U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
[ X ]           ANNUAL REPORT PURSUANT TO 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 0-023075

                     PELICAN PROPERTIES, INTERNATIONAL CORP.
                 (Name of Small Business Issuer in its Charter)

             Florida                                     65-0616879
(State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
 Incorporation or Organization)

                2 Fenwick Road, Suite 100, Fort Monroe, VA 23651
               (Address of Principal Executive Offices)(Zip Code)

                                 (757) 224-5234
                           (Issuer's Telephone Number)

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

                     Common Stock, par value .001 par share
                                (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  [     ]


<PAGE>


         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in the definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSBor any amendment to this Form 10-KSB. |X|


      State issuer's revenues for its most recent fiscal year: $7,889,203.



         The aggregate market value of the Registrant's voting Common Stock held
by non-affiliates of the registrant was approximately $1,013,518 (computed using
the closing bid price per share of Common Stock on April 1, 2000, based on the
assumption that directors and officers and more than 5% stockholders are
affiliates).

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

         There were 5,975,851 shares of the registrant's Common Stock, par value
$.001 per share outstanding on April 1, 2000.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None.


<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

<S>                                                                                                   <C>
1.       Description of Business.....................................................................  2

2.       Description of Property.....................................................................  4

3.       Legal Proceedings...........................................................................  4

4.       Submission of Matters to a Vote of Security Holders.........................................  5

5.       Market for Common Equity and Related Stockholder Matters....................................  6

6.       Management's Discussion and Analysis or Plan of Operation...................................  6

7.       Financial Statements........................................................................  F1-F15

8.       Changes in and Disagreements with Accountants on Accounting
         And Financial Disclosure....................................................................  9

9.       Directors, Executive Officers, Promoters and Control Persons;
         Compliance with section 16(a) of the Exchange Act (Items 401
         And 405)...................................................................................  10

10.      Executive Compensation.....................................................................  11

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

12.      Certain Relationships and related Transactions.............................................  11

13.      Exhibits and reports on Form 8-K...........................................................  12

14.      Signatures of Officers.....................................................................  14
</TABLE>

<PAGE>

                                     PART I

Item 1. Description of Business

         Forward-Looking Statements

         Certain matters discussed in this Annual Report on Form 10-KSB are
"forward-looking-statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as the Company "believes",
"anticipates", "expects" or words of similar import. Similarly, statements that
describe the Company's future plans, objectives or goals are also
forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties which are described in close proximity to such
statements and which could cause actual results to differ materially from those
currently anticipated. Shareholders, potential investors and other readers are
urged to consider these factors in evaluating the forward-looking statements and
are cautioned not to place undue reliance on such forward-looking statements.
The forward-looking statements included herein are made as of the date of this
report, and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.

         Generally

         Pelican Properties, International Corp. (the "Company") was
incorporated under the laws of the State of Florida on June 1, 1990 under the
name Optimum Computing Inc. Its subsidiaries, Ohio Key I, Inc. and Ohio Key II,
Inc., were incorporated under the laws of the State of Florida on December 19,
1996.

         On August 31, 1995, the Company entered into a Share Exchange Agreement
with the limited partners of the Sunshine Key Associates limited partnership, a
Florida Limited Partnership (the "Partnership") whereby a 99% interest in the
Partnership was transferred to the Company in exchange for 3,100,000 shares, or
83.6%, of the Company's common stock. On December 31, 1996, the Partnership
entered into agreements with Ohio Key I, Inc. and Ohio Key II, Inc., both
wholly-owned subsidiaries of the Company (the "Subsidiaries") pursuant to which
with the Subsidiaries were assigned the assets and assumed the liabilities of
the Partnership including the Sunshine Key RV Resort and Marina, a resort
property located in Ohio Key, Florida ("Property").

         Until June 4, 1998, the Company, through the Subsidiaries, engaged in
the ownership and management of the Property. On June 4, 1998, the Company's
Subsidiaries sold (the "Sale") the Property for a sale price of $15,750,000
cash. A portion of the proceeds from the Sale, or $5,589,908, was used to pay
all of the Company's long-term debt (including all debt associated with the
Property). Proceeds were also used to redeem all of the Company's outstanding,
Series A preferred stock and satisfy all other loans associated with the
Property and Partnership. After provisions for closing costs and the resolution
of certain issues with respect to the Property, the Company placed the remaining
proceeds of the Sale, $8,149,727.15 (the "Remaining Proceeds"), in an IRS Rule
1031 Exchange Account with the intention of taking advantage of tax deferral
strategies if reinvested in real estate properties within specified time frames
and if certain criteria.

         On October 15, 1998, the Company, through its Subsidiaries purchased
the McLure House Hotel and Conference Center (now Ramada Plaza City Center)
located in Wheeling, West Virginia for $3,200,000 paid in cash. The cash was
drawn from the proceeds held in the Company's Rule 1031 Exchange Account.

         On November 25, 1998, the Company, through its Subsidiaries purchased
the Palmer Inn Hotel located in Princeton, New Jersey for $7,500,000. $2,500,000
was paid in cash and the remaining balance was financed. The cash was drawn from
the proceeds held in the Company's Rule 1031 Exchange Account.

                                       2
<PAGE>
         On November 30, 1998, the Company, through its Subsidiaries, purchased
the Chamberlin Hotel located in Hampton Roads, Virginia for $5,350,000.
$2,350,000 was paid in cash and the remaining balance was financed. The cash was
drawn from the proceeds held in the Company's Rule 1031 Exchange Account. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Description of Property" for further discussion of these
acquisitions.

         As of this date all assets and liabilities of the Ramada Plaza City
Center, Chamberlin Hotel and the Palmer Inn have been transferred by Ohio Key I,
Inc. and Ohio Key II, Inc. to McLure House Hotel & Conference Center, LLC, Old
Point Comfort Hotel, LLC and Palmer Inn, Princeton LLC, respectively.

         Business Strategy

         The acquisition of the three hotels was a significant beginning for the
Company and management is presently reviewing other potential acquisitions with
the intent to build the asset base of the Company. The Company intends to
increase the growth of the existing properties through (1) their introduction
into other markets via Internet travel reservation companies (2) expansion and
renovation of its existing facilities, and (3) new innovative marketing efforts.
The Company has centralized accounting procedures to its Corporate office (which
produces monthly financial statements), has published standardized accounting
procedures for all hotel locations and maintains such standards by periodic
internal audits, has established a combined effort of sales and marketing
through a Corporate Sales department, and has centralized purchasing for capital
and commonly used items by all hotels. The Company has developed a consistent
standard at each hotel in relation to the customer service with periodic
training by the Corporate Sales department, as well as monitoring of guest
satisfaction through customer surveys and comment cards.

         Management believes an increased marketing program will create both
short-term and long-term benefits at each hotel. A significant primary customer
base of the hotels continues to be the business traveler. Consequently, the
Company's sales force has concentrated its marketing efforts towards the
corporate environment. In addition, the Company's sales force has marketed
meeting and banquet services to groups and individuals for seminars, business
meetings, holiday parties and weddings. This has been accomplished by new
collateral materials at each hotel, as well as active sales calls and sales
campaigns in each area among targeted groups. The Company anticipates a
significant amount of media exposure through television and newspaper coverage
during the Operation Sail 2000 event in June 2000. Operation Sail 2000, a
nationally sponsored event planned by the United States, will be the largest
gathering of sail training and naval vessels in history. It is in celebration of
the millennium and will begin in May 2000 gathering in Puerto Rico and end in
New London, Maine in July 2000, with a stop in the Hampton Roads area in June
2000. The Chamberlin Hotel has been designated as the media host hotel in
Hampton Roads for this event.

         The Company also intends to expand through the acquisition of
additional hotel properties. Management will concentrate on evaluating
full-service, high quality, independently franchised hotels throughout the
United States. The Company believes there are full-service, high quality,
independent franchised hotel properties on the hotel market that can benefit
from the efficiencies of experienced central management and the availability of
financial resources to achieve full potential. Management is focused on those
properties that will provide internal growth and increased profitability.
Management believes that market conditions remain favorable for the acquisition
of full-service, high quality, independent franchised hotels and expects to
continue analyzing potential acquisition properties. The Company intends to fund
the acquisition of hotel properties through the public or private sale of its
securities or by obtaining financing from institutional or other financing
firms.

         The Company has (as of March 2000) created a new division, Purchasing
Concepts, Inc., for the purpose of handling turnkey design, purchasing and
installation for both in-house and outside hospitality related projects. The
President of Purchasing and Design for the new division, Ms. Sheri Rountree, has
extensive experience in the hospitality industry with projects ranging from
renovation to new construction and expects to be very busy in the coming months
as the Company adds its own projects to her schedule. The Company plans
extensive renovations to the Chamberlin Hotel, as well as commencing the
up-coming construction of 22 new guest suites to the Palmer Inn.

         Competition

         The hotel industry is highly competitive and the Company's hotels are
subject to competition from other hotels. Many of the Company's competitors may
have substantially greater marketing and financial resources than the Company's.
Each of the Company's hotels competes for guests primarily with other similar
hotels in its immediate vicinity and secondarily with other hotels in its
geographic market. Management believes that brand recognition, location, the
quality of the hotel and services provided, and price are the principal
competitive factors affecting the Company's hotels.

         Seasonality

         The hotel industry is seasonal in nature. Generally, the Company's
hotel revenue will be greater in the second and third quarters of a calendar
year. The Ramada Plaza City Center also generates greater revenues in the fourth

                                       3
<PAGE>

quarter of the calendar year due to an annual local area festival. This
seasonality can be expected to cause quarterly fluctuations in revenues and
profitability of the Company. Quarterly earnings also may be adversely affected
by events beyond the Company's control, such as extreme weather conditions,
economic factors, increasing fuel prices, and other considerations affecting
travel.

