SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2000

                         JANUS HOTELS AND RESORTS, INC.
             (Exact name of registrant as specified in its charter)



         Delaware             Commission File Number:  0-22745      13-2572712
(State or other jurisdiction of                                    (IRS Employer
incorporation or organization)                               Identification No.)


2300 Corporate Blvd., N.W., Suite 232                              33431-8596
Boca Raton, Florida                                                (Zip Code)
(Address of principal executive offices)

       Registrant's telephone number, including area code: (561) 997-2325

Securities registered pursuant to Section 12(b) of the Exchange Act of 1934:


  Title of each class                  Name of each exchange on which registered
  -------------------------            -----------------------------------------

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days: Yes |X| No |_|

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K. |_|

The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates of the issuer was approximately $6,648,000, as of March 16, 2001.
It is the position of the Company that the United States Lines,  Inc. and United
States Lines (S.A.), Inc. Reorganization Trust is not an affiliate.

Number of shares of common stock outstanding as of March 16, 2001: 8,437,673


                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  registrant's  definitive  proxy statement  relating to the 2001
Annual  Meeting of  Stockholders,  to be filed with the  Securities and Exchange
Commission, are incorporated by reference in Part III, Items 10-13 of the Annual
Report on Form 10-K as indicated herein.


<PAGE>


                           Forward Looking Statements

Certain information contained or incorporated by reference in this Annual Report
on  Form  10-K  is  forward-looking  in  nature.  All  statements   included  or
incorporated  by  reference  in  this  Annual  Report  on  Form  10-K or made by
management of Janus Hotels and Resorts, Inc. and its subsidiaries (the "Company"
or "Janus"),  other than  statements of  historical  fact,  are  forward-looking
statements.  Examples of forward-looking statements include statements regarding
the Company's future financial results,  operating results, business strategies,
projected  costs,  competitive  positions and plans and objectives of management
for  future  operations.  In  some  cases,  forward-looking  statements  can  be
identified by terminology such as "may," "will," "should,"  "would,"  "expects,"
"plans,"  "anticipates,"   "believes,"   "estimates,"  "predicts,"  "potential,"
"continue," or the negative of these terms or other comparable terminology.  Any
expectations based on these forward-looking  statements are subject to risks and
uncertainties  and other  important  factors,  including  those discussed in the
sections titled "Item 1: Business - the Hospitality Business; - Certain Business
Considerations" and " "Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations."  Actual results may differ materially from
historical  earnings and those presently  anticipated or projected.  The Company
has no  obligation to release  publicly the result of any revisions  that may be
made to any  forward-looking  statements to reflect anticipated or unanticipated
events or circumstances occurring after the date of such statements.

                                     PART I

Item 1.  Business.

Introduction

Janus  Hotels  and  Resorts,   Inc.  (the  "Company"  or  "Janus"),  a  Delaware
corporation,  is in the business of operating and managing  hotels.  The Company
has  ownership  interests  in 15 hotels  (the  "Owned  Hotels")  and  manages an
additional  37 hotels  (the  hotels  which are  managed,  but not owned,  by the
Company are referred to as the "Managed Hotels" and the Owned Hotels and Managed
Hotels are collectively referred to as "Hotels").

The Company's executive offices are located at 2300 Corporate  Boulevard,  N.W.,
Suite 232, Boca Raton, Florida 33431 and its telephone number is (561) 997-2325.

Background of the Company

Janus is the successor to United States Lines, Inc. ("U.S.  Lines"),  which once
was one of the largest  containerized  cargo shipping companies in the world. On
November 24, 1986, McLean  Industries,  Inc., First Colony Farms, Inc. and their
subsidiaries  U.S.  Lines and United  States Lines  (S.A.),  Inc.  ("U.S.  Lines
(S.A.)")  filed  petitions  for relief  under  Chapter  11 of the United  States
Bankruptcy Code. Soon thereafter, the shipping operations of U.S. Lines and U.S.
Lines (S.A.) ceased. U.S. Lines and U.S. Lines (S.A.) emerged from bankruptcy in
1990  under  the  terms  of  the  First  Amended  and  Restated  Joint  Plan  of
Reorganization  dated February 23, 1989 (the "Plan"). At that time, the names of
U.S. Lines and U.S. Lines (S.A.) were changed to Janus  Industries,  Inc. and JI
Subsidiary, Inc. ("JI Subsidiary"),  respectively.  On May 21, 1999, the name of
the  Company  was  changed  to Janus  Hotels and  Resorts,  Inc.  JI  Subsidiary
currently  has  no  business   activities.   See  "  History  of  the  Company's
Reorganization."

In July 1996, the Company  acquired  substantially  all of the assets of Pre-Tek
Wireline Service Company, Inc. ("Pre-Tek"),  an oil and gas engineering services
and wireline logging company based in Bakersfield,  California. During 1997, the
Company  determined to discontinue this line of business and  subsequently  sold
the business to its management effective April 1, 1998.

In April  1997,  the  Company  entered the hotel  business  by  acquiring,  from
affiliates  of Louis S. Beck  ("Beck") and Harry G. Yeaggy  ("Yeaggy"),  certain
assets relating to the hospitality  business  comprised of (i) six hotels and an
85%  interest  in a  partnership  that owns one hotel;  (ii) a hotel  management
company; (iii) a management fee sharing arrangement with Summit Hotel Management
Company,  which has since been  terminated;  and (iv) two loans, one of which is
secured by a first mortgage on a hotel, which was subsequently  terminated based
on a  merger,  and the  other of  which  is  secured  by a first  mortgage  on a
campground,  which is  personally  guaranteed  by Messrs.  Beck and  Yeaggy.  In
consideration therefor,  Messrs. Beck and Yeaggy and Beck Hospitality III, Inc.,
a corporation  wholly-owned  by them,  received  shares of the Company's  common
stock, par value $.01 per share (the "Common Stock"), representing approximately
43% of the total  outstanding  shares of Common Stock and shares of the Series B
preferred  stock of the  Company,  par  value  $.01 per  share  (the  "Series  B
Preferred Stock).

Messrs.  Beck  and  Yeaggy,  who  are  currently  Chairman  and  Vice  Chairman,
respectively, of the Board of Directors of the Company, have been engaged in the
hospitality business since 1972.

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<PAGE>

In August  1998,  the Company  acquired  four hotels near  Cleveland,  Ohio (the
"Cornerstone Hotel Group") from an unrelated party.

Effective  January 1, 1999, the Company acquired,  by merger,  Beck Hospitality,
Inc. II ("Beck II") which owned six hotels and a 75% interest in another  hotel.
As part of the  purchase  price in this  transaction,  Messrs.  Beck and  Yeaggy
received additional shares of the Series B Preferred Stock.

Messrs.  Beck and  Yeaggy  retain  miscellaneous  independent  interests  in the
hospitality  business.  However, they have contractually agreed with the Company
not to engage in any business that competes with the business of the Company.

The Hospitality Business

     Owned Hotels

The Owned  Hotels are  located in five  states and operate  under  franchise  or
membership agreements that provide for the use of the brand names Days Inn, Best
Western,  Knights  Inn,  Holiday Inn and Comfort Inn. One of the Owned Hotels is
located  adjacent to the Paramount Kings Dominion  amusement park near Richmond,
Virginia.  The remaining Owned Hotels are located near office parks,  interstate
highways,  airports or tourist attractions in Ohio,  Florida,  Indiana and North
Carolina.  The Owned Hotels generally offer remote control cable  television,  a
swimming  pool and, in many cases,  restaurants.  Some of them offer meeting and
banquet facilities and room service.

The Owned  Hotels are owned in fee,  either  directly  or  through  consolidated
entities.  Except for the Days Inn, Pompano Beach, Florida, the Owned Hotels are
wholly owned by the Company. An unrelated party holds a 25% interest in the Days
Inn,  Pompano  Beach,  Florida.  Each of the Owned Hotels is subject to mortgage
indebtedness. All of such indebtedness is secured solely by the applicable hotel
property and fixtures,  and is  non-recourse to the other assets of the Company,
with the exception of the indebtedness incurred in the acquisition of the hotels
in the Cornerstone Hotel Group, which is cross-collateralized by such hotels.

     Franchise Agreements

The Company has entered into non-exclusive  multi-year  franchise,  licensing or
membership  agreements,  which allow the Company to utilize the franchise  brand
name of the franchiser or licensor for the Hotels. The Company believes that its
relationships  with  nationally   recognized   franchisers  provide  significant
benefits for its Owned Hotels.  The franchise  agreements require the Company to
pay annual fees, to maintain certain standards and to implement certain programs
that  require  additional  expenditures  by the Company  such as  remodeling  or
redecorating.  The payment of annual fees,  which typically total from 8% to 12%
of room revenues,  covers  royalties and the costs of marketing and  reservation
services provided by the franchisers.  Franchise agreements, at their inception,
generally  provide  for a term of 15 years and an  initial  fee in  addition  to
annual fees payable to the franchiser.

The Company currently has franchise or membership relationships with Bass Hotels
(Holiday Inn), Days Inn, Knights Inn, Best Western,  Choice Hotels (Comfort Inn)
and Red Roof.  Franchise  agreements  may be terminated if, among other reasons,
the Company  breaches  its  obligations  under the  agreement,  the hotel is not
operated in the ordinary course of business or the Company  becomes  financially
unstable.  There  can be no  assurance  that a  desirable  replacement  would be
available  if  any  franchise  agreements  were  to  be  terminated.  Upon  such
termination with respect to the Company's Owned Hotels,  the Company would incur
the costs of signage removal and other expenses,  possible lost revenues and the
costs incidental to establishing new  associations.  Through the Managed Hotels,
the Company  has  additional  relationships  with other  franchisers,  including
Howard Johnson, Ramada, Wingate and Radisson.

     Managed Hotels

The Company  operates the Managed Hotels pursuant to management  agreements (the
"Management  Agreements") with the owners of such Managed Hotels. Managed Hotels
are operated  primarily under nationally  recognized  brand names.  Four Managed
Hotels are non-franchised properties.

The Company is responsible for all matters relating to the day-to-day operations
of the Managed Hotels and is required to prepare an annual operating budget, use
its reasonable best efforts to market the hotels and ensure  compliance with the
terms of applicable  franchise  agreements.  The Company is also responsible for
the retention and  supervision  of personnel  necessary for the operation of the
hotel.  The Company  has a contract  with a third  party for this  purpose.  See
"Operations - Hotel Personnel."

