999
     and 1998, are as follows:

<TABLE>
<CAPTION>

                                                                              1999
                                               -----------------------------------------------------------------------
                                                                     Gross              Gross
                                                                   unrealized        unrealized
                                                 Amortized          holding            holding             Fair
                                                   cost              gains             losses              value
                                               --------------    ---------------    --------------    ----------------
             <S>                           <C>                     <C>               <C>                 <C>
                 U.S. government and
                   agency obligations      $       986,109               --                 --             986,109
                 Equity securities                  11,812          103,007             (4,521)            110,298
                 Third-party managed
                   funds                           189,618           26,231                 --             215,849
                                               --------------    ---------------    --------------    ----------------
                                                 1,187,539          129,238             (4,521)          1,312,256

             Available-for-sale
                 securities - equity
                 securities                        288,000               --           (148,023)            139,977
                                               --------------    ---------------    --------------    ----------------

                        Total              $     1,475,539          129,238           (152,544)          1,452,233
                                               ==============    ===============    ==============    ================

                                                                                1998
                                               -----------------------------------------------------------------------
                                                                     Gross              Gross
                                                                   unrealized        unrealized
                                                 Amortized          holding            holding             Fair
                                                   cost              gains             losses              value
                                               --------------    ---------------    --------------    ----------------

             Trading securities -
                 equity securities         $        11,812          112,082             (3,398)            120,496
             Available-for-sale
                 securities - equity
                 securities                        288,000               --           (148,023)            139,977
                                               --------------    ---------------    --------------    ----------------

                        Total              $       299,812          112,082           (151,421)            260,473
                                               ==============    ===============    ==============    ================
</TABLE>

     Equity  securities  are  primarily   concentrated  in  hospitality  related
     companies.

     The available-for-sale  securities were acquired in 1998 in connection with
     the  purchase of certain  leases  (note 7) and are  restricted  as to their
     sale.  Other  comprehensive  loss in 1998 consists of an unrealized loss on
     available-for-sale  securities  of  $148,023.  There  was no change in this
     unrealized loss in 1999.

     Third party  managed funds  consist of trading  securities  held by a Rabbi
     Trust for the benefit of certain  employees  who  participate  in a Company
     deferred  compensation  plan.  Such funds are  restricted to the payment of

<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


     deferred compensation liabilities.  Such liabilities are included in "other
     liabilities" in the  accompanying  consolidated  balances sheets at amounts
     equal to the fair value of the restricted  funds.  None of the  third-party
     managed funds are invested in the common stock of the Company.

     Proceeds from the sale of trading securities were $3,500,000 and $3,000,000
     in 1999 and 1998,  respectively.  Net realized gross gains  calculated on a
     specific  identification  basis and included in  investment  income in 1999
     were $39,377 and in 1998 were $37,260.


(5)  Notes Receivable

     Notes receivable at December 31, 1999 and 1998 consist of the following:

<TABLE>
<CAPTION>
                                                                        1999
                                                 ----------------------------------------------------
                                                                       Other
                                                   Secured             notes              Total
                                                 -------------     --------------    ----------------
             <S>                             <C>                        <C>              <C>

             Principal                       $     3,542,587            834,067          4,376,654
             Less allowances                         284,071             92,080            376,151
                                                 -------------     --------------    ----------------
                                                   3,258,516            741,987          4,000,503
             Less current portions                   192,228            325,642            517,870
                                                 -------------     --------------    ----------------

             Noncurrent portions             $     3,066,288            416,345          3,482,633
                                                 =============     ==============    ================

             Number of notes                          19                11                 30
                                                 =============     ==============    ================

                                                                        1998
                                                 ----------------------------------------------------
                                                                       Other
                                                   Secured             notes              Total
                                                 -------------     --------------    ----------------

             Principal                       $     2,652,398            787,331          3,439,729
             Less allowances                         284,071             92,080            376,151
                                                 -------------     --------------    ----------------
                                                   2,368,327            695,251          3,063,578
             Less current portions                   121,495            245,522            367,017
                                                 -------------     --------------    ----------------

             Noncurrent portions             $     2,246,832            449,729          2,696,561
                                                 =============     ==============    ================

             Number of notes                          14                10                 24
                                                 =============     ==============    ================
</TABLE>

     The secured notes are primarily  collateralized  by mortgages and leasehold
     interests on hotel properties.

     The recorded  investment  in impaired  notes  receivable as of December 31,
     1999 and 1998 was $906 and $17,080, respectively, and the Company has fully
     reserved for these notes. Cash received in payment of impaired notes during
     1999 and 1998 amounted to $16,174 and $9,938, respectively.



<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


     The activity in the allowance for doubtful  notes  receivable for the years
     ended December 31, 1999 and 1998 was as follows:

<TABLE>
<CAPTION>
                                                                                   1999                1998
                                                                             -----------------    ---------------

             <S>                                                         <C>                            <C>
             Allowance for doubtful notes receivable at
                 beginning of year                                        $         376,151              57,874
             Allowances recorded in connection with leasehold
                 interest sales (note 7)                                                 --             350,215
             Additions charged to bad debt expense                                   16,174                   --
             Write-downs charged against the allowance                                    --             (22,000)
             Collections on impaired notes                                          (16,174)             (9,938)
                                                                             -----------------    ---------------

             Allowance for doubtful notes receivable
                 at end of year                                           $         376,151             376,151
                                                                             =================    ===============

</TABLE>

(6)  Property Held for Sale and Property and Equipment

     Property  held for sale at  December  31,  1999  and  1998  consist  of the
     following:

<TABLE>
<CAPTION>

                                                                                   1999                1998
                                                                             -----------------    ---------------

             <S>                                                         <C>                        <C>
             Property and equipment (four hotels at
                 December 31, 1999)                                       $       8,364,083              --
             Allowance for impairment                                              (250,000)             --
                                                                             -----------------    ---------------

                                                                          $       8,114,083              --
                                                                             =================    ===============

</TABLE>


<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998



     Property  and  equipment  at  December  31,  1999 and 1998  consist  of the
     following:

<TABLE>
<CAPTION>
                                                                                   1999                1998
                                                                              ---------------     ----------------

             <S>                                                         <C>                        <C>
             Owned hotel properties (16 in 1999 and 19 in 1998):
                 Land and buildings                                       $       28,991,188         38,510,080
                 Furniture, fixtures, and equipment                                3,328,214          4,577,638
                                                                              ---------------     ----------------
                                                                                  32,319,402         43,087,718
                 Accumulated depreciation                                         (2,681,531)        (3,790,817)
                                                                              ---------------     ----------------
                                                                                  29,637,871         39,296,901
                                                                              ---------------     ----------------

             Leased hotel properties (16 in 1999 and 18 in 1998):
                 Leasehold improvements                                            1,344,847          1,083,967
                 Furniture, fixtures, and equipment                                  834,499            799,496
                                                                              ---------------     ----------------
                                                                                   2,179,346          1,883,463
                 Accumulated depreciation                                           (256,702)          (165,195)
                                                                              ---------------     ----------------
                                                                                   1,922,644          1,718,268
                                                                              ---------------     ----------------

             Construction-in-progress                                                111,433          1,001,213
                                                                              ---------------     ----------------

             Other:
                 Land                                                                200,889            214,198
                 Other                                                               239,339            183,337
                                                                              ---------------     ----------------
                                                                                     440,228            397,535
                 Accumulated depreciation                                           (132,934)          (107,850)
                                                                              ---------------     ----------------
                                                                                     307,294            289,685
                                                                              ---------------     ----------------

                                                                          $       31,979,242         42,306,067
                                                                              ===============     ================
</TABLE>

       In 1999, the Company completed the sale of the Country Hearth Inn located
       in Orlando,  Florida for $13.5  million.  The Company held an approximate
       59%  interest  in the  partnership  which  owned the hotel in addition to
       holding  franchise  and  hotel  management   contracts  relating  to  the
       operation  of the  property.  After  retirement  of an  approximate  $4.4
       million first mortgage loan, payment of certain fees, costs, bonuses, and
       minority  interest  shares,  the  Company's  share  of net  proceeds  was
       approximately $5.5 million.  The Company has no obligation to continue to
       operate the property, but plans to continue to operate the hotel under an
       agreement with Orange County,  Florida (the purchaser) until January 2001
       at which time the property is to be  demolished to make way for expansion
       of the Orange County Convention Center.

       The Company's  share of the gain on sale, net of the minority  interests'
       share  approximated  $3.1 million.  The Company also  received  franchise
       termination fees and hotel management fees of approximately  $640,000 and
       $605,000,   respectively.   Such  fees  are  included  in  the  Company's
       franchising and management operating segments (note 16).