         Employees

         The Company currently has 3 employees in its corporate management
consisting of its Chairman of the Board, Chief Operating Officer, and Legal
Counsel. The Company presently employs approximately 190 persons through its
subsidiaries. All three hotels are full service, but only one operates its own
food service. The number of employees at each hotel is subject to change based
on seasonal considerations. Management believes that it has an adequate number
of employees to support its current operations, although the Company intends to
hire additional employees upon the acquisition of other properties. Management
believes its relations with employees are satisfactory.

Item 2. Description of Property

         The Company currently operates three full-service hotels with food
service and banquet facilities; one is under a franchise agreement with Best
Western, another is under a franchise agreement with Hospitality Franchise
Services and carries the name of Ramada Plaza, an upscale brand of the Ramada
chain. All hotels are concentrated in the Mid-Atlantic Region of the United
States. The Company maintains its principal place of business at the Chamberlin
Hotel in Hampton, Virginia.

         The Ramada Plaza City Center, built in 1852, is located in downtown
Wheeling, West Virginia. In August 1998, AAA rated the hotel a Three Diamond
property. It has 170 guestrooms inclusive of 1 and 2 bedroom suites, a VIP
executive floor, 27 apartments, and a full service attached parking garage. The
hotel has approximately 7,500 square feet of banquet/conference space. The
ground floor has several storefront tenants who offer both street and lobby
access to their facilities. The world's original Hallmark gift shop is among
these tenants. The hotel is in the final phase of negotiations of a lease for
the restaurant facilities. In December 1999 the McLure House changed its name to
the Ramada Plaza City Center Hotel. Changes are continuing to satisfy franchise
requirements and brand recognition.

         The Best Western Palmer Inn is located in Princeton, New Jersey. The
hotel is currently a AAA rated Three Diamond property. There are 106 guestrooms
inclusive of deluxe rooms, suites and efficiencies that are equipped for
extended stays. The hotel has five meeting/banquet rooms, a business center with
computer stations, fax and copier equipment, a pool, and an exercise room
complete with a sauna. There is a Charlie Brown franchised restaurant in the
hotel with lobby access for which there is a long-term lease arrangement between
the hotel and the restaurant.

         The Chamberlin Hotel is located on the Chesapeake Bay in Hampton,
Virginia. The hotel is listed on the National Register of Historic Places. It
has 185 rooms, a banquet room and the second largest meeting space in the
market, indoor and outdoor pools, and a business center with computer stations,
fax and copier equipment. AAA does not currently rate the hotel.

Item 3.  Legal Proceedings

         In June, 1999, the Company's subsidiaries Ohio Key I, Inc. and Ohio Key
II, Inc. (collectively, "Ohio Key") filed suit against JCB Financial
Corporation, James C. Barggren, Chamberlin Hotel, L.L.C., and The Chamberlin
Hotel Company in the Circuit Court for the City of Hampton, State of Virginia.
When Ohio Key purchased The Chamberlin Hotel, Ohio Key assumed two notes in the
aggregate principal amount of $3,000,000 payable to The Chamberlin Hotel
Company, which were secured by two deeds of trust. Said notes were paid, in
full, on or about February 4, 1999. Despite such payment, The Chamberlin Hotel
Company assigned the two deeds of trust to JCB Financial Corporation. Subsequent
to such assignment, JCB Financial Corporation refused to satisfy said deeds of
trust in the public records. Ohio Key filed the subject litigation (i) to have
the two deeds of trust judicially determined to be satisfied and discharged, and
(ii) to obtain a determination as to what amounts of money, if any, are owed by
Ohio Key to James C. Barggren and his affiliates (collectively, "Barggren"). On
or about December, 1999, the Court appointed an auditor to prepare a report
("Report") regarding the indebtedness and claims by and between the litigants.
On February 8, 2000, the parties signed a Mediated Settlement Agreement which
settled and resolved all pending claims between the parties. Pursuant to such


                                       4
<PAGE>

Mediated Settlement Agreement, Barggren agreed to release the existing deeds of
trust encumbering The Chamberlin Hotel; Ohio Key agreed (i) to immediately pay
Barggren the sum of $80,000, (ii) to execute and deliver to Barggren a deed of
trust note in the principal amount of $1,550,000 and, if the Report shows that
Barggren is indebted to Ohio Key, such indebtedness is to be offset and deducted
from the aforementioned principal sum, (iii) to execute and deliver a deed of
trust securing the aforementioned deed of trust note, and (iv) if the Report
shows that Ohio Key is indebted to Barggren, then Ohio Key is obligated to pay
such indebtedness to Barggren. Further, the parties agreed to jointly dismiss
this litigation. Ohio Key has paid to Barggren the aforementioned payment in the
amount of $80,000; however, as of this date, this litigation has not been
dismissed by the parties, and the deed of trust note and deed of trust have not
been executed nor delivered.

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

         There were no matters submitted to a vote of stockholders during the
fourth quarter of 1999.





                                       5






<PAGE>
                                     PART II

Item 5.  Market for Common Equity and Related Stockholders Matters

         As of April 1, 2000, there were approximately 269 stockholders of
record of the Company's Common Stock. The Company's Common Stock is currently
listed for trading on the over-the-counter bulletin board under the symbol
"PELP". The following table sets forth, for the period since January 1, 1999,
the high and low closing sales prices for the Common Stock as reported by the
OTC Bulletin Board.

                                                   Common Stock
                                                  --------------
                                                  High      Low
                                                  ----      ---
1998
First Quarter ..................................  1.50     0.50
Second Quarter .................................  1.50     0.63
Third Quarter ..................................  1.44     1.00
Fourth Quarter .................................  1.25     0.50

1999
First Quarter ..................................  0.81     0.50
Second Quarter .................................  0.43     0.43
Third Quarter ..................................  0.60     0.28
Fourth Quarter .................................  0.49     0.07


         The prices listed above for the Company's Common Stock reflect
inter-dealer quotations, without retail mark-ups, markdowns or commissions, and
do not necessarily represent actual transactions.

         The transfer agent for the Company's Common Stock is Florida Atlantic
Stock Transfer, Inc., 7130 Nob Hill Road, Tamarac, Florida 33321.

         The Company has never paid cash dividends on its Common Stock. The
Company presently intends to retain future earnings, if any, to finance the
expansion of its business and does not anticipate that any cash dividends will
be paid in the foreseeable future. The future dividend policy will depend on the
Company's earnings, capital requirements, expansion plans, financial condition
and other relevant factors.

Item 6.  Management's Discussion and Analysis of Financial Condition and results
of Operations

         The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
report.

         The Company's primary objective is the management of held assets and
the acquisition and management of additional hotel properties. Until June 4,
1998, the Company, through the Subsidiaries, engaged in the ownership and
management of the Property. On June 4, 1998, the Company's Subsidiaries, sold
the Property for a sale price of $15,750,000 cash. A portion of the proceeds
from the Sale, or $5,589,908, was used to pay all of the Company's long term
debt (including all debt associated with the Property.) Proceeds were also used
to redeem all of the Company's outstanding Series A preferred stock and satisfy
all other loans associated with the Property and prior Partnership. After
provisions for closing costs and the resolution of certain issues with respect
to the Property, the Company placed the remaining proceeds of the Sale,
$8,149,727 (the "Remaining Proceeds"), in an IRS Rule 1031 Exchange Account with
the intention of taking advantage of tax deferral strategies if reinvested in
real estate properties within specified time frames and if certain criteria are
met.

         On October 15, 1998, the Company, through the Subsidiaries, purchased
the McLure House Hotel in Wheeling, West Virginia for $3,200,000 paid in cash.
The purchase funds were drawn from the proceeds held in the Company's Rule 1031
Exchange Account. On October 16, 1998 the Company secured a note and mortgage on
the property for $2,4000,000. On April 28, 1999 the mortgage was re-financed
through the new legal entity of McLure House Hotel and Conference Center, LLC
for the amount of $2,400,000.

                                       6
<PAGE>

         On November 25, 1998, the Company through the Subsidiaries purchased
the Palmer Inn Hotel located in Princeton, New Jersey for $7,500,000. $2,500,000
was paid in cash and the remaining balance was financed. The cash was drawn from
the proceeds held in the Company's Rule 1031 Exchange Account.

         On November 30, 1998, the Company, through the Subsidiaries, purchased
the Chamberlin Hotel located in Hampton Roads, Virginia for $5,350,000.
$2,350,000 was paid in cash and the remaining balance was financed. The cash was
drawn from the proceeds held in the Company's 1031 Exchange Account.

         Year Ended December 31, 1998 Compared to Year Ended December 31, 1999

         For the year ended December 31, 1999, revenues from continuing
operations were $7,889,203 as compared to $1,078,106 in 1998. Costs of revenues,
consisting of rooms, food and beverage, and other operating categories were
$5,838,576 as compared to $396,481 in 1998. The Gross Profit was $2,050,627 as
compared to $681,625 in 1998. The changes were attributable to hotel operations
through an entire twelve month fiscal period, as compared to only the last two
months in 1998.

         Loss from continuing operations increased to $(978,266) as compared to
$(260,186) in 1998. Net Loss was $(1,448,266) for 1999 as compared to Net Income
of $5,932,918 in 1998. The increase in 1999 was attributable to 12 months of
hotel operations compared to only 2 months in 1998 coupled with material
non-recurring items as discussed below. Non-cash depreciation expense was
$858,428 in 1999 as compared to $81,361 in 1998.