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<PAGE>

Under the terms of the Management Agreements, management fees either are a fixed
amount or are based on a percentage of a property's total revenues, ranging from
3% to 5%, and/or incentive payments based upon net operating income.  Additional
fees are generated from accounting services. The Management Agreements generally
have  terms  of one  year  to  five  years  and are  automatically  renewed  for
successive similar terms,  unless either party decides not to renew prior to the
expiration  of the  current  term.  Either  party  may  terminate  a  Management
Agreement for cause prior to a stated expiration date, except in the case of two
Management  Agreements,  which permit  termination  at any time  without  cause.
Generally,  the owner of a  property  has the right to  terminate  a  Management
Agreement  upon sale of the Hotel to an unrelated  third  party,  subject to the
payment of a termination fee to the Company.

    Operations

The  Company  operates  each Hotel  according  to a business  plan  specifically
tailored  to the  characteristics  of the  Hotel  and  its  market  and  employs
centralized  management,  accounting  and  purchasing  systems to enhance  hotel
operations, reduce the costs of goods, food and beverages and increase operating
margins.

Computerized  Reporting Systems. The Company has a service agreement for a hotel
property  management  information  system with Computel Computer  Systems,  Inc.
("Computel"),  a  corporation  wholly-owned  by  Messrs.  Beck and  Yeaggy.  The
agreement  provides a computerized  system that tracks all services  provided by
nine of the Hotels and enables  the  Company to monitor a broad  spectrum of the
operations  of each Hotel  covered by the system,  including  the  occupancy and
revenues of the Hotels.  The agreement  with Computel has a term of one year and
automatically renews for successive terms of one year, unless one party notifies
the other to the contrary at least three months prior to the  termination  date.
Computel  is paid a monthly  fee of $275 per  property  for its  basic  property
management  software package and one computer terminal.  Additional monthly fees
are charged for  additional  terminals and add-on  software for services such as
guest  messaging,  call  accounting  interface,  franchise  central  reservation
interface and movie interface. On each annual renewal of the agreement, Computel
is entitled to adjust its fees to the Company commensurate with the fees charged
to  other  customers.  Beginning  in  1998,  due to  requirements  of one of the
Company's franchisors,  the Company significantly decreased the number of Hotels
utilizing the Computel system, thereby substantially decreasing the service fees
to Computel.

Hotel  Personnel.  The  majority of the  personnel  at the Hotels is provided by
Hospitality Employee Leasing Program, Inc. ("HELP"), a corporation  wholly-owned
by Messrs.  Beck and Yeaggy,  pursuant to an  agreement  with the  Company.  The
agreement  has a term  of one  year  and  automatically  renews  for  successive
one-year  terms,  unless one party  notifies  the other to the contrary at least
three months prior to the expiration date. The Company pays HELP the actual cost
of the personnel provided to it to operate the Hotels plus an administrative fee
of $10.15 per bi-monthly pay period per person provided.

     Employees

As of December 31, 2000,  approximately  thirty-three full-time employees of the
Company were engaged in management,  business  operations and  administration of
its  hospitality  business.  In  addition,  at  that  date  approximately  2,380
individuals  employed by HELP  provided  services at the Hotels  under a service
agreement between HELP and the Company.

     Growth Strategy

Management of the Company  intends to pursue a program of expanding its business
of  the  management   and/or   acquisition  of  hotels,   recreation,   resorts,
entertainment or other related entities through the marketing of its services to
the owners of properties not owned by the Company and through the acquisition of
properties either by itself or with other investors. The Company is engaged in a
marketing  program to expand  selectively  the number of hotels that it manages.
Since entering the hospitality  business in April 1997, and through December 31,
2000, the Company increased its number of Managed Hotels by sixteen. The Company
also continues to review possible acquisitions of hospitality properties.  There
can be no assurance  that the Company will be  successful in pursuing its growth
strategy due to the highly competitive nature of the market and the difficulties
associated with raising capital or obtaining debt financing.

     Public Service

The Company has a one-year  agreement  with  America  Responds  With Love,  Inc.
("America Responds") under which it provides lodging at no charge at a number of
its Hotels.  While this  program will from time to time  increase the  Company's

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<PAGE>

costs of operations  without a  corresponding  increase in revenues,  management
believes that the impact upon profitability will be immaterial,  and regards its
participation  in the  program as a marketing  opportunity.  The Company has the
right to cancel this agreement at any time with notice to America Responds.


     History of the Company's Reorganization

Under the terms of the Plan, (i) the United States Lines, Inc. and United States
Lines (S.A.), Inc. Reorganization Trust (the "Reorganization Trust") was created
for the benefit of unsecured creditors of U.S. Lines and U.S. Lines (S.A.); (ii)
certain  assets  and  liabilities  of U.S.  Lines  and U.S.  Lines  (S.A.)  were
transferred  to the  Reorganization  Trust;  and (iii) U.S. Lines and U.S. Lines
(S.A.) were discharged of all liabilities.

The agreement  establishing  the  Reorganization  Trust (the "Trust  Agreement")
provided for shares of stock of Janus and JI Subsidiary to be distributed to the
unsecured  creditors  as their  claims  were  allowed.  See "The  Reorganization
Trust." The Plan provided for the unsecured  creditors to hold a majority of the
outstanding stock of the reorganized  companies through the Reorganization Trust
and further  anticipated that the reorganized  companies would acquire operating
businesses.


     The Reorganization Trust

The  Reorganization  Trust was created by the Plan for the purpose of  resolving
the disputed claims of former  unsecured  creditors of U.S. Lines and U.S. Lines
(S.A.),  marshalling  the remaining  assets of U.S. Lines and U.S. Lines (S.A.),
such as claims  against third parties,  and acting as the  disbursing  agent for
distribution to the former creditors. The trustee of the Reorganization Trust is
John T. Paulyson,  who has been employed by the  Reorganization  Trust since its
inception.

The Reorganization Trust was issued stock by both Janus and JI Subsidiary, which
was intended by the Plan to be distributed to the former creditors of U.S. Lines
and U.S. Lines (S.A.) as their claims were resolved.  Five million shares of the
Company's Common Stock was originally  issued to the  Reorganization  Trust, all
ultimately to be distributed to allowed  creditors of U.S. Lines. As of December
31, 2000,  4,635,583 shares have been distributed by the Reorganization Trust to
former creditors.

The  balance of 364,416  shares  includes a fixed  reserve of 352,850  shares of
Common Stock  established by order of the United States Bankruptcy Court for the
Southern  District of New York (the "Bankruptcy  Court") for the benefit of more
than  14,673   individuals   who  have  asserted   asbestos-related   and  other
late-manifesting personal injury claims. The resolution of these claims (and any
future  late-manifesting  asbestos and other personal injury claims) is delayed,
in part,  by a  dispute  between  the  Reorganization  Trust  and the  insurance
carriers of U.S. Lines over certain aspects of insurance coverage.  This dispute
has no impact upon the Company other than delaying  identification of individual
shareholders and prolonging the activities of the Reorganization Trust.

The Trust Agreement provides for the Reorganization Trust to contribute to Janus
and JI  Subsidiary  from time to time cash on hand that  exceeds  its  projected
liabilities and administrative  requirements.  Such contributions are to be made
90%  to  Janus  and  10%  to JI  Subsidiary.  The  Company  did  not  receive  a
contribution  from the Trust in 2000, 1999 and 1998.  Through December 31, 2000,
an aggregate of approximately $15 million was transferred by the  Reorganization
Trust to the Company. No additional  transfers from the Reorganization Trust are
anticipated until there is a resolution of the insurance coverage issues.

As of December 31, 2000, the  Reorganization  Trust reported total cash and cash
equivalents  of  $2,499,925  of which  $418,316 was  identified  as  "restricted
funds". While there is no objective formula to determine the extent to which the
Reorganization  Trust assets exceed  projected  liabilities  and  administrative
requirements, management of the Company believes that more monies may ultimately
be  available  for  contribution  to  the  Company  and  JI  Subsidiary  by  the
Reorganization   Trust.   The  principal   unknown  variable  that  could  cause
substantial depletion of the unrestricted available cash and cash equivalents is
the  remaining  period  of  Reorganization  Trust  activity  and the  amount  of
professional fees necessary to resolve  outstanding  claims,  particularly,  any
asbestos or other  late-manifesting  personal injury claims. No assurance can be
given, nor is any assurance intended, that additional cash will become available
to the Company from the  Reorganization  Trust or the amount of such  additional
cash, if any.


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<PAGE>



Certain Business Considerations

     Possible Need for Additional Financing

The  Company  has been  substantially  dependent  upon  mortgage  loans  for the
financing of its real estate  activities  and internal cash flow for its working
capital  requirements.  The Company  anticipates  that in the absence of further
acquisitions  of hotels,  and based on currently  proposed plans and assumptions
relating to its operations, its available resources,  including its current cash
balances,  will  be  sufficient  to  satisfy  the  Company's  contemplated  cash
requirements for its current  operations for at least the next 24 months. In the
event that the Company acquires one or more hotels, or its assumptions change or
prove to be  inaccurate,  the  Company  could  be  required  to seek  additional
financing  or  curtail  its  activities.   Any  equity   financing  may  involve
substantial dilution to the interest of the Company's stockholders, and any debt
financing could result in operational or financial  restrictions on the Company.
There can be no assurance that any additional financing will be available to the
Company on acceptable terms or at all.

    Conflicts of Interest

Independent  business interests of Messrs.  Beck and Yeaggy may give rise to the
possibility of conflicts of interest.

The Company  relies upon  Computel  and HELP,  which are wholly owned by Messrs.
Beck and Yeaggy, for administrative and personnel services at the Hotels.

Conflicts  may  arise  between  the  Company  and  Messrs.  Beck and  Yeaggy  in
connection with the exercise of any rights or the conduct of any negotiations to
extend,  renew,  terminate or amend the agreements  between each of Computel and
HELP and the  Company,  the mortgage on the Days Inn Pompano  Beach,  which they
hold, or the subleases for the offices occupied by the Company in Boca Raton and
Cincinnati  which are  sublet  from an  affiliate  of Messrs.  Beck and  Yeaggy.
Conflicts  may also arise  between the  Company  and Messrs.  Beck and Yeaggy in
connection with certain mortgage  indebtedness of the Company that is personally
guaranteed by Messrs. Beck and Yeaggy, or in connection with the exercise by the
Company of its rights with  respect to a mortgage  note and related  mortgage on
the KOA  Campground in Kissimmee,  Florida,  which is owned by Messrs.  Beck and
Yeaggy.