       During  1999,  the Company  began to actively  market for sale five hotel
       properties (three in Texas and two in Georgia).  The income statement for
       the year ended  December 31, 1999 includes a provision for  impairment of
       $373,529 which represents  management's estimate of losses expected to be
       incurred  in  connection  with the hotel  sales.  One of the Texas  hotel
       properties  was sold in 1999  resulting  in a loss of $123,529  which was
       charged to the allowance for  impairment.  As of December 31, 1999,  four
       properties  with an aggregate net carrying  value of $8,114,083  remained
       held for sale.  In January 2000,  another  Texas hotel  property was sold
       resulting  in a charge  to the  remaining  allowance  for  impairment  of
       approximately $65,000.


<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998



     Revenues  and  expenses  for the years  ended  December  31,  1999 and 1998
     relating to the properties held for sale were as follows:

<TABLE>
<CAPTION>
                                                                               1999              1998
                                                                           --------------    --------------
                     <S>                                               <C>                     <C>
                     Hotel revenues                                     $     2,751,345        2,575,175
                     Less:
                         Hotel operations expense                             2,316,579        2,086,038
                         Depreciation                                           206,851          328,272
                         Interest                                               612,592          552,686
                                                                           --------------    --------------

                              Loss before income taxes                  $       384,677          391,821
                                                                           ==============    ==============
</TABLE>

     The revenues and expenses  relating to hotel  properties  held for sale are
     included in the Company's hotel operations business segment (note 16).

     All of the  Company's  owned hotel  properties  are  encumbered by mortgage
     obligations (note 8).

     During 1999, the Company acquired additional control in a partnership which
     owns a 93-room hotel property in Mason, Ohio (Mason Hotel).  Prior to 1999,
     the Company's  investment in the  partnership had been accounted for on the
     equity  method (note 7). Due to the increase in control,  the  accompanying
     1999  financial  statements  include the accounts of this  partnership on a
     consolidated  basis  with  the  minority  partners'   interests   reflected
     separately on a net basis.

(7)  Deferred Costs, Leasehold Interests, and Other Assets

     Deferred costs at December 31, 1999 and 1998 consist of the following:

<TABLE>
<CAPTION>
                                                                                   1999              1998
                                                                              ---------------    -------------
             <S>                                                           <C>                   <C>
               Country Hearth Inn franchise system:
                 Trademark rights                                          $      584,300            584,300
                 Franchise licenses                                               939,778            939,778
                 Other deferred costs                                             247,885            163,549
                                                                              ---------------    -------------
                                                                                1,771,963          1,687,627
                 Accumulated amortization                                        (590,333)          (470,333)
                                                                              ---------------    -------------
                                                                                1,181,630          1,217,294
                                                                              ---------------    -------------

             Hotel management contract acquisition costs                          898,309                  --
             Accumulated amortization                                             (25,000)                 --
                                                                              ---------------    -------------
                                                                                  873,309                  --
                                                                              ---------------    -------------

             Notes payable acquisition costs, net                                 439,084            674,901
                                                                              ---------------    -------------

             Other, net                                                            19,226                  --
                                                                              ---------------    -------------

                                                                           $    2,513,249          1,892,195
                                                                              ===============    =============
</TABLE>
<PAGE>
                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


     Leasehold interests represent the cost of leasehold rights in real property
     acquired by the Company and consist of the  following  at December 31, 1999
     and 1998:

<TABLE>
<CAPTION>
                                                                                   1999              1998
                                                                              ---------------    -------------

             <S>                                                           <C>                      <C>
             Leasehold interests                                           $     2,851,984          3,431,867
             Accumulated amortization                                             (325,385)          (238,928)
                                                                              ---------------    -------------

                                                                           $     2,526,599          3,192,939
                                                                              ===============    =============
</TABLE>

     During 1999, the Company sold four leasehold interests in hotel properties.
     The Company  received  net proceeds of  approximately  $500,000 in cash and
     $825,000  in notes  receivable.  The notes  receivable  are  secured by the
     related leasehold interests. The Company recorded approximately $500,000 in
     gains in  connection  with those sales.  The Company  remains  contingently
     liable for rent  payments due in  accordance  with the leases on certain of
     the properties (note 9).

     During  1998,  the  Company  sold  eight   leasehold   interests  in  hotel
     properties.  The Company received net proceeds of approximately $990,000 in
     cash and $1,655,000 in notes  receivable.  The notes receivable are secured
     by the related leasehold interests. The Company recorded approximately $1.6
     million  in gains in  connection  with these  sales.  The  Company  remains
     contingently  liable for rent payments due in accordance with the leases on
     certain of the properties (note 9).

     In June 1998,  the Company  entered into leases for seven hotel  properties
     owned by Host Funding, Inc. The hotel properties are operated under Super 8
     (4) and Sleep Inn (3) license  agreements.  All of the leases are accounted
     for as operating leases (note 9). The Company paid  approximately  $500,000
     in cash,  $400,000 in common  stock and  $400,000 in notes  payable for the
     leasehold  interests.  In  addition to the  leases,  the  Company  received
     $288,000  of  Host  Funding,  Inc.  common  stock;  the  remainder  of  the
     acquisition fee was allocated to leasehold interests.

     Other assets at December 31, 1999 and 1998 consist of the following:

<TABLE>
<CAPTION>

                                                                                 1999              1998
                                                                             -------------     -------------

<S>                                                                       <C>                    <C>
               Investments in joint ventures/partnerships                 $      369,080         1,159,662
               Other                                                              57,415                --
                                                                             -------------     -------------

                                                                          $      426,495         1,159,662
                                                                             =============     =============
</TABLE>

     Investments  in joint  ventures/partnerships  consists  of  investments  in
     partnership  entities (five in 1999 and six in 1998),  each of which owns a
     single hotel property. The Company accounts for its interests on the equity
     method and recognized  aggregate losses from these entities of $131,065 and
     $124,480 during 1999 and 1998, respectively.

     Such losses are included in hotel  operations  expense in the  accompanying
     consolidated  statements  of income and in the Company's  hotel  operations
     business segment (note 16). One partnership which was previously  accounted
     for on the equity method is consolidated  in the 1999 financial  statements
     (note 6).
<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


(8)    Notes Payable

       Notes payable at December 31, 1999 and 1998 consist of the following:

<TABLE>
<CAPTION>
                                                                            1999               1998
                                                                       ---------------    ---------------

                       <S>                                         <C>                       <C>
                       Variable rate mortgage notes                $       2,974,040          3,095,776
                       Fixed rate mortgage notes                          22,916,151         24,057,934
                       Unsecured subordinated notes                        1,755,779          2,034,011
                       Convertible debenture notes, net of
                           unamortized discount                            4,940,555          4,920,555
                       Other notes payable                                   155,270            448,132
                       Capital lease obligations (note 9)                     37,547             52,021
                                                                       ---------------    ---------------
                                                                          32,779,342         34,608,429
                       Less current portions                               8,681,568          1,251,251
                                                                       ---------------    ---------------

                       Noncurrent portions of notes payable        $      24,097,774         33,357,178
                                                                       ===============    ===============
</TABLE>

     The variable  rate  mortgage  notes  consist of four notes  secured by four
     hotel  properties.  The  notes  bear  interest  at  prime  plus 1% (9.5% at
     December 31, 1999),  require  aggregate  monthly  payments of $32,916,  and
     mature at various dates through 2015.

     The fixed  rate  mortgage  notes  consist  of 18 notes  secured by 16 hotel
     properties.  The notes bear  interest at rates  ranging  from 8.25% to 9.5%
     (weighted  average  at  December  31,  1999 of  8.81%).  The notes  require
     aggregate  monthly payments of $217,896 and mature at various dates through
     2018.

     The  unsecured  subordinated  notes consist of three notes which are due in
     varying  amounts of monthly and  quarterly  payments  and mature at various
     dates through  December  2002.  The stated  balances  represent the present
     value of amounts to be paid at a discount rate of 9%.

     The convertible  debentures,  which were issued to investment funds managed
     by a related party (note 14), consist of five notes aggregating  $5,000,000
     net of  unamortized  original issue discount of $59,445 in 1999 and $79,445
     in 1998.  The notes bear interest at 8%, are unsecured,  require  quarterly
     interest only payments,  and mature in December  2002.  Under the debenture
     agreements, the holders also have certain rights of conversion (note 10).