         Net Loss increased from $(1,448,266) in 1999 as compared to income of
$5,932,918 in 1998. The decrease in net income resulted from the loss from
continuing operations as discussed in the above paragraph in addition to the
additional deferral of income taxes in the amount of $1,023,000 as outlined in
"Other Factors to Consider" below. Also, in 1998 a net gain of $5,475,305 was
recognized on the sale of Discontinued Opeartions.

         Liquidity and Capital Resources

         The Company's working capital decreased from $55,498 as of December 31,
1998 to $(2,111,301) at December 31, 1999. This decrease was due to cash
obtained through hotel operations being used for capital improvements at the
Ramada Plaza City Center Hotel, the Chamberlin Hotel, the construction of the
Corporate Office located at the Chamberlin Hotel, the use of investment funds
for operational expenses, the accrual of current liabilities, and the maturity
of $1,638,750 of debt to current for the Chamberlin Hotel. This maturity is
anticipated to be refinanced by September 2000.

         As of December 31, 1998 the Company held Accounts Receivables of
$290,798 as compared to $87,290 at December 31, 1999. This decrease is due to
the increased effort at the hotel level in collections, as well as the net use
of Bad Debt Allowance for uncollectable accounts in the 90 Day category. As of
December 31, 1998 the Company had Accounts Payable and Accrued Expenses of
$473,128 as compared to $1,125,305 at December 31, 1999. The changes were
attributable to hotel operations through an entire twelve month fiscal period,
as compared to only two months in 1998.

         Capital Expenditures of Property and Equipment totaled $16,059,223 in
1998 as compared to $1,490,000 in 1999. This difference is due primarily to the
purchase of all three hotel locations in 1998. The McLure House Hotel, it's
subsequent conversion to a Ramada Plaza hotel, improvements at the Chamberlin
Hotel, as well as the construction of the new Corporate Offices located at the
Chamberlin Hotel in Hampton, Virginia account for the capital expenditures in
1999.

         Long-term debt of $10,371,628 in 1998 decreased to $8,986,313 in
1999. The original debt of $1 million for the Palmer Inn was satisfied in
October 1999 and was replaced with a bridge loan of $940,000 due on April 1,
2000. This loan, as well as the current $4 million mortgage at the Palmer Inn,
is expected to be satisfied in the re-financing package scheduled for closing in
May, 2000.


                                       7
<PAGE>

Additional Facts to Consider

         Material change in Financial Statements Items from 1998 to 1999

         In 1999, the Company made an election related to the filing of its 1998
income tax return allowing the reduction of the tax basis of the property
exchanged in 1998 rather than the recognition of taxable income currently. When
calculating the estimated tax basis of its assets and the tax provision at
December 31, 1998, the election was not taken into account. The election is
related to the forgiveness of indebitedness from the restructure of debt in 1996
and resulted in an additional deferral of income taxes in the amount of
$1,023,000. This change in estimated tax basis is reflected in the Company's
1999 income tax on Statement of Operations and as an increase in deferred tax
liability on the Balance Sheet.

         Significant elements of expense not arising out of Continuing
Operations

         During 1999, the Company experienced non-recurring quantifiable expense
items directly related to three events: the acquisition and re-position of the
three hotel properties, consulting fees related to continued capital raising ,
and the legal proceedings against the former owner of the Chamberlin Hotel. The
financial impact on the Company as a result of these events is in excess of
$375,000, of which $130,000 were non-cash expenses. These expenses are reflected
in the Company's Statement of Opeartions.

         Year 2000

         The Commission has issued Staff Legal bulletin No. 5 (CF/IM) stating
that public operating companies should consider whether there will be any
anticipated costs, problems and uncertainties associated with the year 2000
issue, which affects many existing computer programs that use only two digits to
identify a year in the date field. The Company anticipates that its business
operations will electronically interact with third parties minimally and the
issues raised by Staff Legal Bulletin No. 5 are not applicable in any material
way to the Company's business or operations. The Company presently utilizes
hotel reservation software systems that are year 2000 compliant. To date there
have been no problems associated with Y2K issues.

         Outlook

         Management anticipates an increase in revenues at all three
properties through the end of 2000. Management continues to believe that the
implementation of its central management operation will produce decreases in
management expenses incurred at all hotel operations. The Company believes that
this self-management approach will create savings in the overall management
costs as opposed to the use of management companies. Included in this approach
are accounting, sales and marketing, purchasing, and legal counsel.

         Palmer Inn implemented a rate increase in mid 1999 that will allow it
to remain within the average rate of comparable hotels in its market. The Palmer
Inn will also begin construction of a 22 room suite wing that will be completed
by the end of 2000.

         The McLure House Hotel will be finalizing its conversion to a Ramada
Plaza Hotel. Current emphasis is upon all common areas such as the lobby,
exterior and other public areas, corridors, meeting and ballroom space. The
restaurant lease is expected to be finalized in May, 2000. Overtures with the
City of Wheeling regarding the building of a Convention/Expo Center across the
street from the Ramada Plaza will continue throughout the year.

         The Chamberlin Hotel is expected to begin renovations in the Spring,
2000. The initial construction will cover the public areas such as the lobby,
selected meeting space, restaurant and lounge, selected corridors, and one floor
of guestrooms. In mid June the hotel will host the media covering Op Sail 2000,
an event involving several hundred sailing vessels from around the world.
Visitor estimates will be between 1 and 2 million for this 4-day event.


         The Company is investigating several Internet opportunities that it
believes has a synergystic relationship to the existing business. It is the hope
of management that inclusion of Internet diversification will have a positve
effect on the value of the Company's stock.

                                       8

<PAGE>

Item 7.  Financial Statements

         The Company's financial statements are included in this report, at
pages F-1 through F-15.


Item 8.  Changes In Disagreements With Accountants on Accounting and Financial
Disclosure

         None






                                       9

<PAGE>

                                    PART III

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

         The following table sets forth the names, position with the Company and
ages of the executive officers and directors of the Company. Directors will be
elected at the Company's annual meeting of stockholders and serve for one year
or until their successors are elected and qualify. The Board of Directors elects
officers and their terms of office are, except to the extent governed by
employment contract, at the discretion of the Board.

         Name                               Age      Position
         ----                               ---      --------
         C. John Knorr, Jr. .............   54      Chairman of the Board
         Nathan A. Roesing ..............   32      Chief Operating Officer
         Donald E. Schupp ...............   53      Director
         Michael Halpern ................   47      Director


         Unless otherwise noted, the address of each of the directors and
officers of the Company is 2 Fenwick Road, Suite 100, Fort Monroe, Virginia
23651.

         Carl John Knorr, Jr. Since June 1, 1996 Mr. Knorr has served as the
Company's Chairman of the Board and from August 31, 1995 through May 31, 1996 as
the Company's President. Mr. Knorr is also President and sole shareholder of
Infinity Investment Group, Inc., the general partner and management Company for
the Partnership since 1991.

         Nathan A. Roesing. Since March 1999 Mr. Roesing has served as Chief
Operating Officer. Mr. Roesing has extensive hospitality experience, having
worked for Interstate Hotels, Servico Hotels, Brookshire Hotels, and Lane
Hospitality. Mr. Roesing also serves as President of Vintage Hotels Corporation,
which is the management company for Pelican Properties International's hotel
properties.

         Donald E. Schupp. Since February 20, 1997 Mr. Schupp has served as a
director of the Company. Mr. Schupp has served as President and Chief Operating
Officer for American Refining Group, which is in the oil refining business,
headquartered in Pittsburgh, Pennsylvania since 1983.

         Michael Halpern. Since June 22, 1999 Mr. Halpern has served as a
director of the Company. Mr. Halpern has worked as an attorney since 1977 in the
Key West, Florida area. He has also served as President and Chief Executive
Officer of Triad Planning and Management Corp., Ramlo Construction Corp., Ramlo
Development Corp., and Key West Saloon, Inc.

         As additional properties are acquired, the Company anticipates
attracting additional, equally successful and qualified, directors, officers,
and facility managers.

         The Company currently does not have any board-approved committees.

         Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the outstanding common stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership on Form 3 and
reports of changes in ownership of Common Stock on Forms 4 or 5. Such persons
are required by SEC regulation to furnish the Company with copies of all such
reports they file.

         Based solely on its review of the copies of such reports furnished to
the Company or written representations that no other reports were required, the
Company believes that all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were complied
with during the year ended December 31, 1999.


                                       10
<PAGE>


Item 10. Executive Compensation

         Only one executive officer of the Company has had annual compensation
in excess of $100,000. The following table shows for the years ended December
31, 1998 and 1999 the cash and other compensation paid by the Company to its
Chairman and Chief Operating Officer.

                           Summary Compensation Table
<TABLE>
<CAPTION>


    Name and                                                                        Other Annual      All Other
Principal Position                                   Year     Salary       Bonus    Compensation     Compensation
------------------                                   ----     ------        -----    ------------     ------------
<S>                                                  <C>      <C>         <C>           <C>                <C>
C. John Knorr, Chairman of the Board                 1998     $ 62,400    $ 8,750       $-0-               $-0-
                                                     1999     $ 73,500      $-0-        $-0-               $-0-

Nathan A. Roesing, Chief Operating Officer           1999     $112,452    $26,600       $-0-               $-0-

</TABLE>

         Option Grants in Last Fiscal Year

         There were no option grants made in fiscal year 1999.


Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth certain information regarding the
Company's Common Stock beneficially owned on April 1, 2000 for (i) each
stockholder known by the Company to be the beneficial owner of five (5%) percent
or more of the Company's outstanding Common Stock, (ii) each of the Company's
executive officers and directors, and (iii) all executive officers and directors
as a group. In General, a person is deemed to be a "Beneficial Owner" of a
security if that person has or shares the power to vote or direct the voting of
such security, or the power to dispose or to direct the disposition of such
security. A person is also deemed to be a beneficial owner of any securities of
which the person has the right to acquire beneficial ownership within sixty (60)
days. On April 1, 2000, there were 5,975,581 shares of Common Stock outstanding.
The address for each of the persons set forth below is 2 Fenwick Road, Suite
100, Fort Monroe, VA 23651, except as otherwise noted.
<TABLE>
<CAPTION>

                                                                  No. of Shares
                                                                of Common Stock                 Percent
Name and address                                              Beneficially Owned                 of Class
----------------                                              ------------------                 --------
<S>                                                                <C>                            <C>
C. John Knorr, Jr. (1)                                             1,701,265                      28.5%
Thomas L. Callahan (2)                                               675,434                      11.3%
Linda Brauer (3)                                                     350,698                       5.9%
Clara Road Investments, Inc. (4)                                     666,666                      11.2%
All executive officers and directors as a group                    1,701,265                      28.5%
</TABLE>

----------------
(1)      Mr. Knorr's address is 104 Woodhall Drive, Richmond, VA 23229.
(2)      Mr. Callahan's address is 1001 Oystercove Drive, Grasonville, MD  21638
(3)      Ms. Braurer's address is 11308 Bedfordshire Avenue, Potomac, MD  20854
(4)      Clara Road Investments' address is 2670 Clara Road, Whitehaven,
         MD 21856

Item 12.  Certain Relationships and Related Transactions

         Infinity Investments Group, Inc., a Florida corporation which is owned
and controlled by Mr. Knorr, Chairman of the Board, privately owned three park
model units located at the Sunshine Key Resort. Those rental units were managed
through Ohio Key I Inc.'s rental management program and expenses were paid on
their behalf; these units earned income through May 1998. On June 4, 1998
Infinity Investment Group sold its interests in the three park model units and
all balances owed by the Company were settled.


                                       11
<PAGE>

                                     PART IV


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

Exhibit
Number            Description
------            -----------
3.1               -Articles of Incorporation dated 5/30/90 (Incorporated by
                  reference to the exhibit of the same number filed with the
                  Company's registration statement on Form SB-2 as filed with
                  the Securities and Exchange Commission on September 12, 1997,
                  file No. 000-23075
3.2               - Articles of Incorporation Amendment to the Articles of
                  Incorporation dated 6/29/95 (Incorporated by reference to the
                  exhibit of the same number filed with the Company's
                  registration statement on Form SB-2 as filed with the
                  Securities and Exchange Commission on September 12, 1997, File
                  No.
                  000-23075)
3.3               -Articles of Incorporation Amendment to the Articles of
                  Incorporation dated 6/20/90 (Incorporated by reference to the
                  exhibit of the same number filed with the Company's
                  registration statement on Form SB-2 as filed with the
                  Securities and Exchange Commission on September 12, 1997, File
                  No.
                  000-23075)
3.4               -Articles of Incorporation Amendment to the Articles of
                  Incorporation dated 8/15/95 (Incorporated by reference to the
                  exhibit of the same number filed with the Company's
                  registration statement on Form SB-2 as filed with the
                  Securities and Exchange Commission on September 12, 1997,
                  File, No.
                  000-23075)
3.5               -Ohio Key I Articles of Incorporation date 12/16/96
                  (Incorporated by reference to the exhibit of the same number
                  filed with the Company's registration statement on Form SB-2
                  as filed with the Securities and Exchange Commission on
                  September 12, 1997, File No. 000-23075)
3.6               -Ohio Key II Articles of Incorporation dated 12/16/96
                  (Incorporated by the exhibit of the same number filed with the
                  Company's registration statement on Form SB-2 as filed with
                  the Securities and Exchange Commission on September 12, 1997,
                  File No. 000-23075)
3.7               -Bylaws (Incorporated by reference to the exhibit of the same
                  number filed with the Company's registration statement on Form
                  SB-2 as filed with the Securities and Exchange Commission on
                  September 12, 1997, File No. 000-23075)
3.8               -Ohio Key I Bylaws (Incorporated by reference to the exhibit
                  of the same number filed with the Company's registration
                  statement on Form SB-2 as filed with the Securities and
                  Exchange Commission on September 12, 1997, File No. 000-23075)
3.9               - Ohio Key II Bylaws (Incorporated by reference to the exhibit
                  of the same number filed with the Company's registration
                  statement on Form SB-2 as filed with the Securities and
                  Exchange Commission on September 12, 1997, File No. 000-23075)
3.10              - Articles of Incorporation Amendment to the Articles of
                  Incorporation dated June 29,1997 (Incorporated by reference to
                  the exhibit of the same number filed with Securities and
                  Exchange Commission on November 14, 1997, File No. 000-23075)
4.1               - Specimen Common Stock Certificate (Incorporated by reference
                  to the exhibit of the same number filed with the Company's
                  registration statement on Form SB-2 as filed with the
                  Securities and Exchange Commission on September 12, 1997, File
                  No. 000-23075)
4.2               - Specimen Class A Common Stock Purchase Warrant (Incorporated
                  by reference to the exhibit of the same number filed with the
                  Company's registration statement on Form SB-2 as filed with
                  the Securities and Exchange Commission on September 12, 1997,
                  File No. 000-23075)
4.3

                                       12
<PAGE>

                  -Specimen Class B Common Stock Purchase Warrant (Incorporated
                  by reference to the exhibit of the same number filed with the
                  Company's registration statement on Form SB-2 as filed with
                  the Securities and Exchange Commission on September 12, 1997,
                  File No. 000-23075)
10.1              - Share Exchange Agreement between the Company and all of the
                  limited partners of Sunshine Key Associates Limited
                  Partnership effective August 30, 1995 (Incorporated by
                  reference to the exhibit of the same number filed with the
                  Company's registration statement on Form SB-2 as file with the
                  Securities and Exchange Commission on September 12, 1997, File
                  No. 000-23075)
10.2              - Loan Restructuring Agreement between Ohio Key I, Inc.; WAMCO
                  XXII Ltd. and Sunshine Key Associates Limited Partnership
                  dated 1/31/96 (Incorporated by reference to the exhibit of the
                  same number filed with the Company's registration statement on
                  Form SB-2 as file with the Securities and Exchange Commission
                  on September 12, 1997, File No. 000-23075)
10.3              -Promissory  Note  between  WAMCO  XXII,  Ltd.,  Ohio Key I,
                  Inc. and Ohio Key II, Inc. dated 12/31/96 (Incorporated by
                  reference to the exhibit of the same number filed with the
                  Company's registration statement on Form SB-2 as file with the
                  Securities and Exchange Commission on September 12, 1997, File
                  No. 000-23075)
10.4              - Restated Mortgage and Assumption Agreement
                  (Incorporated by reference to the exhibit of the same number
                  filed with the Company's registration statement on Form SB-2
                  as file with the Securities and Exchange Commission on
                  September 12, 1997, File No. 000-23075)
10.5              - Assignment for Assumption of Leases between Ohio Key I, Inc.
                  and Sunshine Key Associates Limited Partnership dated 1/24/97
                  (Incorporated by reference to the exhibit of the same number
                  filed with the Company's registration statement on Form SB-2
                  as file with the Securities and Exchange Commission on
                  September 12, 1997, File No. 000-23075)
10.6              - Agreement for Assumption of Liabilities between Ohio Key I,
                  Inc. and Sunshine Key Associated Limited Partnership dated
                  1/24/97 (Incorporated by reference to the exhibit of the same
                  number filed with the Company's registration statement on Form
                  SB-2 as file with the Securities and Exchange Commission on
                  September 12, 1997, File No. 000-23075)
10.7             - Assignment and Assumption of Contracts between Ohio Key I,
                  Inc. and Sunshine Key Associated Limited Partnership dated
                  1/24/97 (Incorporated by reference to the exhibit of the same
                  number filed with the Company's registration statement on Form
                  SB-2 as file with the Securities and Exchange Commission on
                  September 12, 1997, File No. 000-23075)
10.8              - Assignment between Ohio Key I, Inc. and Sunshine Key
                  Associated Limited Partnership dated 1/24/97 (Incorporated by
                  reference to the exhibit of the same number filed with the
                  Company's registration statement on Form SB-2 as file with the
                  Securities and Exchange Commission on September 12, 1997, File
                  No. 000-23075)
10.9              - Purchase agreement between Ohio Key I, Inc., Ohio Key II,
                  Inc. and WesBanco for the purchase of the Ramada Plaza City
                  Centre dated September 23,1998 (Incorporated by reference to
                  the Company's 8-K as filed with the Securities and Exchange
                  Commission on October 22, 1998
10.10             - Agreement of Sale between Ohio Key I, Inc., Ohio Key II,
                  Inc. and Keydocrom, Inc. for the purchase of the Palmer Inn
                  date November 11, 1998 ( Incorporated by reference to the
                  Company's 8-K/A as filed with the Securities and Exchange
                  Commission on December 14, 1998)
10.11             - Sale and Purchase of Assets Agreement between Ohio Key I,

                  Inc., Ohio Key II, Inc. and Chamberlin Hotel LLC dated
                  November 30, 1998 (Incorporated by reference to the Company's
                  8-K/A as filed with the Securities and Exchange Commission on
                  December 14, 1998)
10.12             - Ramada Plaza City Centre $2,400,000 Term Note. (1)
10.13             - Palmer Inn $4,000,000 Mortgage Note. (1)
10.14             - Palmer Inn Note and Mortgage Modification and Assumption
                  Agreement for 10.14 $1,000,000 First Mortgage.(1)
10.15             - Palmer Inn Promissory Note of $940,000.(1)
21.1              - Subsidiaries.
23.1              - Independent Auditor's Consent(2)
27.1              - Financial Date Schedule. (2)

(footnotes on next page)

                                       13
<PAGE>

     (footnotes for previous page)

(1)  Incorporated by reference to the Company's report on Form 10-KSB as filed
     with the Securities and Exchange Commission on April 15, 1999.
(2)  Filed herewith.