Although management's recommendations on matters potentially involving conflicts
of interest  will be referred to the Audit  Committee  of the Board of Directors
for review,  there can be no assurance  that any such conflicts will be resolved
in favor of the Company.

     Operating Risks

The  Company's  business is subject to all of the risks  inherent in the lodging
industry.  These risks include,  among other things,  adverse effects of general
and local  economic  conditions,  changes in local market  conditions,  cyclical
overbuilding  of hotel  space,  a  reduction  in local  demand for hotel  rooms,
changes in travel patterns,  the recurring need for  renovations,  refurbishment
and  improvements of hotel  properties,  changes in interest rates and the other
terms and availability of credit.  Changes in demographics or other changes in a
hotel's local market could impact the  convenience or  desirability  of a hotel,
which, in turn, could affect the economic returns from the operation of a hotel.
The operational  expenses of a hotel cannot be reduced when circumstances result
in a reduction of revenue.

     Competition

The lodging industry is highly  competitive in terms of both geographic  markets
and market  segmentation.  The Hotels are in the market segments known generally
as full service,  limited service and economy hotels.  The Company competes with
other  franchisers  of Bass Hotels  (Holiday Inn),  Days Inn,  Knights Inn, Best
Western,  Choice Hotels (Comfort Inn) and Red Roof within the geographic markets
of the applicable Hotels and operators of other similar service type hotels. The
Managed  Hotels  cover the  spectrum of market  segments  and  include  economy,
limited  service,  full  service  mid-market  hotels  and  higher  rated  luxury
properties.  Like the Company's Hotels, the Managed Hotels compete, within their
geographical markets, with other properties under the same franchise names, with
properties operating under other franchise names and with independent operators.
Several owners/managers of multiple hotel properties are larger than the Company
and have greater  financial and other resources and better access to the capital
markets  than  the  Company.   Performance   of  the  hotel  industry  has  been
historically  cyclical and is affected by general economic conditions and by the
local economy where each hotel is located.  In addition,  to remain competitive,
hotels  periodically  must be renovated and  modernized in order to compete with
newer or more recently renovated facilities. Furthermore, shifts in demographics
or other local market changes can reduce the economic returns from a hotel.


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<PAGE>

     Geographic Concentration of Hotels

Many of the Owned  Hotels  are  located  in Florida  and Ohio.  Such  geographic
concentration  exposes the Company's  operating  results to events or conditions
that  specifically  affect  those areas,  such as local and  regional  economic,
weather and other conditions.  Adverse  developments  that  specifically  affect
those areas may have a material  adverse  effect on the results of operations of
the Company.

    Relationships with Franchisers

The Company enters into  non-exclusive  agreements with certain  franchisers for
the  franchise  or license of brand  names,  which allows the Company to benefit
from  franchise  name  recognition  and loyalty.  The Company  believes that its
relationships  with  nationally  recognized   franchisers  provides  significant
benefits  for its  existing  Owned  Hotels and  acquisitions  it may make in the
future.  While the Company believes that it currently enjoys good  relationships
with its  franchisers,  there can be no assurance  that a desirable  replacement
would be available if any of the  franchise  agreements  were to be  terminated.
Upon termination of any franchise  agreement,  the Company would incur the costs
of  signage  removal  and other  costs,  possible  lost  revenues  and the costs
incidental to establishing new associations.

     Compliance with Government Regulations

The lodging industry is subject to numerous federal,  state and local government
regulations,  including  those relating to the  preparation and sale of food and
beverages  (such as health  and liquor  license  laws) and  building  and zoning
requirements.  In  addition,  the  Company  is  subject  to laws  governing  its
relationships  with employees,  including minimum wage  requirements,  overtime,
working conditions and work permit requirements. The failure to obtain or retain
liquor licenses or an increase in the minimum wage rate,  employee benefit costs
or other costs  associated with employees,  could adversely  affect the Company.
Under the  Americans  with  Disabilities  Act of 1990 (the  "ADA"),  all  public
accommodations  are required to meet  certain  federal  requirements  related to
access and use by disabled  persons.  While the Company believes that the Hotels
comply with these requirements, a determination that the Company does not comply
with the ADA could result in the  imposition  of fines or an award of damages to
private  litigants.  These and other  initiatives  could  adversely  affect  the
Company.

Under  various  federal,  state and local  environmental  laws,  ordinances  and
regulations,  a current or previous  owner or operator of real  property  may be
liable for the costs of removal or remediation of hazardous or toxic  substances
on, under or in such property.  Such laws often impose liability  whether or not
the owner or operator  knew of, or was  responsible  for,  the  presence of such
hazardous or toxic substances.  In connection with the ownership or operation of
the Hotels, the Company may be potentially  liable for any such costs.  Although
the Company is not currently aware of any material  environmental claims pending
or   threatened   against  it,  no  assurance  can  be  given  that  a  material
environmental  claim will not be  asserted  against  the  Company or against the
Company and the Hotels.  The cost of defending against claims of liability or of
remediating a contaminated  property could have a material adverse effect on the
results of operations of the Company.

     Litigation

The Company's  Hotels are visited by thousands of invitees  each year.  Injuries
incurred by any invitees on the hotel premises may result in litigation  against
the Company. While the Company maintains general liability insurance,  there can
be no  assurance  that a claim will be covered by such  insurance or that claims
made against  insurers by the Company  will not result in increased  premiums or
cancellation of insurance coverage.

     Ownership of Hotel Real Estate

The Company currently owns 15 hotels. Accordingly, the Company is subject to the
risks associated with the ownership of real estate.  These risks include,  among
others,  changes in  national,  regional  and local  economies,  changes in real
estate  market  conditions,  changes in the  costs,  terms and  availability  of
credit,  the potential for uninsured  casualty or other losses and changes in or
enactment of new laws or regulations  affecting real estate. Many of these risks
are beyond the control of the Company.  Real estate is generally  illiquid which
could  result in  limitations  on the  ability of the Company to sell any one or
more Owned Hotels if business conditions so required.

     Hotel Renovation Risks

The  renovation  of hotels  involves  risks  associated  with  construction  and
renovation of real  property,  including the  possibility of  construction  cost
overruns and delays due to various  factors  (including  the inability to obtain
regulatory  approvals,  inclement  weather,  labor or material shortages and the

                                       7
<PAGE>

unavailability  of  construction  or  permanent  financing)  and  market or site
deterioration  after  acquisition or  renovation.  Any  unanticipated  delays or
expenses  in  connection  with the  renovation  of hotels  could have an adverse
effect on the results of operations and financial condition of the Company.

     No Limits on Indebtedness

Neither the Company's Restated Certificate of Incorporation, as amended, nor its
by-laws limit the amount of indebtedness that the Company may incur.  Subject to
limitations it may agree to in debt  instruments,  the Company  expects to incur
additional  debt in the  future to finance  acquisitions  and  renovations.  The
Company's continuing  substantial  indebtedness could increase its vulnerability
to general  economic and lodging  industry  conditions  (including  increases in
interest  rates) and could  impair the  Company's  ability to obtain  additional
financing  in  the  future  and  to  take  advantage  of  significant   business
opportunities  that may arise.  The Company's  indebtedness  is, and will likely
continue  to be,  secured  by  mortgages  on all of  the  Owned  Hotels.  Future
indebtedness may require the Company to secure indebtedness with other assets of
the Company, including its Management Agreements. There can be no assurance that
the Company will be able to meet its debt service obligations and, to the extent
that it  cannot,  the  Company  risks  the  loss  of some or all of its  assets,
including the Owned Hotels,  to foreclosure.  Adverse economic  conditions could
cause the terms on which borrowings become available to be unfavorable.  In such
circumstances,  if the  Company is in need of capital to repay  indebtedness  in
accordance with its terms or otherwise, it could be required to liquidate one or
more  investments  in hotels at times  that may not  permit  realization  of the
maximum return on such investments. See "Management's Discussion and Analysis of
Financial   Condition  and  Results  of  Operations   --Liquidity   and  Capital
Resources."

     Control of the Company by Principal Officers

Messrs.  Beck and Yeaggy  beneficially own  approximately 46% of the outstanding
shares of the Common Stock. As a result, such persons, acting together, have the
ability to exercise significant influence over all matters requiring stockholder
approval.  Messrs.  Beck and Yeaggy are also directors and executive officers of
the Company.  The  concentration of ownership could delay or prevent a change in
control of the Company.

     Dependence on Key Personnel

The Company believes that its success will depend to a significant extent on the
efforts and abilities of certain of its senior management, particularly those of
its Chairman of the Board and Chief Executive  Officer,  Louis S. Beck, its Vice
Chairman,  Harry Yeaggy, and its President,  Michael M. Nanosky. The loss of any
one of them or  other  key  management  or  operations  employees  could  have a
material  adverse  effect  on the  Company's  operating  results  and  financial
condition.  There is strong competition for qualified management personnel,  and
the loss of key  personnel  or an inability  on the  Company's  part to attract,
retain and motivate key personnel could adversely affect the Company's business,
operating  results and financial  condition.  There can be no assurance that the
Company will be able to retain its existing key personnel or attract  additional
qualified personnel. The Company does not presently carry and does not intend to
carry "key man" insurance on the lives of any of its key personnel.

     Potential Effects of Preferred Stock Issuance

The Board of Directors has the authority,  without further stockholder approval,
to issue up to 5,000,000 shares of preferred  stock, in one or more series,  and
to fix the number of shares and the rights,  preferences  and  privileges of any
such series.  The issuance of  preferred  stock by the Board of Directors  could
affect the  rights of the  holders of the Common  Stock.  For  example,  such an
issuance  could  result in a class of  securities  outstanding  that  would have
dividend,  liquidation, or other rights superior to those of the Common Stock or
could make a takeover of the Company or the removal of management of the Company
more difficult.

     Dividends Unlikely

Since  reorganization,  the Company has never  declared or paid dividends on the
Common Stock and currently  does not intend to pay dividends in the  foreseeable
future.  The payment of dividends in the future will be at the discretion of the
Board of  Directors.  In addition,  the Company may not pay any dividends on the
Common Stock unless  dividends on the  outstanding  preferred stock are current.
The Company  presently has 3,100 shares of preferred stock  outstanding  with an
annual dividend  expense of $232,500.  The Company was current in the payment of
dividends on the preferred stock as of December 31, 2000.

     Seasonality; Quarterly Fluctuations

The  lodging  industry  is seasonal in nature.  Generally,  hotel  revenues  are
greater in the second and third quarters than in the first and fourth  quarters.