     The combined  aggregate amount of maturities for all notes payable for each
     of the next five years and thereafter is as follows:

                       Year ending December 31,
                       ---------------------------------

             2000                       $        8,681,568
             2001                                2,079,324
             2002                                8,482,059
             2003                                  247,929
             2004                                2,036,522
             Thereafter                         11,251,940
                                             ----------------
                                        $       32,779,342
                                             ================



<PAGE>


                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


     Current portions of notes payable include $6,618,680 relating to four notes
     secured by four hotel  properties held for sale (note 6). The actual amount
     required  to be paid in the year 2000  under  the  terms of these  notes is
     $132,641.


(9)  Leases

     The Company leases certain  equipment under  agreements that are classified
     as capital  leases.  The leases have  remaining  terms  ranging from one to
     three  years and have  purchase  options at the end of the  original  lease
     terms.

     Capital  lease assets  included in property  and  equipment at December 31,
     1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                                 1999               1998
                                                                             -------------     ---------------

               <S>                                                       <C>                         <C>
                Equipment                                                 $       69,284              69,284
                Accumulated amortization                                         (26,309)            (14,830)
                                                                             -------------     ---------------

                                                                          $       42,975              54,454
                                                                             =============     ===============
</TABLE>


     The Company operates several of its locations in leased  facilities.  Lease
     terms  range  from 10 to 30 years with  options to renew at varying  terms.
     Certain of the leases provide for contingent  payments based upon a percent
     of revenues. Some leased vehicles and equipment are classified as operating
     leases.

     Future minimum payments, by year and in the aggregate,  under noncancelable
     capital leases and operating  leases with initial or remaining terms of one
     year or more consist of the following at December 31, 1999:

<TABLE>
<CAPTION>
                Year ending                                                    Capital           Operating
                December 31,                                                    leases             leases
                ------------                                                -------------     ---------------
                    <S>                                                  <C>                     <C>
                     2000                                                $        19,818           2,821,668
                     2001                                                         14,449           3,104,217
                     2002                                                          9,632           3,060,007
                     2003                                                             --           2,920,039
                     2004                                                             --           2,828,603
                     Subsequent years                                                 --          25,418,911
                                                                             -------------     ---------------

                           Total minimum lease payments                           43,899          40,153,445
                                                                                               ===============

                Amounts representing interest                                      6,352
                                                                             -------------
                Present value of net minimum payments                             37,547

                Current portions                                                  16,114
                                                                             -------------

                Long-term capitalized lease obligation                   $        21,433
                                                                             =============
</TABLE>



<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998

     Rental  expense,  including  contingent  rentals  of  $176,774  in 1999 and
     $230,376 in 1998 and net of sublease rentals of $78,040 in 1999 and $80,129
     in 1998, for all operating  leases was $3,350,064 in 1999 and $3,300,307 in
     1998.

     Leases  described in the preceding  paragraphs  include  leases between the
     Company and operating  companies whose shareholders are common shareholders
     of the Company.  Such amounts  totaled $60,512 in 1999 and $69,984 in 1998.
     Total future  minimum  payments  under these related party leases amount to
     $424,826.

     The Company remains  contingently liable for future minimum rental payments
     of $3,679,233  on sold  leasehold  interests  (note 7) and on subleased and
     assigned   properties  and  equipment  in  the  event  of  default  by  the
     purchasers, sublessees and assignees.


(10) Capital Structure and Net Income Per Share

     Series A Preferred Stock

     In connection with an acquisition in 1997, the Company issued 30,000 shares
     of Series A (par value $100) preferred  stock. The Series A preferred stock
     is nonvoting and accrues cumulative dividends at the rate of 10% per annum,
     payable  when  and  to  the  extent  declared  by the  Company's  Board  of
     Directors. All accrued but unpaid dividends of the Series A preferred stock
     must be paid in full  before  any  cash  dividend  may be  declared  on the
     Company's  common  stock.  As of December 31,  1999,  there was $136,250 of
     cumulative  preferred  dividends  in  arrears.  The holders of the Series A
     preferred stock have agreed to forgive the cumulative  preferred  dividends
     in arrears in exchange for the settlement of certain claims the Company has
     against them in connection with the acquisition.

     In the event of any voluntary or involuntary liquidation,  dissolution,  or
     winding-up  of the  Company,  the holders of the Series A  preferred  stock
     shall be entitled to receive,  prior and in preference to any  distribution
     to the holders of the Company's  common  stock,  an amount equal to the par
     value of the preferred shares held plus any unpaid cumulative dividends.

     At any time after  September  17,  2004,  each holder of Series A preferred
     stock may convert any or all such stock,  at par, into common shares of the
     Company.  The  conversion  price for such common shares shall be the market
     price of such shares immediately prior to conversion.

     At any time after  September  17, 2004,  the Company may convert all of the
     Series  A  preferred  stock,  at 110% of par,  into  common  shares  of the
     Company.  The  conversion  price for such common shares shall be the market
     price of such  shares  immediately  prior  to  conversion.  If the  Company
     converts  the Series A preferred  stock into common  shares of the Company,
     the holders of such converted shares have certain rights for a limited time
     period to put the shares back to the Company for cash.

     Convertible Debentures

     The convertible  debentures  (note 8) are convertible into common shares of
     the  Company  any time at the  option  of the  holder  at a price of $9 per
     share. If all such debentures were converted,  an additional 555,555 shares
     of common stock would be issued.



<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998

     Net Income Per Share

     The following  table sets forth the  computations  of basic and diluted net
     income per common share for the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                                     1999               1998
                                                                                     ----               ----

             <S>                                                               <C>                    <C>
            Numerator:
              Net income                                                       $    1,668,957         1,235,495
              Less Series A preferred stock dividends                                (300,000)         (300,000)
                                                                                  --------------    --------------
              Numerator for basic net income per common shares                      1,368,957           935,495
              Add back Series A preferred stock dividends
                 (assumed converted)                                                  300,000                --
              Add back debenture interest, net of tax (assumed
                 converted)                                                           248,000           248,000
                                                                                  --------------    --------------

            Numerator for diluted net income per common shares                $     1,916,957         1,183,495
                                                                                  ==============    ==============

            Denominator:
              Denominator for basic net income per common share:
                 Actual weighted-average shares outstanding                         1,983,114         1,926,511
              Effect of dilutive securities:
                   Series A preferred stock                                           558,423                --
                   Convertible debentures                                             555,555           555,555
                   Outstanding stock options                                           30,189            45,852
                                                                                  --------------    --------------

              Denominator for diluted net income per common share                   3,127,281         2,527,918
                                                                                  ==============    ==============

            Net income per common share:
              Basic                                                            $      0.69               0.48
                                                                                      ====               ====

              Diluted                                                          $      0.61               0.47
                                                                                      ====               ====
</TABLE>


     The assumed conversion of the convertible preferred stock was excluded from
     the  computation of diluted net income per common share in 1998 because the
     effect would be antidilutive.


(11) Other Income

     Other income in 1998 includes  $510,000 from favorable  settlements of Days
     Bankruptcy  claims and changes in estimates of allowed amounts of remaining
     unsettled claims (note 3).



<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


(12) Income Taxes

     Total income tax expense (benefit),  principally  Federal and all deferred,
     recognized  differs from the amount  computed by applying the U.S.  Federal
     income tax rate of 34% to pretax income as a result of the following:

<TABLE>
<CAPTION>
                                                                                  1999                1998
                                                                             ---------------     ---------------

             <S>                                                          <C>                       <C>
             Computed "expected" tax expense                              $        926,000             114,000
             Increase (reduction) in income taxes resulting from:
                 State taxes, net of Federal tax benefit                           108,000              13,000
                 Increase (decrease) in valuation allowance for
                   deferred tax assets                                              65,000          (1,028,000)
                 Other                                                             (44,000)                  --
                                                                             ---------------     ---------------

                                                                          $      1,055,000            (901,000)
                                                                             ===============     ===============
</TABLE>


     At December 31, 1999, the Company has net operating loss  carryforwards for
     Federal  income  tax  purposes  of  approximately  $7.1  million  which are
     available to offset future taxable income, if any, and expire at dates from
     2006 through 2018.