     (b) Reports on Form 8-K
     The Company filed a report on Form 8-K, date of report February 4, 2000,
 which reported a change in the Company's certifying accountants.



                                   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.

                         Pelican Properties, International, Corp
                                           (Registrant)



                         By: /s/ C. John Knorr, Jr.
                         --------------------------
                                 C. John Knorr, Jr.
                                 Chairman

         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.

         Signature                             Title                     Date
         ---------                             -----                     ----

/s/ C. John Knorr, Jr.              Chairman of the Board
----------------------              ---------------------
    C. John Knorr, Jr.              (Principal Executive Officer)


/s/ Nathan A. Roesing               Chief Operating Officer
---------------------               -----------------------
    Nathan A. Roesing




                                       14
<PAGE>




                     PELICAN PROPERTIES, INTERNATIONAL CORP.
                                AND SUBSIDIARIES


                        CONSOLIDATED FINANCIAL STATEMENTS


                     Years Ended December 31, 1999 and 1998





<PAGE>


<PAGE>



                                 C O N T E N T S
                                    --------


                                                                       Page
                                                                       Number
                                                                      -------

Reports of Independent Certified Public Accountants

         Moore Stephens Lovelace, P.A.                                  F-1

         Morrison, Brown, Argiz & Company                               F-2


CONSOLIDATED FINANCIAL STATEMENTS

     Consolidated Balance Sheet as of
         December 31, 1999                                              F-3

     Consolidated Statements of Operations for the
         Years Ended December 31, 1999 and 1998                         F-4

     Consolidated Statements of Changes in Stockholders' Equity
         for the Years Ended December 31, 1999 and 1998                 F-5

     Consolidated Statements of Cash Flows for the
         Years Ended December 31, 1999 and 1998                         F-6

     Notes to Consolidated Financial Statements                         F-7


<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
               --------------------------------------------------



Board of Directors
Pelican Properties, International Corp.
    and Subsidiaries
Fort Monroe, Virginia



We have audited the accompanying consolidated balance sheet of Pelican
Properties, International Corp. and Subsidiaries (the "Company") as of December
31, 1999, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the year 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pelican Properties,
International Corp. and Subsidiaries as of December 31, 1999, and the results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.




Moore Stephens Lovelace, P.A.
Certified Public Accountants



Orlando, Florida
March 17, 2000



                                       F-1

<PAGE>
                                                                    [Letterhead]

                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------



Board of Directors and Stockholders
Pelican Properties, International Corp. and Subsidiaries

We have audited the consolidated statements of operations, stockholders'
(deficit) and cash flows of Pelican Properties, International Corp. and
Subsidiaries (the "Company") for the year ended December 31, 1998. 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly. In all material respects, the results of the operations and the cash
flows of Pelican Properties, International Corp. and Subsidiaries for the year
ended December 31, 1998. In conformity with generally accepted accounting
principles.



/s/ MORRISON, BROWN, ARZIG & COMPANY
MORRISON, BROWN, ARZIG & COMPANY
Certified Public Accountants
Miami, Florida
April 2, 1999

                                       F-2
<PAGE>


                                PELICAN PROPERTIES, INTERNATIONAL CORP.
                                           AND SUBSIDIARIES

                                      CONSOLIDATED BALANCE SHEET

                                           December 31, 1999


                                                ASSETS
<TABLE>
<CAPTION>
<S>                                                                               <C>                               <C>
CURRENT ASSETS
Cash                                                                                                                $   69,037
Accounts receivable, net of allowance for doubtful accounts of $157,976
                                                                                                                        87,290
Supplies
                                                                                                                        82,974
Prepaid expenses                                                                                                        25,380
Note receivable                                                                                                        500,000
Income taxes refundable                                                                                                228,000
Other current assets
                                                                                                                         1,734
                                                                                                                   -----------

                                                                                   TOTAL CURRENT ASSETS
                                                                                                                       994,415

PROPERTY AND EQUIPMENT, net of accumulated depreciation
and amortization of $921,770                                                                                        16,653,021

OTHER ASSETS
Deferred loan costs, net of accumulated amortization of $14,804
                                                                                                                        70,473
Deferred franchise costs, net of accumulated amortization of $106                                                       18,894
Deposits and other
                                                                                                                        58,648
                                                                                                                   -----------
                                                                                                                       148,015
                                                                                                                    ----------
                                                                                                                   $17,795,451
                                                                                                                   ===========

                                 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current maturities of long-term debt                                                                               $ 1,638,750
Accounts payable and accrued liabilities                                                                             1,125,305
Obligation for renovations                                                                                             150,000
Income taxes payable                                                                                                   150,000
Other current liabilities
                                                                                                                        41,660
                                                                                                                   -----------
                                                                              TOTAL CURRENT LIABILITIES              3,105,716

OBLIGATION FOR RENOVATIONS
                                                                                                                       496,495

LONG-TERM DEBT, less current maturities                                                                              7,347,563

DEFERRED INCOME TAXES                                                                                                3,512,000

                                                                                                                             -
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Preferred Stock, 1,000,000 shares  authorized; none issued or outstanding
                                                                                                                             -
Common Stock, par value $.001; 100,000,000 shares authorized;
   5,975,851 shares issued and outstanding
                                                                                                                         5,975
Additional paid-in capital                                                                                           3,393,216
Accumulated deficit
                                                                                                                      (65,513)
                                                                                                                   -----------
                                                                             TOTAL STOCKHOLDERS' EQUITY              3,333,678
                                                                                                                   -----------
                                                             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $17,795,451
                                                                                                                   ===========
</TABLE>

                                      F-2


<PAGE>

                     PELICAN PROPERTIES, INTERNATIONAL CORP.
                                 AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF OPERATIONS

                  For The Years Ended December 31, 1999 and 1998


<TABLE>
<CAPTION>
                                                                                                1999                 1998
                                                                                           ------------          ----------
<S>                                                                                        <C>                   <C>
REVENUES
Rooms                                                                                      $  5,324,616          $  708,642
Food and beverage                                                                             1,621,447              70,399
Rental Income                                                                                   529,075              98,945
Interest income                                                                                  53,252             163,431
Other                                                                                           360,813              36,689
                                                                                           ------------          ----------
                                                                    TOTAL REVENUES            7,889,203           1,078,106

COSTS AND EXPENSES
Rooms                                                                                         1,425,422             126,407
Food and beverage                                                                             1,395,898             131,826
Other operating expenses                                                                      3,017,256             138,248
Corporate expenses                                                                              971,272             678,006
Sales and marketing expenses                                                                    584,667              36,016
Interest expense                                                                                614,526             146,428
Depreciation and amortization                                                                   858,428              81,361
                                                                                           ------------          ----------

                                                          TOTAL COSTS AND EXPENSES            8,867,469           1,338,292

                                  LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES          (978,266)           (260,186)

INCOME TAX (PROVISION) BENEFIT                                                                 (775,000)             97,570
                                                                                           ------------          ----------
                                                   LOSS FROM CONTINUING OPERATIONS           (1,753,266)           (162,616)

DISCONTINUED OPERATIONS
Income from discontinued operations, net of $15,967 in taxes                                          -              39,686
Gain on sale, net of $3,311,834 in taxes                                                              -           5,475,305
                                                                                           ------------          ----------

                                           INCOME (LOSS) BEFORE EXTRAORDINARY ITEM           (1,753,266)          5,352,375

EXTRAORDINARY ITEM, net of $195,000 and $-0- in taxes, for
December 31, 1999 and 1998, respectively                                                        305,000             580,543
                                                                                           ------------          ----------

                                                                 NET INCOME (LOSS)         $ (1,448,266)         $5,932,918
                                                                                           ============          ==========

BASIC AND DILUTED EARNINGS (LOSS)
PER COMMON SHARE:
Continuing operations                                                                      $      (0.31)         $    (0.03)
                                                                                           ------------          ----------
Discontinued operations                                                                    $          -          $     1.09
                                                                                           ------------          ----------
Extraordinary items                                                                        $       0.05          $     0.11
                                                                                           ------------          ----------
Net income (loss)                                                                          $      (0.25)         $     1.17
                                                                                           ============          ==========

</TABLE>


                                      F-3


<PAGE>


                     PELICAN PROPERTIES, INTERNATIONAL CORP.
                                AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                 For The Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                      Preferred
                                             Common Stock              Stock                 Additional      Retained
                                             ------------    ----------------------------     Paid-In        Earning
                                                Shares       Amount    Shares      Amount     Capital       (Deficit)     Total
                                                ------       ------    ------      ------     -------       ---------     -----
                                                <S>          <C>       <C>         <C>       <C>          <C>          <C>
BALANCES - DECEMBER 31, 1997                    4,954,185    $  4,954   195,907    $  196    $3,536,894    (4,550,165)  (1,008,121)

ISSUANCE OF STOCK COMPENSATION                     50,000          50         -         -         6,200             -        6,250

ISSUANCE OF STOCK COMPENSATION                     20,000          20         -         -         2,480             -        2,500