                                       8
<PAGE>

This seasonality can be expected to cause quarterly fluctuations in the revenues
of the Company.  Quarterly  earnings  may also be  adversely  affected by events
beyond the  Company's  control,  such as extreme  weather  conditions,  economic
factors  and other  considerations  affecting  travel.  However,  the Company is
working on gaining  ownership and  management  agreements in various  geographic
areas throughout the United States, where the "busy" seasons are during the less
"busy"  seasons of the Company's  currently  owned and managed  hotels,  thereby
lessening the seasonality affect of the Company's net income.

Item 2. Properties.

As of December  31,  2000,  the Company  owned the  following  15 hotels in five
different states with a total of 2,457 rooms:
<TABLE>
<CAPTION>

                                                                                       Year of Last
                                           No. of                                      Renovation/
Hotel Name                                   Rooms        Location                     Construction
------------------------------------     ----------      -----------------------     ----------------
<S>                                           <C>               <C>                          <C>
Best Western Cambridge                        95          Cambridge, OH                  1999 / 1973
Best Western Kings Quarters                   248         Doswell, VA                    2000 / 1977
Comfort Inn West                              134         Akron, OH                      2000 / 1989
Days Inn Cambridge                            103         Cambridge, OH                  1999 / 1973
Days Inn Cincinnati                           142         Sharonville, OH                2000 / 1974
Days Inn Kings Island                         124         Mason, OH                      2000 / 1976
Days Inn Pompano Beach                        183         Pompano Beach, FL              1999 / 1974
Days Inn Raleigh                              126         Raleigh, NC                    2000 / 1979
Days Inn RTP                                  110         Morrisville, NC                2000 / 1987
Holiday Inn Express                           110         Juno Beach, FL                 2000 / 1989
Holiday Inn Hudson                            288         Hudson, OH                     1999 / 1967
Holiday Inn Independence                      364         Independence, OH               1999 / 1974
Holiday Inn North Canton                      194         North Canton, OH               2000 / 1970
Knights Inn Lafayette                         112         Lafayette, IN                  2000 / 1987
Red Roof Kings Island                         124         Mason, OH                      1999 / 1979
</TABLE>


The Company  conducts its  corporate  and business  operations  activities  from
offices in Cincinnati,  OH and Boca Raton, FL. The Company occupies 4,300 square
feet of office space in  Cincinnati,  OH under a sublease,  which  terminates in
April 2001 and  occupies  2,200  square feet of office  space in Boca Raton,  FL
under a sublease,  which  terminates in April 2001.  Both  subleases are from an
affiliate of Messrs. Beck and Yeaggy, and are expected to be renewed.

Item 3.           Legal Proceedings.

The Company is not involved in any material legal proceedings.

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

No matters were submitted to  stockholders  for a vote during the fourth quarter
of 2000.

















                                       9
<PAGE>



                                     PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters.

Market Information:

The Company's  Common Stock is traded on the Nasdaq Stock Market SmallCap Market
under the symbol "JAGI".

The following table sets forth, for the periods indicated, the range of the high
and low sales  prices for the Common  Stock as reported  by the Nasdaq  SmallCap
Market.
<TABLE>
<CAPTION>

                                                          High             Low
<S>                                                        <C>             <C>
          Quarter ended December 31, 2000                 $3.63           $1.16

          Quarter ended September 30, 2000                $2.92           $1.03

          Quarter ended June 30, 2000                     $3.50           $2.03

          Quarter ended March 31, 2000                    $3.94           $2.00

          Quarter ended December 31, 1999                 $2.13           $1.00

          Quarter ended September 30, 1999                $2.50           $1.38

          Quarter ended June 30, 1999                     $3.88           $1.94

          Quarter ended March 31, 1999                    $4.00           $2.19
</TABLE>


Holders:

As of March 16, 2001,  there were  approximately  5,793 holders of record of the
Company's Common Stock.

Dividends:

Since  reorganization,  the Company has never  declared or paid dividends on its
Common Stock and currently  does not intend to pay dividends in the  foreseeable
future.  The payment of dividends in the future will be at the discretion of the
Board of Directors.




















                                       10
<PAGE>



Item 6.           Selected Financial Data
<TABLE>
<CAPTION>

                                                      Years ended December 31,
                                -----------------------------------------------------------------------
                                    2000                1999                1998               1997
                                ------------        ------------        ------------        -----------
<S>                                  <C>                 <C>                 <C>                 <C>
Total revenues                  $ 49,768,643        $ 51,173,422        $ 29,056,825        $10,275,638

Operating income                   6,937,064           8,493,864           4,968,391          1,323,091

Income from
continuing operations                996,588           1,632,584           1,751,055            423,965

Net income (loss)               $  1,074,246        $  1,172,784        $  1,887,241        $  (562,744)

Income (loss) per
common share -
basic and diluted:
 Income (loss) from
 contining operations           $      (0.03)       $       0.04        $       0.11        $     (0.02)
  Net income (loss)             $      (0.02)       $      (0.01)       $       0.13        $     (0.15)


Total assets                    $124,162,685        $127,692,489        $110,569,666        $61,404,126

Long-term debt                    64,946,400          67,933,460          60,582,883         17,866,318
</TABLE>


QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain  unaudited  operating  results of each of
the eight prior quarters.  This information is unaudited,  but in the opinion of
management includes all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the results of operations of such periods.

<TABLE>
<CAPTION>

                                                                   Fiscal 2000
                                      ---------------------------------------------------------------
                                         First            Second             Third           Fourth
                                        Quarter           Quarter           Quarter          Quarter
                                      -----------       -----------       -----------      -----------
<S>                                      <C>                <C>                <C>             <C>
Total revenues                        $10,929,450       $13,396,556       $15,108,836      $10,333,801

Net income (loss)                         110,990           428,077         1,377,820         (842,641)

Net income (loss) applicable
to common stock                       $  (203,787)      $   115,021       $ 1,060,456      $(1,160,006)

Income (loss) per common
share - basic and diluted             $     (0.02)      $      0.01       $      0.12      $     (0.13)
</TABLE>

<TABLE>
<CAPTION>
                                                                   Fiscal 1999
                                      ---------------------------------------------------------------
                                         First            Second             Third           Fourth
                                        Quarter           Quarter           Quarter          Quarter
                                      -----------       -----------       -----------      -----------
<S>                                      <C>                <C>                <C>             <C>
Total revenues                        $10,597,818       $13,660,680       $16,247,761      $10,667,163

Net income (loss)                        (595,555)          909,536         2,719,753       (1,860,950)

Net income (loss) applicable
to common stock                       $  (864,357)      $   595,622       $ 2,405,839      $(2,181,763)

Income (loss) per common
share - basic and diluted             $     (0.10)      $      0.07       $      0.28      $     (0.25)


</TABLE>


                                       11

<PAGE>


Item 7.        Management's Discussion and Analysis of Financial Condition and
               Results of Operations

Overview

The  operations  of the Company are  comprised  primarily of the  operations  of
Hotels.

The following charts present a summary of the operations of the Owned Hotels for
the calendar years ended December 31, 2000 and 1999.
<TABLE>
<CAPTION>

                                      2000

HOTEL AND LOCATION                                            RMS AVAIL.1          OCC%2         ADR3      Rev PAR4
------------------                                            -----------          -----         ----      --------
<S>                                                                 <C>              <C>          <C>         <C>
Days Inn, Sharonville, OH                                        52,338             61%         $41.23      $25.34
Best Western Kings Quarters, Doswell, VA                         90,768             47%         $66.30      $31.20
Knights Inn, Lafayette, IN                                       40,992             70%         $38.29      $26.74
Days Inn Crabtree, Raleigh, NC                                   44,652             68%         $45.44      $30.93
Days Inn RTP, Raleigh, NC                                        40,626             89%         $70.78      $63.20
Holiday Inn, Independence, OH                                   133,224             61%         $91.36      $55.42
Holiday Inn, North Canton, OH                                    71,004             80%         $65.57      $52.78
Holiday Inn, Hudson, OH                                         105,408             52%         $82.46      $43.21
Comfort Inn, Akron, OH                                           48,312             59%         $59.53      $34.88
Days Inn East, Cincinnati, OH5                                   15,531             64%         $41.08      $26.16
Holiday Inn Express, Juno Beach, FL                              39,528             78%         $62.36      $48.81
Red Roof Kings Island, Mason, OH                                 45,384             45%         $48.63      $21.77
Days Inn Kings Island, Mason, OH                                 45,384             54%         $52.30      $28.03
Days Inn Cambridge, Cambridge, OH                                37,332             36%         $53.24      $19.35
Best Western Cambridge, Cambridge, OH                            34,770             62%         $39.79      $24.54
Days Inn Pompano, Pompano Beach, FL                              63,684             66%         $36.88      $24.36
</TABLE>

<TABLE>
<CAPTION>
                                      1999

HOTEL AND LOCATION                                            RMS AVAIL.(1)        OCC% (2)      ADR (3)   Rev PAR (4)
------------------                                            -----------          -----         ----      --------
<S>                                                               <C>               <C>           <C>        <C>
Days Inn, Sharonville, OH                                         52,195            61%         $44.29      $26.81
Best Western Kings Quarters, Doswell, VA                          90,520            45%         $67.01      $29.90
Knights Inn, Westerville, OH6                                     29,539            57%         $36.60      $20.92
Knights Inn, Lafayette, IN                                        40,880            71%         $39.92      $28.14
Knights Inn, Michigan City, IN7                                   37,595            62%         $40.93      $25.16
Days Inn Crabtree, Raleigh, NC                                    44,530            64%         $43.14      $27.46
Days Inn RTP, Raleigh, NC                                         40,515            88%         $69.74      $61.65
Holiday Inn, Independence, OH                                    132,860            63%         $90.19      $56.52
Holiday Inn, North Canton, OH                                     70,810            79%         $63.08      $49.66
Holiday Inn, Hudson, OH                                          105,120            57%         $81.37      $46.16
Comfort Inn, Akron, OH                                            48,180            61%         $60.40      $36.85
Days Inn East, Cincinnati, OH                                     33,945            70%         $44.78      $31.32
Holiday Inn Express, Juno Beach, FL                               38,690            82%         $59.93      $49.08
Red Roof Kings Island, Mason, OH                                  45,260            46%         $50.66      $23.35
Days Inn Kings Island, Mason, OH                                  45,260            59%         $58.01      $33.92
Days Inn Cambridge, Cambridge, OH                                 37,595            44%         $53.10      $23.59
Best Western Cambridge, Cambridge, OH                             34,675            57%         $42.08      $24.05
Days Inn Pompano, Pompano Beach, FL                               63,145            60%         $37.78      $22.60
</TABLE>


1    Calculation  is based on number of hotel  rooms in  service  multiplied  by
     number of days in a year.
2    Total  number of rooms sold  during a year  divided by the total  number of
     rooms available in such year.
3    Average Daily Rate equals total room revenue  (exclusive of taxes) during a
     year divided by rooms sold.
4    Revenue Per Available Room equals total room revenues  (exclusive of taxes)
     during a year, divided by rooms available for sale during such year.
5    Hotel was sold June 15, 2000
6    Hotel was sold September 29, 1999.
7    Hotel was sold December 29, 1999.