     The tax  effects of  temporary  differences  that give rise to  significant
     portions of deferred tax assets and liabilities as of December 31, 1999 and
     1998 are presented below:

<TABLE>
<CAPTION>
                                                                                  1999                1998
                                                                             ----------------    ---------------

             <S>                                                         <C>                        <C>
                 Notes receivable allowances                              $       128,000             128,000
                 Net operating loss and AMT carryforwards                       2,405,000           4,602,000
                 Partnership basis differences                                    650,000                  --
                 Effect of state income taxes                                     307,000             421,000
                 Other                                                             40,000                  --
                                                                             ----------------    ---------------
                        Total deferred tax assets                               3,530,000           5,151,000

                 Less valuation allowance                                        (127,000)            (62,000)
                                                                             ----------------    ---------------
                        Deferred tax assets                                     3,403,000           5,089,000
                                                                             ----------------    ---------------

               Deferred tax liabilities:
                 Partnership basis differences                                          --             (30,000)
                 Property and equipment basis differences                        (615,000)         (1,228,000)
                                                                             ----------------    ---------------
                        Gross deferred tax liabilities                           (615,000)         (1,258,000)
                                                                             ----------------    ---------------
                        Net deferred tax assets                           $     2,788,000           3,831,000
                                                                             ================    ===============
</TABLE>


     The valuation allowance for deferred tax assets as of December 31, 1999 and
     1998 was $127,000 and  $62,000,  respectively.  The net change in the total
     valuation allowance for the year ended December 31, 1999 was an increase of
     $65,000 and for the year ended December 31, 1998 a decrease of $1,028,000.



<PAGE>
                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


     In assessing the realizability of deferred tax assets, management considers
     whether it is more likely than not that some portion or all of the deferred
     tax assets will not be realized.  The ultimate  realization of deferred tax
     assets is dependent  upon the  generation of future  taxable  income by the
     Company  during the periods in which  those  temporary  differences  become
     deductible.  Management  considers the projected  future taxable income and
     tax planning  strategies in determining the valuation  allowance.  In 1998,
     based on actual events and other  information  available,  it appeared more
     likely than not that  additional  portions of the deferred tax assets would
     be realized and the Company recognized an additional net deferred tax asset
     of  $901,000.  Although  no  assurances  can be  made,  realization  of the
     Company's  deferred  tax  assets  should  occur  if the  Company  generates
     approximately $7.1 million of taxable income over the next 7 to 19 years.


(13) Stock Option Plan

     The  Company's  1995  Stock  Option  Plan (the 1995  Plan)  authorized  the
     issuance of options for up to 170,000 shares of the Company's common stock.
     The  Company's  1997  Stock  Option  Plan (the 1997  Plan)  authorized  the
     issuance of options for up to 80,000 shares of the Company's  common stock.
     The  Company's  1998  Stock  Option  Plan (the 1998  Plan)  authorized  the
     issuance of options for up to 90,000 shares of the Company's  common stock.
     The  Company's  1999  Stock  Option  Plan (the 1999  Plan)  authorized  the
     issuance of options for up to 90,000 shares of the Company's  common stock.
     Granted  options  vest  one-third  immediately,   one-third  on  the  first
     anniversary of the grant date,  and one-third on the second  anniversary of
     the grant date.  The  exercise  price for all options  represents  the fair
     value of the common  stock at the grant date.  Plan options  terminate  ten
     years after vesting, or earlier under certain conditions.

     The granted stock option activity is as follows:

                                              Number           Weighted-average
                                             of shares          exercise price
                                            -------------    -------------------

      Balance December 31, 1997                  206,000        $    5.27
      Granted in 1998                             90,000             7.37
                                                  ------             ----

      Balance December 31, 1998                  296,000             5.91

      Granted in 1999                             93,000             5.26
      Exercised in 1999                          (26,000)            3.89
      Forfeited in 1999                          (52,000)            6.59
                                                 -------             ----

      Balance December 31, 1999                  311,000        $    5.77
                                                 =======        =========


<PAGE>

                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998



     The  following  table  summarizes   information  concerning  stock  options
     outstanding as of December 31, 1999:

<TABLE>
<CAPTION>
                                                   Outstanding                                 Exercisable
                              ---------------------------------------------------    -----------------------------
                                                   Weighted-          Weighted-                          Weighted-
              Range of                             average            average                            average
              exercise                            remaining           exercise                          exercise
               prices             Shares            life               price             Shares           price
          -----------------     -----------     --------------    -----------------    -----------    --------------
<S>         <C>                   <C>            <C>                <C>                  <C>       <C>
              $  3.44              60,000          6.3 years        $   3.44              60,000   $       3.44
           $  5.38 - 6.13          31,000          7.7 years            5.54              29,000           5.54
              $  6.88              63,000          8.5 years            6.88              63,000           6.88
              $  7.37              75,000          9.5 years            7.37              50,000           7.37
              $  5.25              82,000         10.4 years            5.25              27,333           5.25
                                   ------                               ----              ------           ----
                                  311,000                           $   5.77             229,333   $       5.72
                                  =======                           ========             =======   ============
</TABLE>


     No compensation  expense has been recognized for the Company's stock option
     plans.  Had  compensation  cost for the  Company's  stock option plans been
     determined based upon the fair value methodology  prescribed under SFAS No.
     123, the  Company's  net income  would have been  reduced by  approximately
     $113,000  or  approximately  $0.06 per common  share  (basic) and $0.04 per
     common  share  (diluted)  in 1999 and reduced by $151,000 or  approximately
     $0.08 per common  share  (basic) and $0.06 per common  share  (diluted)  in
     1998.  The effects of either  recognizing or disclosing  compensation  cost
     under SFAS No. 123 may not be representative of the effects on reported net
     income for future years.  The fair value of options  granted during 1999 is
     estimated   as  $1.65  on  the  date  of  grant   using  the   Black-Sholes
     option-pricing  model with the following  assumptions:  dividend  yield 0%,
     volatility  20%,  risk-free  interest rate of 6.0%, and an expected life of
     five years.  The fair value of the options granted during 1998 is estimated
     as $2.31 on the date of grant using the Black-Sholes  option-pricing  model
     with the  following  assumptions:  dividend  yield 0%,  volatility  of 20%,
     risk-free interest rate of 6.0%, and an expected life of five years.


(14) Related Party Transactions

     Following the Days Bankruptcy,  a trust was created (the Creditors'  Trust)
     to pursue  certain  claims for the  benefit  of  unsecured  creditors.  The
     Company  acts  as  trustee  for  the  Creditors'  Trust.  The  Company  was
     reimbursed  $100,000 in 1999 and 1998 for expenses  incurred related to the
     Creditors'  Trust.  Other  operating  and  administrative  expenses  in the
     accompanying 1999 and 1998 consolidated  statements of income are presented
     net of such amounts.

     Other  notes  receivable  (note 5) at December  31, 1999 and 1998  includes
     $156,705 and $187,583, respectively, due from an officer and shareholder of
     the  Company.  Such  note  bears  interest  at 10%  and  is due in  monthly
     installments of $5,312 until June 2002.

     The convertible debentures (notes 8 and 10) were issued to investment funds
     managed by a subsidiary of Bay Harbour Management,  formerly known as Tower
     Investment  Group,  Inc.  (Bay  Harbour).  Bay  Harbour  owns  or  controls
     approximately 27.2% of the Company's outstanding common stock. An executive
     officer of Bay Harbour is on the Company's Board of Directors.


<PAGE>
                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


     A director of the Company is a principal in a hotel brokerage company. Such
     company acted as the broker in the sales of the four leasehold interests in
     1999 (note 7) and received aggregate  commissions of $63,000, in connection
     therewith.


(15) Commitments

     In  conjunction  with  master  development  agreements  executed  with  two
     developers,  the  Company is  required  to advance  certain  amounts to the
     developers at certain points in the  construction of the properties.  Under
     an  agreement  executed  with Marion and Cass St.  Corporation  (Cassland),
     owned by a  significant  shareholder,  the Company is required to advance a
     total of $135,000 per property  constructed.  The  agreement  specifies the
     construction of five  properties.  As of December 31, 1999, the Company had
     advanced  Cassland  a total of  $495,000  and is  required  to  advance  an
     additional  $180,000 once certain  construction  points are achieved on the
     fourth  and  fifth  properties.   These  advances  are  recorded  as  notes
     receivable  with  interest  accruing  at a  rate  of 8%  per  annum.  Hotel
     operations expenses in 1999 includes $220,000 of rent expense to Cassland.


     The master development agreement entered into with H&W Ventures, Inc. (H&W)
     requires  the  Company  to  advance  H&W a total of  $75,000  per  property
     developed.  The agreement calls for a maximum of five  properties.  For the
     first two properties, the advances are required once H&W purchases land and
     executes the related license agreements. For the last three properties, the
     advances are made once a property is opened in accordance  with the license
     agreement.   Currently,   one  of  the  last  three   properties  is  under
     construction and is expected to be completed in April 2000.