ISSUANCE OF STOCK COMPENSATION                     20,000          20         -         -        26,230             -       26,250

REPURCHSE OF PREFERRED STOCK                            -           -  (195,907)                   (196)            -     (293,862)

ISSUANCE OF COMMON STOCK                           50,000          50         -         -           450             -          500

NET INCOME                                              -           -         -         -             -     5,932,918    5,932,918

BALANCES - DECEMBER 31, 1998
                                                5,094,185       5,094         -         -     3,278,588     1,382,753    4,666,435
                                                ---------    --------  --------    ------    ----------   -----------   ----------
ISSUANCE OF COMMON STOCK FOR SERVICES             215,000         215         -         -       108,628             -      108,843

ISSUANCE OF COMMON STOCK UPON
EXERCISE OF OPTIONS                               666,666         666         -         -         6,000             -        6,666

NET LOSS                                                -           -         -         -             -    (1,448,266)  (1,448,266)
                                                ---------    --------  --------    ------    ----------   -----------   ----------
BALANCES - DECEMBER 31, 1999                    5,975,851    $  5,975         -    $    -    $3,393,216   $   (65,513) $ 3,333,678
                                                =========    ========  ========    ======    ==========   ===========  ===========


</TABLE>

                                      F-4
<PAGE>


                      PELICAN PROPERTIES, INTERNATIONAL CORP.
                                  AND SUBSIDIARIES

                        CONSOLIDATED STATEMENT OF CASH FLOWS

                   For The Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                                1999                1998
                                                                                            ------------         -----------
<S>                                                                                         <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                                                           $ (1,448,266)        $ 5,932,918
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation                                                                                     843,913              79,640
Amortization                                                                                      14,514               1,721
Extraordinary gain on forgiveness of debt                                                       (500,000)           (580,543)
Loss on disposal of fixed assets from discontinued operations                                          -              28,593
Gain on sale of discontinued operations                                                                -          (8,787,139)
Stock issued for compensation and services                                                       108,843              35,000
Provision for bad debts                                                                          154,976                   -
Deferred income taxes                                                                            819,268           2,692,732
Change in:
Accounts receivable                                                                               48,532            (236,263)
Inventories                                                                                      (10,423)            (19,559)
Prepaid expenses                                                                                  10,310               (8,38)
Income taxes refundable                                                                         (228,000)                  -
Other assets                                                                                     (31,213)             43,219
Accounts payable and accrued expenses                                                            652,177             204,269
Income taxes payable                                                                             (11,684)            161,684

Other liabilities                                                                                (59,804)           (741,345)
                                                                                            ------------         -----------
Net cash provided by (used in) continuing operations                                             363,143          (1,277,706)
Net cash provided by discontinued operations                                                           -              84,246
                                                                                            ------------         -----------
                                 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES             363,143          (1,193,460)

CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in investments                                                             1,082,488          (1,082,488)
Issuance of note receivable                                                                            -            (500,000)
(Increase) decrease in other receivable                                                          224,047            (224,047)
Acquisition of fixed assets                                                                   (1,490,110)        (16,169,838)
Proceeds from the sale of fixed assets
                                                                                                       -          14,958,903
                                                                                            ------------         -----------
                                               NET CASH USED IN INVESTING ACTIVITIES            (183,575)         (3,017,470)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings                                                                       (1,194,335)         (4,459,496)
Changes in pre-petition debt                                                                           -            (136,771)
Proceeds from borrowings                                                                         955,515           9,400,000
Repayments of stockholders loans                                                                       -            (241,153)
Repurchase of preferred stock                                                                          -            (293,862)
Proceeds from issuance of common stock                                                             6,666                 500
                                                                                            ------------         -----------
                                 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES            (232,154)          4,269,218
                                                                                            ------------         -----------

                                                     NET (INCREASE) DECREASE IN CASH             (52,586)             58,288

CASH AT BEGINNING OF YEAR                                                                        121,623              63,335
                                                                                            ------------         -----------

CASH AT END OF YEAR                                                                         $     69,037         $   121,623
                                                                                            ============         ===========

</TABLE>

                                      F-5
<PAGE>



23

                           PELICAN  PROPERTIES,  INTERNATIONAL  CORP.
                                AND SUBSIDIARIES

                   notes to CONSOLIDATED financial STATEMENTS

                     Years Ended December 31, 1999 and 1998



NOTE  1 -     BACKGROUND AND BASIS OF PRESENTATION

              Through June 3, 1998, Pelican Properties, International Corp. and
              its subsidiaries (the "Company") owned and operated Sunshine Key
              RV Resort and Marina ("Sunshine Key") located in the Florida Keys.
              On June 4, 1998, the Company sold its interest in Sunshine Key.
              Accordingly, the operations of Sunshine Key are reflected as
              discontinued operations in the accompanying consolidated statement
              of operations for the year ended December 31, 1998. On October 15,
              1998, the Company acquired the McLure House Hotel and Conference
              Center in Wheeling, West Virginia ("McLure House"). On November
              25, 1998, the Company acquired Palmer Inn in Princeton, New Jersey
              ("Palmer Inn"). On November 30, 1998, the Company acquired the
              Chamberlin Hotel in Hampton, Virginia ("Chamberlin Hotel").

              The accompanying consolidated financial statements include the
              accounts of Pelican Properties International, Corp., and its
              wholly owned subsidiaries, which operated Sunshine Key and
              continue to operate McLure House, Chamberlin Hotel and Palmer Inn.
              The operations of the three hotels are included from the date of
              their respective acquisitions. All significant intercompany
              transactions and accounts have been eliminated in the
              consolidation. For federal income tax purposes, the sale of
              Sunshine Key and the acquisition of the three hotels was treated
              as a tax-free exchange under Section 1031 of the Internal Revenue
              Code.

              Operations

              The accompanying consolidated financial statements have been
              prepared assuming that the Company will continue as a going
              concern. As of December 31, 1999, current liabilities exceeded
              current assets by approximately $2,111,000. Management's plans
              with regard to this situation include seeking to refinance the
              current maturities of the Company's borrowings on a long-term
              basis and improving the occupancy at its hotels (See Note 6).


NOTE  2 -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              Revenue Recognition

              Revenue is recorded on the accrual basis in the period in which
              occupancy rights are provided to guests and tenants. Advance
              deposits are recorded as deferred revenue until occupancy occurs.


                                       F-6


<PAGE>


NOTE  2 -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Supplies

              Supplies consists primarily of food, beverage and housekeeping
              inventories. Supplies are stated at the lower of cost, determined
              using the first-in, first-out method, or market value.

              Property and Equipment

              Property and equipment are stated at cost. Depreciation is
              provided using the straight-line method over the estimated useful
              lives of the respective assets. Leasehold improvements are
              amortized over the estimated useful lives of the improvements, or
              the term of the lease, if shorter. The estimated useful lives for
              property and equipment are as follows:

                                                                    Years
                                                                 -------------
                Buildings and building improvements                15  - 31
                Furniture, fixtures and equipment                   5  -  7
                Computer equipment                                        5

              Other Assets

              Other assets consists primarily of deferred financing costs and
              deposits. Deferred financing costs are amortized over the terms of
              the related borrowings. Other assets are reviewed for impairment
              whenever events or changes in circumstances indicate that the
              carrying amount may not be recoverable. If the sum of the expected
              future cash flows is less than the carrying amount of the asset, a
              loss is recognized.

              Environmental Liabilities

              Accruals for environmental matters, if any, are recorded in
              operating expenses when it is probable that a liability has been
              incurred and the amount of the liability can be reasonably
              estimated. Accrued liabilities are exclusive of claims against
              third parties and are not discounted.

              In general, costs related to environmental remediation are charged
              to expense. Environmental costs are capitalized if the costs
              increase the value of property and/or mitigate or prevent
              contamination from future operations. The Company has not recorded
              an accrual for environmental liabilities at December 31, 1999.

              Income Taxes

              The Company recognizes deferred tax liabilities and assets for the
              expected future tax consequences of events that have been included
              in its financial statements or tax returns. Deferred income tax
              liabilities and assets are determined based on the difference
              between the financial statement and tax bases of liabilities and
              assets using enacted tax rates in effect for the year in which the
              differences are expected to reverse.


              Earnings (Loss) Per Share

              Basic earnings (loss) per share is computed by dividing net income
              available to common stockholders for the period by the weighted
              average number of common shares outstanding for the period.
              Diluted earnings (loss) per share reflects the potential dilution
              that could occur if securities or other contracts to issue common
              stock were exercised or converted. Common share equivalents were
              not considered in the diluted earnings per share calculation for
              1999 or 1998 because their effect would have been anti-dilutive.
              As a result, both basic and diluted earnings (loss) per share for
              1999 and 1998 were calculated based on 5,699,849 and 5,074,980
              weighted average common shares outstanding during each year,
              respectively.

              Credit Risk and Concentrations

              Financial instruments which potentially subject the Company to
              concentrations of credit risk consist principally of cash,
              accounts receivable and note receivable.

              The Company maintains its cash primarily in bank deposit accounts,
              which, at times, may exceed federally insured limits. The Company
              has not experienced any losses in such accounts and management
              believes that it is not exposed to any significant credit risk
              with respect to cash.

              The Company is economically dependent upon the travel and tourism
              trade and changes in weather conditions in the cities where the
              hotels are located. Owning and operating only three hotel
              properties is a source of business concentration risk.

              Fair Value of Financial Instruments

                                      F-7


<PAGE>


NOTE  2 -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              The carrying values of cash, accounts receivable, note receivable,
              accounts payable, accrued expenses and borrowings approximate
              their fair values.