                                       12
<PAGE>

Year Ended December 31, 2000 Compared To Year Ended December 31, 1999

Room and related  services  revenue  decreased  7.3% to $34,947,912 in 2000 from
$37,712,563 in 1999. The decrease was attributable  primarily to dispositions of
hotel properties. The average daily room rate, excluding dispositions, decreased
to $62.26 for 2000 from $62.32 in 1999. The comparable  occupancy rate decreased
to 60.9% in 2000 from 61.4% in 1999. Excluding the dispositions made in 2000 and
late 1999, room and related services revenue decreased 1.3%.

Food and beverage  revenues are  principally  a function of the number of guests
who stay at each Owned Hotel,  local walk-in business and catering sales.  These
revenues  decreased 0.3% to $10,544,317 in 2000 from  $10,578,433 in 1999.  This
decrease is related  primarily to decreased  occupancy and catering  sales.  The
properties  disposed  of in 2000  and 1999 had no  effect  on food and  beverage
revenues.

Management fee income  increased  59.2% to $3,246,814 in 2000 from $2,039,565 in
1999.  This  increase  is due to the  addition  of new  third  party  management
contracts.

Total direct  operating  expenses  decreased  0.6% to  $19,381,404  in 2000 from
$19,502,095  in 1999 but increased as a percentage of room and related  services
and food and beverage  revenues to 42.6% from 40.4%.  Excluding the dispositions
of hotel properties made in 2000 and late 1999, total direct operating  expenses
increased 3.4%.

Occupancy expenses decreased 1.4% to $6,673,326 in 2000 from $6,768,557 in 1999.
Excluding the dispositions made in 2000 and 1999,  occupancy  expenses increased
6.5% primarily due to increases in real estate taxes.

Selling,  general and  administrative  expenses decreased 2.8% to $12,017,409 in
2000 from $12,363,035 in 1999 and decreased as a percentage of total revenues to
24.1% from 24.2 %. Excluding the  dispositions of hotel  properties made in 2000
and late 1999, selling, general and administrative expenses increased 0.6%.

Depreciation  increased  to  $3,900,642  in 2000 from  $3,688,997  in 1999.  The
increase  is due to an  adjustment  made to record  depreciation  of $569,344 on
property  reclassified to property used in operations but offset by dispositions
of hotel properties made in 2000 and late 1999.

Interest income increased to $846,792 in 2000 from $808,560 in 1999.

Interest  expense  decreased to $6,053,127 in 2000 from  $6,597,088 in 1999. The
decrease was attributable to the dispositions made in 2000 and 1999.

Minority  interest  increased to $74,034 in 2000 from $34,606 in 1999 reflecting
the results of operations  from the Kings Dominion  partnership and the Days Inn
Pompano hotel in 2000.  During the first quarter of 2001, the Company  purchased
the minority interest in the Kings Dominion partnership.

The  Company's  effective  tax rate was 36.5% in 2000 compared to 40.9% in 1999.
This  decrease is due to the tax loss on hotel  properties  sold and the greater
impact of the Reorganization Trust loss.

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

Room and related  services  revenue  increased 84.1% to $37,712,563 in 1999 from
$20,489,850 in 1998. The increase was  attributable  primarily to  acquisitions.
The average  daily room rate  increased  to $60.48 for 1999 from $60.11 in 1998.
Occupancy  decreased  to  61.5%  in  1999  from  64.3%  in  1998  partly  due to
management's  decision  to increase  room rates in segments of various  markets.
Excluding  the  acquisitions  made in 1998 and 1999,  room and related  services
revenue decreased 0.2%.

Food and beverage  revenues are  principally  a function of the number of guests
who stay at each Owned Hotel,  local walk-in business and catering sales.  These
revenues  increased  67.9% to $10,578,433 in 1999 from  $6,298,770 in 1998. This
increase is related  primarily to acquisitions.  Excluding the acquisitions made
in 1998 and 1999, food and beverage revenues decreased 2.4%.

Management fee income  increased  16.2% to $2,039,565 in 1999 from $1,754,610 in
1998.  This  increase  is due to the  addition  of new  third  party  management
contracts.

Total direct  operating  expenses  increased  69.0% to  $19,502,095 in 1999 from
$11,537,130  in 1998 but decreased as a percentage of room and related  services

                                       13
<PAGE>

and food and beverage  revenues to 40.4% from 43.1%.  Excluding the acquisitions
made in 1998 and 1999, total direct operating expenses decreased 7.6%.

Occupancy  expenses  increased  96.1% to  $6,768,557  from  $3,451,122  in 1998.
Excluding the acquisitions made in 1998 and 1999,  occupancy  expenses decreased
0.5%.

Selling,  general and administrative  expenses increased 90.6% to $12,363,035 in
1999 from  $6,484,960 in 1998 and increased as a percentage of total revenues to
24.2% from 22.3 %. Excluding the  acquisitions  made in 1998 and 1999,  selling,
general  and   administrative   expenses   increased  32.0%.  This  increase  is
attributable  to additional  regional  management  salaries and  commissions  on
management contracts.

Depreciation  increased to $3,688,997 in 1999 from  $2,392,300 in 1998 primarily
due to the Beck II  acquisition  on January 1, 1999.  However,  the increase was
less than expected due to the change in estimated  useful lives,  the adjustment
of the purchase  allocation  for four hotel  properties  based on an acquisition
appraisal,  and the cessation of depreciation on three hotel properties held for
sale, two of which were sold as of December 31, 1999. These changes reduced 1999
depreciation approximately $1,593,000.

Interest  income  decreased  to $808,560 in 1999 from  $1,137,506  in 1998.  The
decrease was attributable to the elimination of a note receivable as a result of
the Company's  acquisition of the underlying hotel property effective January 1,
1999.

Interest  expense  increased to $6,597,088 in 1999 from  $3,565,053 in 1998. The
increase  was   attributable   to  the  debt  assumed  in  connection  with  the
acquisitions effective January 1, 1999.

Minority  interest  decreased to $34,606 in 1999 from $84,991 in 1998 reflecting
the results of operations  from the Kings Dominion  partnership and the Days Inn
Pompano hotel in 1999.

The  Company's  effective  tax rate was 40.9% in 1999 compared to 27.7% in 1998.
This  increase was due to the Federal tax refund and goodwill  write-off in 1998
that did not repeat in 1999.

Liquidity and Capital Resources

The Company's  principal sources of liquidity are cash on hand (including escrow
deposits and replacement  reserve),  cash from operations,  earnings on invested
cash and, when required, principally in connection with acquisitions, borrowings
(consisting primarily of loans secured by mortgages on real property owned or to
be acquired by the Company).  The  Company's  continuing  operations  are funded
through cash generated  from its hotel  operations.  Acquisitions  of hotels are
expected  to be  financed  through  a  combination  of cash on hand,  internally
generated cash,  issuance of equity securities and borrowings,  some of which is
likely to be secured by assets of the Company.  There can be no  assurance  that
credit will be available to the Company or, if available,  that such credit will
be available on terms and in amounts satisfactory to the Company.

Historical Changes in Liquidity and Capital Resources

Total assets decreased from $127,692,489 at December 31, 1999 to $124,162,685 at
December  31,  2000.  The  decrease  in  total  assets  was  the  result  of the
dispositions of hotel properties made in 2000.

Net cash provided by operating  activities  decreased to $4,193,648 for the year
ended December 31, 2000 from $5,496,405 in the year ended December 31, 1999. The
decrease is  primarily  the result of lower net income and the increase in other
assets due to replacement reserves.

During the year ended  December 31, 2000,  the Company  invested  $2,633,994  in
capital  improvements  for the Owned Hotels as part of its operating  plan.  The
Company plans to spend $2,106,000 on capital improvements during the year ending
December  31,  2001 as part of its  continuing  improvement  plans for the Owned
Hotels.

Capital for improvements to Owned Hotels has been and is expected to be provided
by a combination of internally generated cash, reserve replacement accounts and,
if  necessary  and  available,   borrowings.   The  Company   expects  to  spend
approximately  4% to 5% of annual revenues from Owned Hotels for ongoing capital
expenditures.

The  Company  maintains a number of  commercial  banking  relationships  and has
aggregate lines of credit totaling  $2,200,000.  There is no outstanding balance
on the  lines  of  credit  at  December  31,  2000.  The  Company  is in  active
negotiations  with lending  institutions  that might extend credit facilities to
the Company for capital  purposes  including  capital that might be required for
the acquisition of additional  hotels or management  contracts.  There can be no
assurance such negotiations will be successful.

                                       14
<PAGE>

The Company  anticipates  that it will be able to secure the capital required to
pursue its acquisition  program  through a combination of borrowing,  internally
generated cash and utilization of its common and/or preferred  stock.  There can
be no assurance  however  that the Company will be able to negotiate  sufficient
borrowings  to  accomplish  its  acquisition  program  on terms  and  conditions
acceptable to the Company.  Further,  any such borrowings may contain  covenants
that impose  limitations  on the Company  that could  constrain  or prohibit the
Company  from  making  additional  acquisitions  as well as its  ability  to pay
dividends  or to make other  distributions,  incur  additional  indebtedness  or
obligations  or to enter  into  other  transactions  that the  Company  may deem
beneficial.  Additionally, factors outside of the Company's control could affect
its ability to secure additional funds on terms acceptable to the Company. Those
factors  include,  without  limitation,  any  increase in the rate of  inflation
and/or interest rates, localized or general economic  dislocations,  an economic
downturn and regulatory changes constricting the availability of credit.