     During 1999, the Company  entered into an agreement to purchase  management
     contracts  on 12  hotel  properties  owned by  Quality  Lodging,  LLC.  The
     purchase of nine of these contracts was completed  during 1999. At December
     31,  1999,  the Company was still  contractually  obligated to purchase the
     remaining three contracts for a purchase price of approximately $289,000 to
     be paid in cash and stock. The Company anticipates  completing the purchase
     of these contracts during 2000.


(16) Operating Segments

     The  Company  conducts  recurring  operations  in  three  segments  of  the
     limited-service hotel industry - hotel franchising,  hotel management,  and
     hotel operations.  The Company generates additional revenues and results of
     operations from hotel development activities.

     Hotel franchising involves the selling and servicing of rights and licenses
     comprising the Country Hearth Inn lodging system.  Revenues include initial
     fees and continuing  royalty,  marketing and reservation  fees from Company
     owned and leased hotels and from  unaffiliated  customers.  Continuing fees
     are based on each franchised hotel's room revenues.

     Hotel management  involves the oversight of day-to-day hotel operations and
     accounting  for  limited-service  and some  full-service  hotels.  Revenues
     include  continuing  fees from  Company  owned and  leased  hotels and from
     unaffiliated  customers.  Continuing fees are based on each managed hotel's
     revenues.

     Hotel  operations  involves  the  operations  of  Company  owned and leased
     hotels.  Revenues are  generated  from  unaffiliated  hotel  guests.  Hotel
     operations   also   includes  the  Company's   share  (equity   method)  of
     unconsolidated  partnerships  which also  operate  hotels and the  minority
     interests' share of consolidated  partnerships'  results which are included
     in hotel operations.


<PAGE>
                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


     Hotel  development  activities  involve the development and construction or
     purchase of existing hotel  properties  and  subsequent  sale thereof along
     with related  activities such as servicing notes receivable  generated from
     sales.  Corporate activities are generally  administrative and also include
     all interest income and expense which does not specifically relate to other
     segment operations.



<PAGE>
                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


     Franchise  and  management  fees are  charged to  Company  owned and leased
     hotels at the same  rates as  charged  to  unaffiliated  customers  and are
     eliminated in consolidation.

Condensed  operating results,  assets, and notes payable related to each segment
as of and for the years ended  December 31, 1999 and 1998 are  presented  below.
Segment assets and notes payable exclude  intercompany  balances which eliminate
in  consolidation.  No specific  assets or notes payable  relate to  development
activities and such activities are generally conducted by corporate personnel on
a  nonrecurring  basis.  Thus,  development  results are included with corporate
segment  results.  Assets of hotel  operations and the related notes payable are
reflected in the hotel operations  through the date of sale. Net gains from such
sales  are  reflected  in  the  development  and  corporate   segment.   Capital
expenditures   in  1999  and  1998  amounted  to  $2,990,276   and   $5,966,947,
respectively,  and principally  related to hotel operations.  Income tax expense
(benefit) is not allocated to the various segments.

<TABLE>
<CAPTION>
                                                                          1999
                          --------------------------------------------------------------------------------------------------
                            Hotel           Hotel             Hotel        Development
                          operations      management       franchising     & corporate       Eliminations      Consolidated
                          -----------    -------------     ------------    -------------     -------------     -------------
<S>                   <C>                  <C>              <C>              <C>             <C>               <C>
Revenues              $  25,886,594        2,324,275        2,141,373        3,748,232       (1,801,876)       32,298,598
Expenses                 21,629,229        1,815,896        1,120,353        1,702,913       (1,801,876)       24,466,515
                          -----------    -------------     ------------    -------------                       -------------
     EBITDA*              4,257,365           508,379        1,021,020        2,045,319                          7,832,083

Depreciation              1,620,372            56,471          120,000           12,000                          1,808,843
Interest                  2,599,222                --               --          700,061                          3,299,283
                          -----------    -------------     ------------    -------------                       -------------

     Income before
       income taxes    $     37,771           451,908          901,020        1,333,258                          2,723,957
                          ===========    =============     ============    =============                       =============

Assets                 $  45,934,343        1,686,226        1,424,376        9,669,756                         58,714,701
                          ===========    =============     ============    =============                       =============

Notes payable          $  26,083,007                                          6,696,335                         32,779,342
                          ===========                                      =============                       =============

                                                                       1998
                          --------------------------------------------------------------------------------------------------
                            Hotel           Hotel             Hotel        Development
                          operations      management       franchising     & corporate       Eliminations      Consolidated
                          -----------    -------------     ------------    -------------     -------------     -------------

Revenues               $  25,720,086        1,193,417        1,320,327        2,525,395       (1,590,082)       29,169,143
Expenses                  21,180,555        1,736,310        1,182,781        1,569,793       (1,590,082)       24,079,357
                          -----------    -------------     ------------    -------------                       -------------
     EBITDA*               4,539,531         (542,893)         137,546          955,602                          5,089,786

Depreciation               1,587,341           50,505          123,500           12,000                          1,773,346
Interest                   2,298,223               --               --          683,722                          2,981,945
                          -----------    -------------     ------------    -------------                       -------------

   Income(loss)before
     income taxes      $     653,967         (593,398)          14,046          259,880                            334,495
                           ===========    =============     ============    =============                       =============

Assets                 $  47,454,314          759,474        1,333,294        9,994,036                         59,541,118
                          ===========    =============     ============    =============                       =============
Notes payable          $  27,408,994                                          7,199,435                         34,608,429
                          ===========                                      =============                       =============

       *Earnings before interest, taxes, depreciation, and amortization.
</TABLE>

<PAGE>
Item  8.  Changes  In and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

     None.
<PAGE>


                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.

DIRECTORS AND EXECUTIVE OFFICERS

     The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
<S>                                    <C>          <C>                                          <C>

                                                                                                 Year Joined
                                                                                                 The Company
Name                                   Age          Position
-------------------------------------- ------------ -------------------------------------------- ---------------------

Douglas C. Collins                     47           Chairman of the Board of Directors           1992
                                                    President, Chief Executive
                                                    Officer and Treasurer

Ronald L. Devine                       56           Director                                     1997
                                                    President - The Lodge Keeper Group

Robert B. Lee                          45           Director                                     1992
                                                    Senior Vice President, Chief
                                                    Financial Officer and Secretary

David C. Glickman                      37           Director                                     1999

David B. Mumford                       41           Director                                     1999

William K. Stern                       73           Director                                     1992

Steven A. Van Dyke                     41           Director                                     1997

</TABLE>

     Douglas C.  Collins.  Mr.  Collins  became  President  and Chief  Executive
Officer of the Company in December 1992, became a director of the Company in May
1995 and became  Chairman  of the Board of  Directors  in March  1999.  Prior to
joining the Company,  Mr. Collins served as President of Days Inns from February
1992  through  September  1992 and  Director  of Days Inns from  September  1992
through  November  1992.  Mr.  Collins served as Senior Vice President and Chief
Financial  Officer of Days Inns from August 1990 through  February  1992,  after
serving as President  of Imperial  Hotels  Corporation,  a hotel chain owner and
operator,  from April 1988 until May 1990. Mr. Collins  joined  Imperial  Hotels
Corporation in August 1980, serving as Vice President of Finance and Development
from June 1984 to April 1988.

     Robert B. Lee. Mr. Lee became Secretary of the Company in December 1992 and
became Vice  President  and Chief  Financial  Officer in July 1993.  Mr. Lee was
named  Senior  Vice  President  of Buckhead in May 1996 and became a director in
June  1997.  Prior to joining  the  Company,  Mr.  Lee  served as the  Corporate
Controller of Days Inns from October 1990 until December 1992. Prior to that, he
functioned in numerous  capacities up to senior  manager in the  accounting  and
audit practice of KPMG LLP from December 1979 to October 1990.

     Ronald L. Devine.  Mr. Devine was the President and Chief Executive Officer
of The Lodge Keeper Group, Inc. ("Lodge Keeper") prior to its acquisition by the
Company  and  served in that  capacity  for more than the last five  years.  Mr.
Devine  continues  to serve as  President  of Lodge  Keeper and is an  executive
officer of the  Company.  Mr.  Devine  became a director of the Company in March
1999.

     William K. Stern.  Mr.  Stern  became a director of the Company in December
1992. He has over forty-five years of experience in the hospitality industry. He
served  as  Vice   President   of  Loews   Hotels  and  as  President  of  Loews
Representation International, Inc. ("LRI"), a separate division of Loews Hotels.
In 1987,  Mr.  Stern  established  "The Grande  Collection  of Hotels," a deluxe
division of LRI.  Mr.  Stern also served as the Chief  Executive  Officer of the
Grande  Collection  division.  Mr.  Stern has been the  owner of Stern  Services
International, a hotel consulting company, since 1992.