              Comprehensive Income

              The Company has adopted Statement of Financial Accounting
              Standards No. 130, "Reporting Comprehensive Income" effective for
              the year ended December 31, 1998. There were no items of other
              comprehensive income for the years ended December 31, 1999 and
              1998, respectively.

              Use of Estimates

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

              Reclassifications

              Certain amounts in the 1998 consolidated financial statements have
              been reclassified to conform to the 1999 presentation. These
              reclassifications have no effect on net income (loss).


note  3 -     SIGNIFICANT DISPOSITION AND ACQUISITIONS

              Sale of Sunshine Key

              On June 4, 1998, the Company sold Sunshine Key for approximately
              $15,750,000, resulting in a gain of approximately $5,475,000, net
              of taxes of approximately $3,312,000. The operations of Sunshine
              Key have been presented separately as discontinued operations in
              the 1998 statement of operations. Results of operations for
              Sunshine Key for 1998 through the date of its sale included
              approximately $1,862,000 of revenues and $1,822,000 of expenses,
              resulting in approximately $40,000 of net income from discontinued
              operations, net of taxes of approximately $16,000.

              In connection with the sale of Sunshine Key, the Company satisfied
              certain debt obligations. As a result of the debt satisfaction,
              the Company recognized an extraordinary gain of $580,543.

              Acquisition of McLure House

              On October 15, 1998, the Company acquired the assets of McLure
              House, including land, buildings, furniture, fixtures and
              equipment used in its operations for $3,200,000. In connection
              with the acquisition, the Company obtained financing in the amount
              of $2,400,000.

              Acquisition of Palmer Inn

              On November 25, 1998, the Company acquired the assets of the
              Palmer Inn, including land, buildings, furniture, fixtures and
              equipment used in its operations for $7,500,000. In connection
              with the acquisition, the Company assumed debt in the aggregate
              amount of $5,000,000.

              Acquisition of Chamberlin Hotel

              On November 30, 1998, the Company acquired the assets of the
              Chamberlin Hotel, including the building, furniture, fixtures and
              equipment used in its operations for $5,350,000. In connection
              with the acquisition, the Company assumed responsibility for a
              40-year lease for the land on which the hotel is located (see Note
              9). Also in connection with the acquisition, the Company assumed
              notes payable in the aggregate amount of $3,000,000. The holder of
              the notes payable offered a $500,000 reduction in the principal
              amount of the notes if payment of the notes in full would occur
              within 60 days of the closing and such payment were guaranteed. In
              January 1999, $2,500,000 was paid in full satisfaction of the
              notes approximately as follows: $2,276,500 by the previous owner
              of the Chamberlin Hotel and $223,500 by the Company. The
              $2,276,500 amount paid by the previous owner on the Company's
              behalf was not evidenced by a written agreement and had no formal
              terms for repayment. The $500,000 discount for the early
              repayment, net of the related income tax effect of $195,000, was
              accounted for as an extraordinary gain in the accompanying
              consolidated statement of operations for the year ended December
              31, 1999.

              During March through May 1999, the Company pursued permanent
              financing for the Chamberlin Hotel but was unable to obtain the
              financing primarily because the lessor of the land lease would not
              approve the lease assignment pending the completion of, or the
              commitment to complete, certain renovations. In June 1999, the
              Company filed suit against the previous owner seeking, among other
              things, a judicial determination of the previous owner's
              obligation for the completion of the renovations.

                                      F-8

<PAGE>


Note  3 -     SIGNIFICANT DISPOSITION AND ACQUISITIONS (Continued)

              Acquisition of Chamberlin Hotel (Continued)

              In February 2000, the Company and the previous owner entered into
              a stipulated settlement agreement which provided, among other
              things, that the previous owner would accept a payment of
              $1,630,000 as payment in full for the $2,276,500 that had been
              advanced on behalf of the Company. The resulting difference of
              approximately $646,500 represented the estimated cost of the
              renovations necessary to effect the assignment of the land lease.

              The Company has recorded its estimated obligation to complete the
              renovations as a liability in its December 31, 1999 consolidated
              balance sheet. The Company is currently negotiating with the land
              lessor to obtain approval for the assignment of the lease to the
              Company. Upon the approval of the lease assumption, the Company
              intends to obtain permanent financing for the Chamberlin Hotel and
              to pay the amounts due to the previous owner from the proceeds of
              such financing. The stipulated settlement agreement provides that
              the Company deliver to the previous owner a promissory note for
              such amounts bearing interest at a rate of 8% and maturing June
              15, 2000. The note is to be collateralized by the assets of the
              Chamberlin Hotel.

              The acquisitions of the McLure House, Chamberlin Hotel and Palmer
              Inn were accounted for as purchases. Accordingly, the respective
              purchase prices were allocated to the acquired assets based on
              their respective fair values and the results of operations of the
              hotels have been included in the consolidated financial statements
              from the dates of their respective acquisitions.


note  4 -     NOTE RECEIVABLE

              In November 1998, in connection with the Company's purchase of the
              Palmer Inn, the Company loaned $500,000 to the seller and obtained
              a promissory note receivable in exchange. The note receivable
              earned interest at an annual rate of 7.5% through June 1999. After
              that date, the note earns interest at an annual rate of 8%.
              Interest is payable in monthly installments. The principal balance
              is due on the earlier of May 25, 2000, or the date the $4,000,000
              second mortgage on the Palmer Inn is repaid (See Note 6).


note  5 -     PROPERTY AND EQUIPMENT

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

                Land                                            $     1,084,587
                Buildings and building improvements                  13,909,726
                Furniture, fixtures and equipment                     1,841,857
                Computer equipment                                       59,635
                Renovations in progress                                 678,986
                                                                ---------------
                                                                     17,574,791
                Less accumulated depreciation                          (921,770)
                                                                ---------------

                         Property and equipment, net            $    16,653,021
                                                                ===============

                                       F-9


<PAGE>


Note  6 -     BORROWING ARRANGEMENTS
<TABLE>
<CAPTION>
<S>                                                                                               <C>
              The Company's borrowing arrangements at December 31, 1999,
              consists of the following:

              Promissory  note  payable  to a  financial  institution,  payable  in monthly
              payments  of interest  only at a variable  rate  approximating  prime plus 1%
              with a  balloon  payment  of the  entire  principal  balance  originally  due
              April 1,  2000.  The Company has obtained an  extension of the maturity  date
              through June 30,  2000.  Collateralized  by the property and equipment of the
              Palmer Inn and guaranteed by the Company's chairman.                                $       940,000

              Mortgage note payable to a corporation, payable in monthly
              installments of interest only at 7.5% from November 1998 to May
              1999, and at 8.00% from May 1999 to May 2000. The principal
              balance of the note and any accrued interest is due May 25, 2000.
              The note is collateralized by substantially all property and
              equipment at the Palmer Inn.
                                                                                                        4,000,000

              Mortgage  note  payable  to  a  financial  institution,  payable  in  monthly
              payments of  interest  only at 7.5% per annum  through  October  2000,  after
              which  the   principal   balance  will  be  amortized   based  on  a  25-year
              amortization   schedule   with  the  remaining   principal   balance  due  on
              October 16,  2003.  Collateralized  by  the  property  and  equipment  of the
              McLure House.                                                                             2,400,000

              Obligation due to the former owner of Chamberlin Hotel pursuant to
              a Mediated Settlement Agreement dated February 8, 2000, by which
              an amount of $1,630,000 is due the former owner to satisfy all
              obligations resulting from the transfer of ownership of the
              Chamberlin Hotel to the Company. The interest only note at a rate
              of 8.00% is payable monthly with principal and any accrued
              interest due June 15, 2000. The obligation is collateralized by
              the assets of the Chamberlin Hotel.
                                                                                                        1,630,000

              Other borrowing arrangements with financial institutions at rates
              ranging from 7.50% to 9.65%, payable in monthly installments of
              principal and interest, maturing in 2003 and 2004, collateralized
              by various equipment.
                                                                                                           16,313
                                                                                                   --------------
                                                                                                        8,986,313
              Less current maturities                                                                  (1,638,750)
                                                                                                   --------------

                           Total long-term debt                                                   $     7,347,563
                                                                                                  ===============
</TABLE>
              The Company has obtained a commitment from a financial institution
              to refinance the $4,000,000 mortgage note due in May 2000 and the
              $940,000 promissory note due in April 2000 on a long-term basis.
              The commitment letter from the financial institution provides for,
              among other things, funding of $6,200,000 to repay the maturing
              obligations and to fund the construction of a twenty-two room
              addition to the Palmer Inn. Accordingly, the $4,000,000 mortgage
              note due in May 2000 and the $940,000 promissory note due in April
              2000 have been classified as long term in the accompanying
              consolidated balance sheet. The closing of the refinancing is
              subject to, among other things, the delivery of certain
              information to the financial institution and the attainment of
              certain financial ratios by the Company.

              Cash paid for interest amounted to approximately $590,000 and
              $307,000 in 1999 and 1998, respectively.