The Company's long-term debt at December 31, 2000 totals  $68,605,641.  Mortgage
debt totals  $68,025,426,  which  consists of $64,588,761 in fixed rate mortgage
loans and $3,436,665 in adjustable rate (3-5 year adjustment  periods)  mortgage
loans.  Such  adjustable rate loans have maturity dates ranging from August 2001
to April 2006.  Interest rates on mortgage debt range from 7.75% to 9.75% with a
weighted  average  interest rate of 8.3% at December 31, 2000.  The  approximate
scheduled  repayments of principal on the long-term  debt of the Company for the
next five years are: 2001 -- $3,659,241; 2002 -- $3,825,104; 2003 -- $2,144,520;
2004 --  $1,694,980;  2005 --  $1,775,972.  Management of the Company  currently
believes  that the  cash  flow  from  the  Company's  hotel  operations  will be
sufficient to make the required amortization payments. Balloon payments required
at the maturity of the non-self-amortizing  loans will be made from cash on hand
at the time or from the proceeds of refinancing.  There can be no assurance that
the Company will be able to obtain financing, or financing on terms satisfactory
to it.

Demand at many of the hotels is affected by seasonal patterns.  Demand for hotel
rooms in the  industry  generally  tends to be lower during the first and fourth
quarters and higher in the second and third quarters. Accordingly, the Company's
revenues reflect this seasonality.

Effective January 1, 2001,  13,688.08 shares of preferred stock were redeemed by
the Company.  The aggregate redemption price of $13,688,080 was paid in the form
of promissory  notes  maturing on December 31, 2011.  The notes bear interest at
the rate of 7.5% per annum.  Interest only is payable on a quarterly  basis.  If
the  redemption  had  occurred  on  January  1,  2000,  income  from  continuing
operations,  on a pro forma basis, would have been $342,527,  or $0.01 per basic
and diluted common shares.  Long-term debt, net of current portion,  at December
31, 2000, would have been $78,634,480 and total stockholders'  equity would have
been $32,897,304.

Inflation

Although  inflation has been  relatively  stable over the past two years and has
not had any discernible effect on the Company's  operations,  an increase in the
inflation rate could have a negative  effect on the Company's  ability to secure
additional  capital  under  terms and  conditions  acceptable  to the Company or
refinance  indebtedness  secured by the Owned Hotels. An increase in the rate of
inflation could materially adversely affect the ability of the Company to expand
its operations through the acquisition of Owned Hotels.

Year 2000

Since the date rollover on January 1, 2000, the Company has not  experienced any
material  adverse impacts due to the Year 2000 issue.  While the primary risk to
the Company with respect to the Year 2000 issue continues to be the inability of
external  parties to provide goods and services in a timely and accurate manner,
to date,  the  Company  is not aware of any such  disruption.  As a result,  the
Company does not expect any remaining Year 2000 risks to have a material adverse
impact to the Company.

Item 8.           Financial Statements and Supplementary Data.

The Financial  Statements  required by this item appear under the caption "Index
to Financial Statements" and are included elsewhere herein.

Item 9.           Changes in and Disagreements With Accountants on Accounting
                  and Financial Disclosures.

None.



                                       15
<PAGE>



                                    PART III

Item 10.         Directors and Executive Officers of the Registrant

The  material  contained  in  "Election  of  Directors"  and in  "Section  16(a)
Beneficial  Ownership  Reporting  Compliance" of the Company's  definitive proxy
statement  (to be filed  pursuant to the  Securities  Exchange  Act of 1934,  as
amended) for the annual  meeting of  stockholders  to be held on June 7, 2001 is
hereby incorporated by reference.

Item 11.         Executive Compensation.

The material  contained in "Compensation  of Directors and Executive  Officers",
"Compensation  Committee  Report on  Executive  Compensation"  of the  Company's
definitive proxy statement (to be filed pursuant to the Securities  Exchange Act
of 1934, as amended) for the annual meeting of  stockholders  to be held on June
7, 2001 is hereby incorporated by reference.

Item 12.         Security Ownership of Certain Beneficial Owners and Management.

The material  contained in "Voting  Securities and Principal Holders Thereof" of
the Company's definitive proxy statement (to be filed pursuant to the Securities
Exchange Act of 1934, as amended) for the annual meeting of  stockholders  to be
held on June 7, 2001 is hereby incorporated by reference.

Item 13.         Certain Relationships and Related Transactions.

The material  contained in "Certain  Relationships and Related  Transactions" of
the Company's definitive proxy statement (to be filed pursuant to the Securities
Exchange Act of 1934, as amended) for the annual meeting of  stockholders  to be
held on June 7, 2001 is hereby incorporated by reference.

                                     PART IV

Item 14.         Exhibits, Lists and Reports on Form 8-K.


(a) Exhibits:  The  exhibits  listed in the accompanying index are filed as part
               of this report.

   Exhibit No.          Description

       3.1          Restated   Certificate   of   Incorporation,   as   amended,
                    incorporated by  reference to  Exhibit 3.1 to Form 10-QSB of
                    the Company for the quarter ended September 30, 1997.

       3.2          By-Laws  incorporated  by  reference to  Exhibit 3.2 to Form
                    10-SB of the Company  filed with the Securities and Exchange
                    Commission on June 24, 1997.

       3.3          Certificate  of  Amendment  to  Certificate  of Designation,
                    incorporated  by  reference  to  Exhibit  3.3 to Form 10-KSB
                    filed   with  the  Securities  and  Exchange  Commission  on
                    March 22, 1999.

       10.6         1996 Stock Option Plan  incorporated by reference to Exhibit
                    10.6 to Form 10-SB of the Company filed with the  Securities
                    and Exchange Commission on June 24, 1997.

       10.7         Stock Option Agreement  incorporated by reference to Exhibit
                    10.7 to Form 10-SB of the Company filed with the  Securities
                    and Exchange Commission on June 24, 1997.

       10.9         Investor Agreement incorporated by reference to Exhibit 10.9
                    to Form 10-SB of the Company filed with the  Securities  and
                    Exchange Commission on June 24, 1997.

       10.11        Client  Service   Agreement  between   Hospitality  Employee
                    Leasing  Program,  Inc.  and  the  Company  incorporated  by
                    reference  to  Exhibit  10.11  to  Form 10-SB of the Company
                    filed  with  the  Securities   and  Exchange  Commission  on
                    June 24, 1997.

       10.12        Product  Lease  and  Service   Agreement  between   Computel
                    Systems,  Inc.  and the Company incorporated by reference to
                    Exhibit  10.12  to  Form 10-SB of the Company filed with the
                    Securities and Exchange Commission on June 24, 1997.

                                       16
<PAGE>


       10.13        Sublease Agreement between Beck Hospitality Inc. III and the
                    Company (Cincinnati  premises)  incorporated by reference to
                    Exhibit  10.13 to Form 10-SB of the  Company  filed with the
                    Securities and Exchange Commission on June 24, 1997.

       10.14        Sublease Agreement between Beck Hospitality Inc. III and the
                    Company (Boca Raton  premises)  incorporated by reference to
                    Exhibit  10.14 to Form 10-SB of the  Company  filed with the
                    Securities and Exchange Commission on June 24, 1997.

       10.16        Partnership   Agreement  of  Kings   Dominion   Lodge,  G.P.
                    incorporated  by reference to Exhibit 10.16 to Form 10-SB of
                    the   Company   filed   with  the   Securities  and Exchange
                    Commission on June 24, 1997.

       10.20        Consulting  Agreement  by and  between  the  Company and The
                    Cornerstone  Company  incorporated  by  reference to Exhibit
                    10.20 to Form 10-QSB for the quarter ended June 30, 1998.

       10.25        Loan Agreement dated as of August 14, 1998 by and among JAGI
                    Cleveland - Hudson, LLC; JAGI Cleveland - Independence, LLC;
                    JAGI Montrose West, LLC, JAGI North Canton, LLC; and Amresco
                    Capital,  L.P. incorporated by reference to Exhibit 10.25 to
                    Form 8-K for the event dated August 14, 1998.

       10.26        Note  (Fixed  Rate) of JAGI  Cleveland  - Hudson,  LLC dated
                    August 14,  1998 in the  principal  sum of  $13,300,000  and
                    Schedule  of  Other  Notes  (Fixed  Rate)   incorporated  by
                    reference  to Exhibit  10.26 to Form 8-K for the event dated
                    August 14, 1998.

       10.27        Mortgage and Security Agreement  dated as of August 14, 1998
                    by  and  between  JAGI  Cleveland - Hudson, LLC  and Amresco
                    Capital, L.P. and Schedule of  Other  Mortgage  and Security
                    Agreements  incorporated  by  reference  to Exhibit 10.27 to
                    Form 8-K for the event dated August 14, 1998.

       10.28        Security  Agreement  dated  as of  August  14,  1998 by JAGI
                    Cleveland  -  Hudson,  LLC  and  Amresco  Capital  L.P.  and
                    Schedule  of  Other  Security  Agreements   incorporated  by
                    reference  to Exhibit  10.28 to Form 8-K for the event dated
                    August 14, 1998.

       10.29        Second  Mortgage and Security  Agreement  dated as of August
                    14, 1998 by and  between  JAGI  Cleveland - Hudson,  LLC and
                    Amresco Capital,  L.P. and Schedule of Other Second Mortgage
                    and Security Agreements incorporated by reference to Exhibit
                    10.29 to Form 8-K for the event dated August 14, 1998.

       10.30        Second Security Agreement dated as of August 14, 1998 by and
                    between JAGI  Cleveland - Hudson,  LLC and Amresco  Capital,
                    L.P.  and  Schedule  of  Other  Second  Security  Agreements
                    incorporated  by reference to Exhibit  10.30 to Form 8-K for
                    the event dated August 14, 1998.

       10.31        Guaranty  dated as of August  14,  1998 by and  between  the
                    Company  and Amresco  Capital,  L.P.  and  Schedule of Other
                    Guaranties  incorporated  by reference  to Exhibit  10.31 to
                    Form 8-K for the event dated August 14, 1998.

       10.33        Stock   Appreciation   Right   Certificate  incorporated  by
                    reference to Exhibit 10.33 to Form 10-KSB for the year ended
                    December 31, 1998.

       10.34        Amended and Restated  Registration Rights Agreement dated as
                    of  January  1, 1999  with  Louis S.  Beck  incorporated  by
                    reference to Exhibit 10.34 to Form 10-KSB for the year ended
                    December 31, 1998.

       10.35        Amended and Restated  Registration Rights Agreement dated as
                    of  January  1, 1999 with Harry G.  Yeaggy  incorporated  by
                    reference to Exhibit 10.35 to Form 10-KSB for the year ended
                    December 31, 1998.