     Steven A. Van Dyke.  Mr. Van Dyke  became a director of the Company in June
1997. He is the President and Chief Executive Officer of Bay Harbour Management,
L.C. ("Bay  Harbour"),  formerly known as Tower Investment  Group,  Inc. and has
served in that  capacity  for more than the last five  years.  Bay  Habour is an
investment  advisor  and manages  multimillion  dollar  private  equity and debt
funds.

     David C. Glickman.  Mr.  Glickman became a director of the Company in March
1999. Mr. Glickman is a Senior Vice President and Partner of Roulston & Company,
a  firm  which  provides  financial   management  services  to  individuals  and
institutions. Until March 1999, he was an Associate Director with Bear Stearns &
Co., Inc., an investment  banking firm, and had served in that capacity for more
than the last five years.

     David B.  Mumford.  Mr.  Mumford  became a director of the Company in March
1999. He is the  President of Mumford  Company,  Inc., a national  leader in the
brokerage  of hotel real estate,  and has served in that  capacity for more than
the last five years.

     The members of the  Company's  Board of Directors  are elected  annually to
serve one year terms. Messrs.  Devine,  Glickman,  and Mumford were appointed to
the Board in March 1999 in order to fill a vacated  seat and to fill  additional
seats which were  concurrently  created.  The holders of Common Stock will elect
directors  at the next annual  meeting,  which is scheduled to occur on or about
Thursday, May 25, 2000.


INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

     None.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Based  solely on its review of copies of forms  received  by it pursuant to
Section 16(a) of the  Securities  Exchange Act of 1934,  as amended,  or written
representations from certain reporting persons, the Company believes that during
1999 all Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were complied with.
<PAGE>


Item 10.  Executive Compensation.

SUMMARY COMPENSATION TABLE

     The following table sets forth the compensation paid by the Company to
the named  executive  officers for the years ended  December 31, 1999,  1998 and
1997. These are the only executive officers who received annual salary and bonus
in excess of $100,000 in 1999.

<TABLE>
<CAPTION>
<S>                               <C>            <C>            <C>           <C>                 <C>

                                                                                  Long Term
                                                                                 Compensation
                                                                                   Awards
                                                     Annual     Compensation      Securities
Name and                                            Salary         Bonus          Underlying              All Other
Principal Position                Year                ($)           ($)           Options (#)          Compensation ($)
--------------------------------- -------------- -------------- ------------- ------------------- --------------------------

Douglas C. Collins                1999               $260,000       158,265          17,000   (b)             $8,600  (c)
Chief Executive Officer           1998                250,000       110,470          18,000                   14,000
                                  1997                235,000        94,005          16,000                    1,500

Ronald L. Devine                  1999               $121,866        34,368           8,000   (b)             $8,532(d)
President - Lodge Keeper          1998                111,481        24,572           9,000                    5,000
                                  1997 (a)             70,240        21,005           9,000                        -

Robert B. Lee                     1999               $121,275        39,868          11,000   (b)             $8,531(e)
Chief Financial Officer           1998                115,500        25,457          12,000                    9,000
                                  1997                105,000        31,502           9,000                    1,449

</TABLE>

     (a)  Mr. Devine's employment with the Company began on May 8, 1997.

     (b)  See "OPTION GRANTS TABLE."

     (c)  Employer's portion of 401(k)  contribution  ($3,600) and non-qualified
          deferred compensation plan ($5,000).

     (d)  Employer's portion of 401(k)  contribution  ($3,532) and non-qualified
          deferred compensation plan ($5,000).

     (e)  Employer's portion of 401(k)  contribution  ($3,531) and non-qualified
          deferred compensation plan ($5,000).


<PAGE>


OPTION GRANTS TABLE

     The  following  table  sets  forth the  number  of  shares of Common  Stock
underlying options granted to the named executive officers during the year ended
December 31, 1999. No stock appreciation rights were granted.

                                                Individual Grants
-------------------------------- -----------------------------------------------
<TABLE>
<CAPTION>
<S>                               <C>                    <C>                      <C>                 <C>

                                 Number of                            Percent of
                                 Shares of                                 Total
                                 Common Stock                            Options
                                 Underlying                           Granted to       Exercise
                                 Options                               Employees        Price                    Expiration
Name                             Granted (#)                      in Fiscal 1999      ($/Share)                    Date (g)
-------------------------------- ----------------------- ------------------------ ------------------- ----------------------

Douglas C. Collins                          5,667                  7.8%              $ 5.25 (f)               May 27, 2009
                                            5,667                  7.8%              $ 5.25 (f)               May 27, 2010
                                            5,666                  7.8%              $ 5.25 (f)               May 27, 2011

Ronald L. Devine                            2,667                  3.7%              $ 5.25 (f)               May 27, 2009
                                            2,667                  3.7%              $ 5.25 (f)               May 27, 2010
                                            2,666                  3.7%              $ 5.25 (f)               May 27, 2011

Robert B. Lee                               3,667                  5.0%              $ 5.25 (f)               May 27, 2009
                                            3,667                  5.0%              $ 5.25 (f)               May 27, 2010
                                            3,666                  5.0%              $ 5.25 (f)               May 27, 2011
</TABLE>

     (f)  The exercise price was fixed as the market price at the date of grant.

     (g)  The options expire ten years after the date they become vested.



<PAGE>


AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE

          The following table sets forth the number and fiscal year-end value of
unexercised  options granted to the named executive  officers as of December 31,
1999.
<TABLE>
<CAPTION>
<S>                                          <C>                                       <C>

                                             Number of
                                             Shares of
                                             Common Stock                              Value of
                                             Underlying                                Unexercised
                                             Unexercised                               In-the-Money
                                             Options at                                Options at
                                             FY-End(#)                                 FY-End($)

                                             Exercisable/                              Exercisable/
Name                                         Unexercisable                             Unexercisable
                                             ----------------------------------------- ------------------------------------

Douglas C. Collins                           70,667 / 17,333                           $66,745  /  3,547

Ronald L. Devine                             17,667 / 8,333                            835  /  1,669

Robert B. Lee                                34,667 / 11,333                           23,110  /  2,295

</TABLE>

     No options were exercised by the named  executive  officers during 1999. No
stock appreciation rights have been issued or exercised.



COMPENSATION OF DIRECTORS

     Robert M.  Miller,  the former  Chairman of the Board of  Directors  of the
Company,  resigned  as a director  of the  Company  in March  1999.  Mr.  Miller
received total compensation in 1999 of $78,750.

     Each of the Company's  other outside  (non-employee)  directors  receive an
annual fee of $12,000 and $750 per attendance at board of directors meetings.



<PAGE>


EMPLOYMENT  CONTRACTS AND  TERMINATION  OF  EMPLOYMENT  AND  CHANGE-IN-  CONTROL
ARRANGEMENTS

     Douglas C.  Collins.  The Company has entered into an  employment  contract
with Mr.  Collins  for a term which  expires in July 2002.  If the  contract  is
terminated  by the Company (1) prior to the end of its term,  (2) other than for
cause,  and (3) within twelve months following a  change-in-control  (generally,
acquisition of control of over 50% of the Common Stock or a change in a majority
of the board of directors),  Mr. Collins shall be entitled to the greater of (x)
his annual salary (as defined)  payable  through the end of his employment  term
and (y)  one-half  of his  annual  salary for the rest of the year in which such
termination  occurs.  If such event  occurred as of January 1, 2000, Mr. Collins
would be entitled to a payment of $1,141,662.

     If Mr.  Collins  terminates  his  contract  (1)  between  90 and  120  days
following a  change-in-control  or (2) within 30 days  following  any  demotion,
diminution of responsibility or pay or forced relocation occurring within twelve
months of a  change-in-control,  he shall be  entitled  to the lesser of (x) his
annual salary  through the end of his  employment  term, and (y) one-half of his
annual  salary  for the year in which  such  termination  occurs.  If such event
occurred as of January 1, 2000,  Mr.  Collins  would be entitled to a payment of
$220,967.

     If Mr. Collins' employment is otherwise terminated without cause before the
expiration of his  employment  term, the Company must pay him an amount equal to
his annual salary for the year in which such termination  occurs.  If such event
occurred as of January 1, 2000,  Mr.  Collins  would be entitled to a payment of
$441,934.