                                      F-10


<PAGE>


note  6 -     BORROWING ARRANGEMENTS (Continued)

              Assuming the closing of the refinancing described in the previous
              paragraph occurs, the aggregate maturities of the Company's
              borrowing arrangements subsequent to December 31, 1999, will be
              approximately as follows:

                            Year Ending
                           December 31,                       Amount
                       -----------------------             ---------------

                               2000                         $   1,639,000
                               2001                         $      38,000
                               2002                         $      40,000
                               2003                         $   2,326,000
                               2004                         $       3,000
                            Thereafter                      $   4,940,000


note  7 -     INCOME TAXES

              The components of the Company's provision for income taxes for the
              years ended December 31, 1999 and 1998, are as follows:
<TABLE>
<CAPTION>
                                                                                    1999               1998
                                                                               -------------      --------------
<S>                                                                            <C>                <C>
                   Current
                       Federal                                                 $     100,000      $      138,052
                       State                                                          50,000              23,632
                                                                               -------------      --------------
                          Total current                                              150,000             161,684

                   Deferred
                       Federal                                                       746,000           2,620,048
                       State                                                          74,000             448,499
                                                                               -------------      --------------
                          Total deferred                                             820,000           3,068,547
                                                                               -------------      --------------

                          Total provision for income taxes                     $     970,000      $    3,230,231
                                                                               =============      ==============
</TABLE>

              The provision for income taxes is reflected in the consolidated
              statement of operations as net components included in discontinued
              operations, extraordinary items and income tax (provision)
              benefit.

              Significant components of the Company's deferred tax liabilities
              and assets at December 31, 1999, are approximately as follows:

                   Deferred Tax Liability
                   ----------------------
                       Deferred gain from like-kind exchange      $  (3,574,000)

                   Deferred Tax Asset
                   ------------------
                       Bad debt allowance                                62,000
                                                                  -------------

                          Net deferred taxes                      $  (3,512,000)
                                                                  =============


              Reconciliations of the significant differences between tax at the
              federal statutory income tax rate and the effective income tax on
              pre-tax income (loss), are as follows:

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

               Statutory federal rate                           (34)%     34%
               Change in estimated tax basis of assets          214        -
               Tax exempt portion of gain                         -       (2)
               Tax benefit of net operating loss carryforward    20        -
               State tax effect, net of federal benefit           3        3
                                                               -------  -------
                         Effective income tax                   203%      35%


                                      F-11

<PAGE>


Note  7 -     INCOME TAXES (Continued)

              In 1999, the Company made an election related to the filing of its
              1998 income tax return allowing the Company to reduce the tax
              basis of the property exchanged in 1998 rather than having to
              recognize taxable income currently. When calculating the estimated
              tax basis of its assets and the tax provision at December 31,
              1998, the election was not taken into account. The election is
              related to the forgiveness of indebtedness from the restructure of
              debt in 1996 and resulted in an additional deferral of income
              taxes in the amount of $1,023,000. This change in estimated tax
              basis is reflected in the Company's 1999 income tax provision.

              In 1998, the Company paid $228,000 in cash for income taxes. No
              cash was paid for income taxes in 1999.

note  8 -     Stockholders' Equity

              Common Stock Purchase Warrants

              During 1999 and 1998, the Company had 200,000 Class A Common Stock
              Purchase Warrants ("Class A Warrants") outstanding. The holders of
              each Class A Warrant were entitled to purchase one share of the
              Company's common stock at an exercise price of $5.00 per share.
              The Class A Warrant expired unexercised on March 19, 2000.

              During 1999 and 1998, the Company also had 200,000 Class B Common
              Stock Purchase Warrants ("Class B Warrants") outstanding. The
              holders of each Class B Warrant are entitled to purchase one share
              of the Company's common stock at an exercise price of $5.00 per
              share. The Class B Warrants are exercisable through March 19, 2001
              and are subject to redemption by the Company at a price of $1.00
              per Class B Warrant.

              Preferred Stock

              The Company has authorized the issuance of up to 1,000,000 shares
              of Preferred Stock in one or more series with rights, preferences,
              privileges and restrictions, including voting and conversion
              rights, as determined by the Company's Board of Directors (the
              Board).

              During 1997, in connection with the satisfaction of certain loans
              and debt amounting to $293,862, the Company issued 195,907 shares
              of the Company's authorized preferred shares. The issued preferred
              shares included 46,666 shares issued to the Chairman of the Board
              of the Company, who cancelled a loan in the amount of $70,000. The
              issued preferred shares were designated "Series A Convertible
              Preferred Stock," with a par value of $0.01 per share. The holders
              were entitled to receive a cumulative annual dividend of 6% of the
              stated value ($1.50 per share) on January 1 of each year
              commencing January 1, 1998, payable in cash or common stock of the
              Company. Holders of the Series A Preferred Stock had the right to
              convert each share of their Series A Preferred Stock into the
              Company's common stock at any time, at a conversion ratio of one
              share of Series A Preferred Stock for one share of common stock.
              During 1998, the Company, at a cost of $293,862, redeemed all
              Series A preferred shares.

              Common Stock Options

              During 1999 and 1998, the Company had various stock options
              outstanding to certain officers. The following table summarizes
              the aggregate stock options activity for the years ended December
              31, 1999 and 1998:

                                                                   Shares Under
                                                                      Option
                                                                   ------------

                   Outstanding at December 31, 1997                    746,666
                   Grants                                               50,000
                   Exercises                                           (50,000)
                   Cancellations                                       (40,000)
                                                                   -----------
                   Outstanding at December 31, 1998                    706,666
                   Grants                                                    -
                   Exercises                                          (666,666)
                   Cancellations                                             -
                                                                   -----------
                   Outstanding at December 31, 1999                     40,000
                                                                   ===========

              The 50,000 options that were granted and exercised in 1998 were
              exercised at $0.01 per share. The 666,666 options that were
              exercised in 1999 were exercised at a price of $0.01 per share.
              The 40,000 options that remain outstanding as of December 31,
              1999, are exercisable at a price of $1.00 per share.

                                      F-12


<PAGE>


Note  8 -         Stockholders' Equity (Continued)

                  Financial Accounting Standards Board pronouncement FAS No.
              123, "Accounting for Stock-Based Compensation," (FAS 123) requires
              that the Company calculate the value of stock options at the date
              of grant using an option pricing model. The Company has elected
              the "pro-forma, disclosure only" option permitted under FAS 123,
              instead of recording a charge to operations. If the 50,000 options
              granted in 1998 had been valued using the Black-Shoals model based
              on a 7.5% risk-free rate of return; an expected option life of one
              year; an expected stock price volatility of 106% and a grant date
              value of $1.50; the earnings per share would have been $0.01 per
              share less than that reported in the 1998 consolidated statement
              of operations.


              Issuance of Common Stock for Services

              During 1999, the Company issued 215,000 shares of its common stock
              to a consultant in payment for services. The shares were valued at
              $108,843.

              During 1998, the Company issued 50,000 shares of common stock as
              payment in connection with legal services provided. The shares
              were valued at an aggregate amount of $6,250.

              During 1998, the Company issued 20,000 shares common stock as
              compensation to a key executive. The shares were valued at an
              aggregate amount of $2,500.

              During 1998, the Company issued 20,000 shares of common stock as
              compensation to a key executive. The shares were valued at an
              aggregate amount of $26,250.


Note  9 -     commitments and contingencies

              Franchise Agreement

              The Palmer Inn operates under a franchise agreement with a
              national hotel franchise system. The agreement provides for, among
              other things, an annual membership fee, as determined by the
              franchiser's board of directors. The agreement also requires the
              Company to pay a royalty fee and reservation fee based on room
              bookings, net of cancellations. The terms of the franchise
              agreement expire in November 2000, and renews automatically each
              year at the discretion of the franchiser. The Company may
              terminate the franchise agreement at any time without penalty.

              The McLure House also operates under a franchise agreement with a
              national hotel franchise system. Deferred costs related to the
              acquisition of the franchise agreement of $19,000 have been
              recorded as an other asset in the December 31, 1999 consolidated
              balance sheet, net of accumulated amortization of $106. The
              franchise agreement provides for, among other things, a monthly
              royalty and service fee ranging from 6.5% of monthly gross room
              revenues in the first year to 8.5% by year five of the franchise
              agreement. The term of the franchise agreement is 15 years.

              Lease as Lessee

              The Company leases the land upon which the Chamberlin Hotel is
              located through an operating lease contract. The lease provides
              for minimum lease payments of $6,000 per year through the lease's
              expiration date in 2037. Total rent expense approximated $6,000
              and $500 for the years ended December 31, 1999 and 1998,
              respectively. The Company has not yet obtained the landlord's
              approval of the assumption of the lease (See Note 3).



                                      F-13


<PAGE>


Note  9 -         commitments and contingencies (Continued)


              Lease as Lessor

              The Company leases certain food and beverage and retail concession
              space to unrelated businesses. The Company receives rents for the
              leased space on a monthly basis. The scheduled future minimum
              rents to be received under these leases are approximately as
              follows:

                                     Year Ending
                                    December 31,                   Amount
                               ------------------------       ---------------

                                        2000                  $    213,000
                                        2001                  $    101,000
                                        2002                  $    102,000
                                        2003                  $     82,000
                                        2004                  $     80,000
                                     Thereafter               $    320,000


              Legal Proceedings

              The Company is engaged in various legal and regulatory
              proceedings. Management believes that the range of potential loss
              resulting from these proceedings will fall within the Company's
              available insurance coverage and that the outcomes of such
              proceedings will not be material to the Company's consolidated
              financial position. Additionally, the Company is subject to
              extensive federal, state and local laws and regulations. The
              Company believes that it is in compliance with all applicable laws
              and regulations and is not aware of any pending or threatened
              investigations involving allegations of potential wrongdoing.
              While no such regulatory inquiries have been made, compliance with
              such laws and regulations can be subject to future governmental
              review and interpretation, as well as significant regulatory
              action, including fines and penalties.

              Employment Agreement

              The Company had an employment agreement with one of its officers
              that expired on October 31, 1999. The agreement provided for a
              base salary, benefits and stock options.


                                      F-14