                                       17
<PAGE>




       10.36        Stock  Appreciation Right Agreement with Paul Tipps dated as
                    of December  18, 1998  incorporated  by reference to Exhibit
                    10.36 to Form 10-KSB for the year ended December 31, 1998.

       10.37        Conversion Agreement dated as of January 1, 2001 among Janus
                    Hotels  and  Resorts,  Inc., Harry G. Yeaggy, Louis S. Beck,
                    Elbe  Financial  Group, LLC. and Beck Hospitality, Inc. III,
                    with forms  of  promissory notes as exhibits incorporated by
                    reference to  Exhibit  10.37 to Form 8-K for the event dated
                    January 31, 2001.

       10.38        Purchase  Agreement  dated as of  March 1, 2001 between Elbe
                    Properties and  JAGI Doswell, LLC  incorporated by reference
                    to  Exhibit  10.38 to Form  8-K for the event dated March 1,
                    2001.

       21           Subsidiaries of the Company.

       24           Powers of Attorney.


(b) Reports on Form 8-K:

          There were no reports on Form 8-K filed for the period October 1, 2000
through December 31, 2000.





































                                       18
<PAGE>


                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of 1934,
the  registrant  has  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                     JANUS HOTELS AND RESORTS, INC.


Dated:  March 30, 2001               /s/ Louis S. Beck
                                     ----------------------------------------
                                     Louis S. Beck
                                     Chairman and Chief Executive Officer

Dated:  March 30, 2001              /s/ Richard A. Tonges
                                    -----------------------------------------
                                    Richard A. Tonges
                                    Treasurer and Vice President of Finance
                                    (Principal Financial and Accounting Officer)


In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed by the following persons in the capacities and on the dates indicated.

Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    Michael M. Nanosky
                                    President and Director

Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    Harry G. Yeaggy
                                    Vice Chairman

Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    Arthur Lubell
                                    Director

Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    Richard P. Lerner
                                    Director

Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    Vincent W. Hatala, Jr.
                                    Director

Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    Lucille Hart-Brown
                                    Director

Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    C. Scott Bartlett, Jr.
                                    Director



<PAGE>



Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    Stephen Grossman
                                    Director

Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    Paul Tipps
                                    Director

Dated:  March 30, 2001
                                                     *
                                    ----------------------------------------
                                    Howard Nusbaum
                                    Director


* /s/ Richard A. Tonges
  --------------------------------
  Richard A. Tonges
  Attorney-in-Fact


































                                       20
<PAGE>

                 JANUS HOTELS AND RESORTS, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                                  PAGE
<S>                                                                                <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                          F-2

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2000 AND 1999                            F-3

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31,
2000,1999 AND 1998                                                                F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED
DECEMBER 31, 2000, 1999 AND 1998                                                  F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,
2000, 1999 AND 1998                                                               F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                        F-7
</TABLE>
































                                      F-1
<PAGE>


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Janus Hotels and Resorts, Inc.

We have audited the accompanying consolidated balance sheets of Janus Hotels and
Resorts, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the three years in the period ended December 31, 2000.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Janus Hotels and
Resorts,  Inc.  and  Subsidiaries  as of  December  31,  2000 and 1999,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.




/s/ GRANT THORNTON LLP

February 8, 2001, except for the second
paragraph of Note 17 as to which the
date is March 1, 2001



















                                      F-2
<PAGE>


                         JANUS HOTELS AND RESORTS, INC.
<TABLE>
<CAPTION>
                          CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 1999

                                                                                       December 31,        December 31,
                                                                                           2000                1999
                                                                                       ------------        ------------
                                     ASSETS
<S>                                                                                          <C>                <C>
Current assets:
   Cash and cash equivalents                                                           $  8,244,481       $  8,859,888
   Restricted cash                                                                        1,330,350          1,251,297
   Accounts receivable                                                                    2,126,152          1,743,241
   Current portion of notes receivable                                                      100,384            182,226
   Other current assets                                                                     208,362            212,082
                                                                                        -----------        -----------
     Total current assets                                                                12,009,729         12,248,734
                                                                                        -----------        -----------

Property held for sale                                                                            -         12,641,199
Property and equipment, net                                                              93,311,684         84,059,513
Mortgage notes receivable                                                                 3,138,345          3,392,709
Goodwill, net                                                                             7,334,064          7,542,376
Deferred tax asset                                                                        2,566,000          2,566,000
Other assets                                                                              5,802,863          5,241,958
                                                                                        -----------        -----------
                                                                                       $124,162,685       $127,692,489
                                                                                        ===========        ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt                                                   $  3,659,241       $  3,776,846
   Accounts payable                                                                       2,342,183          2,215,039
   Accrued expenses                                                                       1,921,449          1,959,960
                                                                                        -----------        -----------
     Total current liabilities                                                            7,922,873          7,951,845
                                                                                        -----------        -----------

Long-term debt, net of current portion                                                   64,946,400         67,933,460
Deferred tax liabilities                                                                  2,250,000          2,345,275
Minority interest                                                                         2,540,028          2,465,994

Stockholders' equity:
   Preferred stock, series B; par value $0.01 per share; 20,000 shares authorized;
    16,788.08 shares issued and outstanding at December 31,
    2000 and 1999, respectively                                                                 168                168
   Common stock, par value  $0.01 per share; 15,000,000 shares authorized;
     11,883,220 shares issued at December 31, 2000 and 1999, respectively                   118,833            118,833
   Additional paid-in capital                                                            52,582,257         52,582,257
   Accumulated deficit                                                                   (4,477,159)        (4,288,844)
   Treasury stock, at cost, 3,412,347 and 3,212,128 common shares at
     December 31, 2000 and 1999, respectively                                            (1,720,715)        (1,416,499)
                                                                                        -----------        -----------
     Total stockholders' equity                                                          46,503,384         46,995,915
                                                                                        -----------        -----------
                                                                                       $124,162,685       $127,692,489
                                                                                        ===========        ===========
</TABLE>

                See notes to consolidated financial statements.


                                      F-3

<PAGE>


                       JANUS HOTELS AND RESORTS, INC.
<TABLE>
<CAPTION>
                   CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998

                                                                                     2000             1999            1998
                                                                                 -----------      -----------     ----------
<S>                                                                                  <C>               <C>             <C>
Revenues:
   Room and related services                                                     $34,947,912      $37,712,563     $20,489,850
   Food and beverage                                                              10,544,317       10,578,433       6,298,770
   Management fees                                                                 3,246,814        2,039,565       1,754,610
   Other                                                                           1,029,600          842,861         513,595
                                                                                  ----------       ----------      ----------
     Total revenues                                                               49,768,643       51,173,422      29,056,825
                                                                                  ----------       ----------      ----------

Operating expenses:
   Direct:
     Room and related services                                                     9,027,084        9,341,472       4,918,908
     Food and beverage                                                             8,235,163        8,113,617       5,122,426
     Selling and general                                                           2,119,158        2,047,006       1,495,796
                                                                                  ----------       ----------      ----------
       Total direct expenses                                                      19,381,405       19,502,095      11,537,130
                                                                                  ----------       ----------      ----------
   Occupancy expenses                                                              6,673,326        6,768,557       3,451,122
   Selling, general and administrative expenses                                   12,017,409       12,363,032       6,484,960
   Severance arrangement of former president                                         500,000                -               -
   Depreciation                                                                    3,900,642        3,688,997       2,392,300
   Amortization                                                                      358,797          356,877         222,922
                                                                                  ----------       ----------      ----------
       Total operating expenses                                                   42,831,579       42,679,558      24,088,434
                                                                                  ----------       ----------      ----------

Operating income                                                                   6,937,064        8,493,864       4,968,391

Other income (expense):
   Interest expense                                                               (6,053,127)      (6,597,088)     (3,565,053)
   Interest income                                                                   846,792          808,650       1,137,506
   Other                                                                             (45,107)         115,565         -
                                                                                  ----------       ----------      ----------
Income from continuing operations before income taxes and minority interest        1,685,622        2,820,991       2,540,844

Provision for income taxes                                                           615,000        1,153,801         704,798
                                                                                  ----------       ----------      ----------
Income from continuing operations before minority interest                         1,070,622        1,667,190       1,836,046

Minority interest                                                                     74,034           34,606          84,991
                                                                                  ----------       ----------      ----------
Income from continuing operations                                                    996,588        1,632,584       1,751,055
Gain (loss) on disposal of discontinued operations, net of taxes                      77,658         (459,800)        136,186
                                                                                  ----------       ----------      ----------
Net income                                                                         1,074,246        1,172,784       1,887,241
Less preferred dividend requirement                                                1,262,561        1,217,443         783,891
                                                                                  ----------       ----------      ----------
Net income (loss) applicable to common stock                                     $  (188,315)     $   (44,659)    $ 1,103,350
                                                                                  ==========       ==========      ==========

Basic income per common share:
   Income from continuing operations                                             $     (0.03)     $      0.04     $      0.11
   Gain (loss) on disposal of discontinued operations                                   0.01            (0.05)           0.02
                                                                                  ----------       ----------      ----------
   Net income (loss)                                                             $     (0.02)     $     (0.01)    $      0.13
                                                                                  ==========       ==========      ==========

Diluted income per common share:
   Income from continuing operations                                             $     (0.03)     $      0.04     $      0.11
   Gain (loss) on disposal of discontinued operations                                   0.01            (0.05)           0.02
                                                                                  ----------       ----------      ----------
   Net income (loss)                                                             $     (0.02)     $     (0.01)    $      0.13
                                                                                  ==========       ==========      ==========

Weighted average common shares:
   Basic                                                                           8,659,846        8,673,996       8,693,545
                                                                                  ==========       ==========      ==========
   Diluted                                                                         8,659,846        8,673,996       8,693,545
                                                                                  ==========       ==========      ==========
</TABLE>

              See notes to consolidated financial statements.