     Ronald L. Devine. The Company has entered into an employment  contract with
Mr.  Devine for a term which  expires in May 2003. If the contract is terminated
by the Company (1) prior to the end of its term,  (2) other than for cause,  and
(3) within twelve months following a  change-in-control  (as defined above), Mr.
Devine  shall be entitled  to the greater of (x) his annual base salary  payable
through the end of his  employment  term and (y) one-half of his base salary for
the rest of the year in which such termination occurs. If such event occurred as
of January 1, 2000, Mr. Devine would be entitled to a payment of $418,333.

     If Mr. Devine terminates his contract (1) between 90 and 120 days following
a change-in-control or (2) within 30 days following any demotion,  diminution of
responsibility or pay or forced  relocation  occurring within twelve months of a
change-in-control,  he shall be  entitled  to the lesser of (x) his annual  base
salary  through the end of his  employment  term,  and (y)  one-half of his base
salary for the year in which such termination  occurs. If such event occurred as
of January 1, 2000, Mr. Devine would be entitled to a payment of $62,750.

     If Mr. Devine's employment is otherwise terminated without cause before the
expiration of his  employment  term, the Company must pay him an amount equal to
his annual base salary for the year in which such  termination  occurs.  If such
event  occurred as of January 1, 2000, Mr. Devine would be entitled to a payment
of $125,500.



<PAGE>


     Robert B. Lee. The Company has entered into an employment contract with Mr.
Lee for a term which  expires in July 2002. If the contract is terminated by the
Company  (1) prior to the end of its term,  (2) other  than for  cause,  and (3)
within twelve months following a  change-in-control  (as defined above), Mr. Lee
shall be entitled to the greater of (x) his annual  salary (as defined)  payable
through the end of his employment term and (y) one-half of his annual salary for
the rest of the year in which such termination occurs. If such event occurred as
of January 1, 2000, Mr. Lee would be entitled to a payment of $477,732.

     If Mr. Lee  terminates his contract (1) between 90 and 120 days following a
change-in-control  or (2) within 30 days  following any demotion,  diminution of
responsibility or pay or forced  relocation  occurring within twelve months of a
change-in-control,  he shall be entitled to the lesser of (x) his annual  salary
through the end of his  employment  term,  and (y) one-half of his annual salary
for the year in which such  termination  occurs.  If such event  occurred  as of
January 1, 2000, Mr. Lee would be entitled to a payment of $92,464.

     If Mr. Lee's  employment is otherwise  terminated  without cause before the
expiration of his  employment  term, the Company must pay him an amount equal to
his annual salary for the year in which such termination  occurs.  If such event
occurred  as of  January  1, 2000,  Mr.  Lee would be  entitled  to a payment of
$184,929.


REPORT ON REPRICING OF OPTIONS/SARS

     Not applicable.


<PAGE>


Item 11.  Security Ownership of Certain Beneficial Owners and Management.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The  following  table sets forth  information  as of February 29, 2000 with
respect  to the  beneficial  ownership  of shares of the  Common  Stock  held by
beneficial owners of more than 5% of the Common Stock. The information set forth
below is based upon the Company's stock records and information  obtained by the
Company from the persons named below.  Unless otherwise  indicated,  each person
has sole voting and investment power with respect to such shares.

<TABLE>
<CAPTION>
<S>                                                    <C>                                       <C>

Name and Address                                       Amount and Nature of                      Percent
of Beneficial Ownership                                Beneficial Ownership                      of Class
---------------------------------------------------------------------------------------------------------
NY Motel Enterprises                                   112,821  - Direct                         5.56%
440 West 57th Street
New York, NY   10019

Leon M. & Marsha C. Wagner                             124,181  - (a)                            6.12%
8 Lincoln Woods
Purchase, NY 10577

Heartland Advisors, Inc.                               184,600  - Investment                     9.10%
789 North Water Street                                            Advisor
Milwaukee, WI 53202

Hotel-Motel Management Corporation                     238,960  - Direct                         11.78%
3485 North Desert Drive
Suite 106 - Building 2
East Point, GA  30344

Bay Harbour Management, L.C.                           1,107,002  - Investment                   42.83%
Suite 270                                                           Advisor (b)
777 South Harbour Island Boulevard
Tampa, FL 33602

</TABLE>

     (a)  Mr. Wagner holds 111,036 shares  directly and Ms. Wagner,  his spouse,
          holds 13,145 shares directly.

     (b)  Includes  551,447  shares  owned by  investment  funds  managed by Bay
          Harbour and 555,555  contingently  issuable shares from the conversion
          of debentures owned by investment funds managed by Bay Harbour.


<PAGE>


SECURITY OWNERSHIP OF MANAGEMENT

     The following  table sets forth,  as of February 29, 2000,  all  beneficial
holdings of  outstanding  Common Stock by the directors and the named  executive
officers of the Company and all directors and executive officers as a group. The
information  set forth  below is based  upon the  Company's  stock  records  and
information  obtained  by the  Company  from the  persons  named  below.  Unless
otherwise  indicated,  each  person has sole  voting and  investment  power with
respect to such shares. The address of each director and executive officer is in
care of the Company, Suite 850, 7000 Central Parkway, Atlanta, Georgia 30328.

<TABLE>
<CAPTION>
<S>                                     <C>                                          <C>

Name of                                 Amount and Nature of                         Percent
Beneficial Holder                       Beneficial Ownership                         of Class
----------------------------------------------------------------------------------------------
Douglas C. Collins                         89,775    - (a)                              4.28 %
Ronald L. Devine                            83,119   - (b)                              4.06 %
Robert B. Lee                               48,475   - (c)                              2.35 %
David C. Glickman                            3,667   - (d)                              0.18 %
David B. Mumford                             3,167   - (e)                              0.16 %
William K. Stern                            47,667   - (f)                              2.31 %
Steven A. Van Dyke                       1,127,700   - (g)                             43.41 %

Directors and Officers                   1,397,062   - (a-g)                           50.59 %
as a group (7 persons)
</TABLE>

     (a)  Mr.  Collins  holds  12,600  shares  directly  and holds 6,508  shares
          indirectly  through DC  Hospitality,  Inc.,  which is 85% owned by Mr.
          Collins and 15% owned by Mr. Lee.  Mr.  Collins  also has the right to
          acquire an  additional  70,667 shares within the next 60 days pursuant
          to option agreements.

     (b)  Mr. Devine holds 65,452  shares  directly and has the right to acquire
          an additional 17,667 shares within the next 60 days pursuant to option
          agreements.

     (c)  Mr. Lee holds 7,300 shares directly and holds 6,508 shares  indirectly
          through DC  Hospitality,  Inc.,  which is 15% owned by Mr. Lee and 85%
          owned  by Mr.  Collins.  Mr.  Lee also has the  right  to  acquire  an
          additional  34,667  shares  within the next 60 days pursuant to option
          agreements.

     (d)  Mr.  Glickman holds 2,000 shares directly and has the right to acquire
          1,667  additional  shares  within the next 60 days  pursuant to option
          agreements.

     (e)  Mr.  Mumford holds 1,500 shares  directly and has the right to acquire
          1,667  additional  shares  within the next 60 days  pursuant to option
          agreements.

     (f)  Mr.  Stern holds 10,000  shares  directly and has the right to acquire
          37,667  additional  shares  within the next 60 days pursuant to option
          agreements.

     (g)  Mr. Van Dyke holds 8,031 shares  directly and has the right to acquire
          an additional 12,667 shares within the next 60 days pursuant to option
          agreements.  Mr. Van Dyke is the President and Chief Executive Officer
          of Bay Harbour. Bay Harbour manages investment funds which own 551,447
          shares and have the right to acquire  555,555  within the next 60 days
          from the conversion of debentures.



<PAGE>


CHANGES IN CONTROL

     To the best of the Company's knowledge, there are no arrangements which may
result in a change of control.


Item 12.  Certain Relationships and Related Transactions.

     On  December  22,  1997,  the  Company  issued  $5,000,000  of  Convertible
Debentures to investment  funds managed by Tower  Investment  Group,  Inc.,  now
known as Bay Harbour  Management,  L.C.  ("Bay  Harbour").  Bay Harbour  manages
investment  funds which, at that time,  owned 262,000 (13.8%) of the outstanding
common shares of the Company.  Bay Harbour presently owns 551,447 (27.2%) common
shares.  Mr. Van Dyke, a director of the Company is the Chief Executive  Officer
of Bay Harbour.

     The related  debenture  notes bear  interest at 8%,  payable  quarterly  in
arrears,  and are due December 22, 2002.  The debentures  are  convertible  into
common  shares  of the  Company  at any time at  $9.00  per  share.  If all such
debentures were converted, an additional 555,555 shares of Common Stock would be
issued.

     In connection with the 1997 Lodge Keeper acquisition, the Company assumed a
lease for  office  space in  Prospect,  Ohio.  The lease  requires  annual  rent
payments of approximately  $60,000 through 2006. Members of the immediate family
of Mr. Devine, an executive officer and director of the Company,  own 50% of the
lessor.

     Also in connection with the Lodge Keeper acquisition, Mr. Devine executed a
$250,000 note payable to the Company for certain  inventory and equipment  which
did not relate to Lodge Keeper's  primary  business.  The note bears interest at
10% and is due in monthly installments of $5,312 until June 2002.

     During 1999 and 1998,  Mumford  Company,  Inc. earned  aggregate  brokerage
commissions  of $63,000 and  $142,313,  respectively,  relating to the Company's
sale of eleven leasehold interests in hotel properties.  Mr. Mumford, a director
of the Company, is the President of Mumford Company, Inc.

     The Company has entered into five hotel lease  agreements with an affiliate
(the "Lessor") of Hotel-Motel  Management  Corporation,  a beneficial  holder of
more than 5 percent of the Common  Stock.  As of December 31, 1999,  the Company
had advanced  the Lessor a total of $495,000 in lease  deposits and is committed
to advance an additional  $180,000.  Such deposits bear interest at 8%. Three of
the leased  properties  have been  opened and the  Company  paid rent in 1999 of
$220,000 to the Lessor.  Once all five properties are opened,  aggregate  annual
rent to the Lessor will be $750,000 plus  contingent  percentage  rents based on
certain hotel revenue levels.


<PAGE>


Item 13.  Exhibits and Reports on Form 8-K.

(a)   INDEX TO EXHIBITS
      -----------------

 Exhibit   Description
 -------   -----------

    2.1    Stock  Purchase  Agreement  dated  as of  March  7,  1997  among  the
           Registrant,  The Lodge Keeper Group,  Inc.  ("Lodge  Keeper") and the
           Stockholders of Lodge Keeper.  (Incorporated  by reference to Exhibit
           2.1 to the  Registrant's  Quarterly  Report  on Form  10-QSB  for the
           quarter ended March 31, 1997.)

    2.2    Agreement of Merger dated as of March 11, 1997 among the  Registrant,
           BLM-RH, Inc., Hatfield Inns, LLC, Guy Hatfield Dorothy Hatfield,  and
           Hatfield Inns Advisors, LLC. (Incorporated by reference to Appendix B
           to  the  Registrant's  Definitive  Proxy  Statement  filed  with  the
           Securities and Exchange Commission on June 9, 1997.)

    2.3    Second  Amendment to Agreement of Merger,  dated as of September  17,
           1997  among the  Company,  BLM-RH,  Inc.,  Hatfield  Inns,  LLC,  Guy
           Hatfield,   Dorothy  Hatfield,   and  Hatfield  Inn  Advisors,   LLC.
           (Incorporated  by  reference  to  Exhibit  2.1.1 to the  Registrant's
           Current Report on Form 8-K filed October 8, 1997.)

    3.1    Articles of Incorporation.  (Incorporated by reference to Exhibit 2.1
           to  the  Registrant's  Registration  Statement  on  Form  10-SB  (No.
           0-22132) which became effective on November 22, 1993.)

    3.2    Certificate   of   Amendment   of   Certificate   of   Incorporation.
           (Incorporated  by  reference to Exhibit  3(i)(a) to the  Registrant's
           Annual  Report on Form 10-KSB for the fiscal year ended  December 31,
           1994.)

    3.3    Certificate   of   Amendment   of   Certificate   of    Incorporation
           (Incorporated  by  reference  to  Appendix  "A" to  the  Registrant's
           Definitive  Proxy  Statement  filed with the  Securities and Exchange
           Commission on June 9, 1997.)

    3.4    Certificate   of   Amendment   of   Certificate   of    Incorporation
           (Incorporated  by  reference  to  Appendix  "A" to  the  Registrant's
           Definitive  Proxy  Statement  filed with the  Securities and Exchange
           Commission on May 5, 1998.)

    3.5    By-Laws - Amended and Restated as of June 27, 1994.  (Incorporated by
           reference to Exhibit 3(ii) to the Registrant's  Annual Report on Form
           10-KSB for the fiscal year ended December 31, 1994.)

    4.1    Form of Stock Certificate  (Incorporated by reference to Exhibit 4.3
           to the Registrant's Registration Statement on Form S-8 (No.333-58375)
           filed on July 2, 1998.

    4.2    Certificate  of  Designation,  Preference  and  Rights  of  Series  A
           Preferred  Stock of the  Registrant.  (Incorporated  by  reference to
           Exhibit 3.1(c) to the  Registrant's  Quarterly  Report on Form 10-QSB
           for the quarter ended September 30, 1997.)

    10.1   Employment  Agreement  dated as of June 30, 1993  between the Company
           and Douglas C. Collins.  (Incorporated by reference to Exhibit 6.2 to
           the  Registrant's  Registration  Statement on Form 10-SB  (No.022132)
           which became effective on November 22, 1993.)

    10.2   First   Amendment  to  Douglas  C.  Collins   Employment   Agreement.
           (Incorporated  by reference to Exhibit  10(ii)(b) to the Registrant's
           Annual  Report on Form 10-KSB for the fiscal year ended  December 31,
           1995.)

    10.3*  Second Amendment to Douglas C. Collins Employment Agreement.

    10.4   Employment  Agreement  dated as of June 30, 1993  between the Company
           and Robert B. Lee. (Incorporated by reference to Exhibit 10(ii)(c) to
           the  Registrant's  Annual  Report on Form  10-KSB for the fiscal year
           ended December 31, 1995.)

    10.5   First Amendment to Robert B. Lee Employment Agreement.  (Incorporated
           by reference to Exhibit  10(ii)(d) to the Registrant's  Annual Report
           on Form 10-KSB for the fiscal year ended December 31, 1995.)

    10.6*  Second Amendment to Robert B. Lee Employment Agreement.

    10.7*  Employment Agreement dated as of May 8, 1997 between the Company and
           Ronald L. Devine.

    10.8*  First Amendment to Ronald L. Devine Employment Agreement.

    10.9   1995 Stock Option Plan.  (Incorporated  by reference to Appendix A to
           the Registrant's Definitive Proxy Statement dated April 25, 1995.)

    10.10  1997 Employee Stock Option Plan (Incorporated by reference to Annex 1
           to  the  Registrant's  Definitive  Proxy  Statement  filed  with  the
           Securities and Exchange Commission on June 9, 1997.)

    10.11  1998 Employee Stock Option Plan (Incorporated by reference to Annex 1
           to  the  Registrant's  Definitive  Proxy  Statement  filed  with  the
           Securities and Exchange Commission on May 5, 1998.)

    10.12  1999 Employee Stock Option Plan (Incorporated by reference to Annex 1
           to  the  Registrant's  Definitive  Proxy  Statement  filed  with  the
           Securities and Exchange Commission on April 29, 1999.)

    21*    Subsidiaries of the Company

    23*    Accountants' Consent

    27*    Financial Data Schedule (Electronic filing only)

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

     * Filed herewith.



(b) REPORTS ON FORM 8-K.

     The Company  has not filed any reports on Form 8-K during the last  quarter
of the period covered by this report.




<PAGE>


                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

(Registrant)                     BUCKHEAD AMERICA CORPORATION
<TABLE>
<CAPTION>
<S>                         <C>                             <C>

By: (Signature and Title):  /s/ Douglas C. Collins           /s/ Robert B. Lee
                            ----------------------           --------------------
                            Douglas C. Collins               Robert B. Lee
                            President &                      Senior Vice President & Chief
                            Chief Executive Officer          Financial & Accounting Officer

Date:                       March 29 , 2000                  March 29 , 2000
</TABLE>

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

By: (Signature and Title)                    Date

 /s/ Douglas C. Collins                      March   29  , 2000
-------------------------                    ------------------
Douglas C. Collins
Director

 /s/ Ronald L. Devine                        March    29 , 2000
-------------------------                    ------------------
Ronald L. Devine
Director


-------------------------                    -------------------
David C. Glickman
Director

 /s/ Robert B. Lee                           March    29 , 2000
-------------------------                    ------------------
Robert B. Lee
Director

 /s/ David B. Mumford                        March    29  , 2000
-------------------------                    -------------------
David B. Mumford
Director

 /s/ William K. Stern                        March    29  , 2000
-------------------------                    -------------------
William K. Stern
Director

 /s/ Steven A. Van Dyke                      March    29  , 2000
-------------------------                    -------------------
Steven A. Van Dyke
Director