                                      F-4
<PAGE>


                         JANUS HOTELS AND RESORTS, INC.
<TABLE>
<CAPTION>
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

                                                Preferred Stock            Common Stock
                                             ----------------------   -----------------------

                                             Number of                 Number of                   Additional     Accumulated
                                              Shares         Amount     Shares        Amount    Paid-in Capital      Deficit
                                             ---------       ------   ----------     --------   ---------------   -----------
<S>                                             <C>           <C>         <C>          <C>             <C>             <C>
Balance January 1, 1998                      10,451.88       $ 105    11,880,867     $118,809     $43,163,321     $(5,347,535)
Net income                                                                                                          1,887,241
Decrease in net operating loss valuation
allowance                                                                                           2,566,000
Conversion of warrants and payout of puts                                  2,353           24           8,799
Preferred stock dividends                                                                                            (783,891)
                                             ---------       -----    ----------      -------      ----------      ----------
Balance December 31, 1998                    10,451.88         105    11,883,220      118,833      45,738,120      (4,244,185)
Net income                                                                                                          1,172,784
Decrease in net operating loss valuation
allowance                                                                                             508,000
Shares issued for acquisition                 6,336.20          63                                  6,336,137
Common stock returned from Pre-Tek
purchase for non-performance of earn
out
Preferred stock dividends                                                                                          (1,217,443)
                                             ---------        ----    ----------      -------      ----------      ----------
Balance December 31, 1999                    16,788.08         168    11,883,220      118,833      52,582,257      (4,288,844)
Net income                                                                                                          1,074,246
Purchases of treasury stock
Preferred stock dividends                                                                                          (1,262,561)
                                             ---------        ----    ----------      -------      ----------      ----------
                                             16,788.08       $ 168    11,883,220     $118,833     $52,582,257     $(4,477,159)
                                             =========        ====    ==========      =======      ==========      ==========







                                                     Treasury Stock
                                             --------------------------

                                             Number of
                                               Shares        Amount           Total
                                             ---------     ------------    -----------
<S>                                              <C>           <C>             <C>
Balance January 1, 1998                      3,189,132     $(1,316,299)    $36,618,401
Net income                                                                   1,887,241
Decrease in net operating loss valuation
allowance                                                                    2,566,000
Conversion of warrants and payout of puts        2,996        (100,000)        (91,177)
Preferred stock dividends                                                     (783,891)
                                             ---------      ----------      ----------
Balance December 31, 1998                    3,192,128      (1,416,299)     40,196,574
Net income                                                                   1,172,784
Decrease in net operating loss valuation
allowance                                                                      508,000
Shares issued for acquisition                                                6,336,200
Common stock returned from Pre-Tek
purchase for non-performance of earn
out                                             20,000            (200)           (200)
Preferred stock dividends                                                   (1,217,443)
                                             ---------      ----------      ----------
Balance December 31, 1999                    3,212,128      (1,416,499)     46,995,915
Net income                                                                   1,074,246
Purchases of treasury stock                    200,219        (304,216)       (304,216)
Preferred stock dividends                                                   (1,262,561)
                                             ---------      ----------      ----------
                                             3,412,347     $(1,720,715)    $46,503,384
                                             =========      ==========      ==========
</TABLE>

See notes to consolidated financial statements.

                                      F-5


<PAGE>

                   JANUS HOTELS AND RESORTS, INC.
<TABLE>
<CAPTION>
               CONSOLIDATED STATEMENTS OF CASH FLOWS
        FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998


                                                                              2000            1999             1998
                                                                           ----------     -----------      -----------
<S>                                                                           <C>              <C>             <C>
Operating activities:
Net income                                                                 $1,074,246     $ 1,172,784      $ 1,887,241
Adjustments to reconcile net income  to net cash provided by (used
in) operating activities:
   Depreciation and amortization                                            3,900,642       3,688,997        2,392,300
   Amortization of intangible assets                                          358,797         356,877          222,922
   Deferred taxes                                                             (95,275)        967,401          695,874
   Minority Interest                                                           74,034          34,606           84,992
   (Gain) loss on sale of hotel property                                       45,107        (110,787)               -
   Discontinued operations                                                          -         499,800          (73,948)
Changes in operating assets and liabilities, excluding acquisitions:
   Accounts receivable                                                       (382,911)       (320,914)      (1,013,853)
   Other current assets                                                         3,720          27,124          342,043
   Other assets                                                              (711,390)        638,526       (4,348,888)
   Accounts payable and accrued expenses                                      (73,322)     (1,458,009)       1,716,232
                                                                            ---------      ----------       ----------
      Net  cash provided by operating activities                            4,193,648       5,496,405        1,904,915
                                                                            ---------      ----------       ----------

Investing activities:
Acquisition of hospitality business, net of noncash consideration and
cash acquired                                                                       -         462,008                -
Increase in notes receivable                                                        -        (250,000)          (4,276)
Purchases of property and equipment                                        (2,633,994)     (4,953,847)     (42,595,244)
Proceeds from sale of property                                              2,700,000       4,250,000           14,161
Collections of notes receivable                                               261,206         233,599          127,884
                                                                            ---------      ----------       ----------
      Net cash (used in) provided by investing activities                     327,212        (258,240)     (42,457,475)
                                                                            ---------      ----------       ----------

Financing activities:
Dividends paid                                                             (1,262,561)     (1,217,443)        (981,474)
Increase in restricted cash                                                   (79,053)       (448,551)        (470,382)
Repurchase of common stock                                                   (304,216)              -         (100,000)
Conversion of warrants to common stock                                              -               -            8,823
Proceeds from long-term borrowings                                                  -               -       44,000,000
Repayments of long-term borrowings                                         (3,490,437)     (7,096,024)        (712,147)
                                                                            ---------      ----------       ----------
      Net cash (used in) provided by financing activities                  (5,136,267)     (8,762,018)      41,744,820
                                                                            ---------      ----------       ----------

Increase (decrease) in cash and cash equivalents                             (615,407)     (3,523,853)       1,192,260

Cash and cash equivalents, beginning of period                              8,859,888      12,383,741       11,191,481

                                                                            ---------      ----------       ----------
Cash and cash equivalents, end of period                                   $8,244,481     $ 8,859,888     $ 12,383,741
                                                                            =========      ==========      ===========

Supplemental disclosure of cash flow data:
Interest paid                                                              $6,053,127     $ 6,597,088     $  3,565,053
                                                                            =========      ==========      ===========

Income taxes paid                                                          $  493,909     $   757,880     $    130,750
                                                                            =========      ==========      ===========

Noncash investing and financing transactions:
Acquisitions of equipment through capital leases                           $  385,772     $         -     $          -
                                                                            =========      ==========      ===========

Noncash transactions:
Acquisition of hospitality business
   Assets acquired                                                         $        -     $27,192,451     $          -
   Liabilities assumed                                                              -      20,856,251                -
                                                                            ---------      ----------      -----------
   Value of stock issued                                                   $        -     $ 6,336,200     $          -
                                                                            =========      ==========      ===========
</TABLE>

          See notes to consolidated financial statements.

                                      F-6

<PAGE>


                 JANUS HOTELS AND RESORTS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization:

As of December 31, 2000, the continuing  operations of Janus Hotels and Resorts,
Inc. and its Subsidiaries ("Janus" or the "Company") were comprised primarily of
the  operations of fifteen hotels (of which  thirteen are  wholly-owned,  one is
85%-owned and one 75% owned) and a hotel management company which manages hotels
for  unrelated  parties.  The  Company's  owned and  managed  hotels are located
primarily in the Midwestern and Southeastern United States.

As further  described in Note 10,  management  decided  during  December 1997 to
discontinue  and  dispose  of all of the  Company's  operations  related  to the
provision of engineering and wireline  logging  services to companies in the oil
and gas industry (the "oil and gas services operations").

In November 1986, the Company's predecessor,  United States Lines, Inc. ("USL"),
together  with  United  States  Lines  (S.A.)  Inc.  ("USL-SA")  and two related
companies,  filed  petitions  under Chapter 11 of the United  States  Bankruptcy
Code. In May 1989, the United States  Bankruptcy Court for the Southern District
of New York (the "Bankruptcy  Court")  confirmed a plan of  reorganization  with
respect to such companies,  which was later amended and modified  pursuant to an
order of the Bankruptcy Court entered in February 1990 (the "Plan").

Pursuant to the Plan and the order of the Bankruptcy Court confirming the Plan:

(a) USL and  USL-SA  changed  their  names  to  Janus  Industries,  Inc.  and JI
Subsidiary, Inc. ("JIS"), respectively;

(b)  The  United  States  Lines,  Inc.  and  United  States  Lines  (S.A.)  Inc.
Reorganization  Trust  (the  "Reorganization  Trust")  was  established  for the
purpose of  administering  the Plan and  liquidating and paying claims of former
creditors of USL and USL-SA;  it will also make  contributions  of cash to Janus
and JIS from time to time of amounts in excess of its projected  liabilities and
administrative requirements;

(c) All claims of former  creditors  of USL and  USL-SA  were  discharged;  as a
result, such former creditors may look only to the Reorganization Trust (and not
to Janus or JIS) for payment of amounts in respect of their discharged claims;

(d) The  interests  of all  holders  of shares of the  capital  stock of USL and
USL-SA  were  extinguished  and the former  creditors  of USL and USL-SA  became
entitled  to receive  all of the shares of capital  stock  issuable by Janus and
JIS, except for shares issuable to Janus and a subsidiary of Dyson-Kissner-Moran
("DKM"),  a new  investor;  shares of  capital  stock  issuable  to such  former
creditors were initially issued to the Reorganization  Trust as recordholder for
reissuance to such creditors; and

(e) The  Reorganization  Trust contributed  $3,000,000 of USL and USL-SA cash to
capitalize  Janus and JIS on February 23, 1990 and  provided  Janus and JIS with
certain books and records,  and all tax attributes and tax benefits,  of USL and
USL-SA;  it  also  made  cash  contributions  of  approximately  $7,491,000  and
$7,622,000 to the capital of Janus and JIS in 1997 and 1996, respectively.

Note 2 - Summary of significant accounting policies:

Use of estimates:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and  assumptions  that affect certain  reported  amounts and  disclosures in the
consolidated financial statements.  Changes in such estimates may affect amounts
reported in future periods.

Fresh-start  accounting:  The Company adopted fresh-start accounting at the time
of its  reorganization  in  February  1990 (see Note 1). The  Company's  opening
balance sheet consisted of $6,000,000 in cash and capital stock.

Principles of consolidation:  The consolidated  financial statements include the
accounts  of  Janus  and  its  majority-owned   subsidiaries.   All  significant
intercompany balances and transactions have been eliminated in consolidation.

Cash   equivalents:   Cash  equivalents   generally  consist  of  highly  liquid
investments with maturities of three months or less when acquired.

Property and equipment:  Property and equipment is stated at cost.  Depreciation
is computed using the  straight-line  method over the estimated  useful lives of
the assets.

                                      F-7
<PAGE>

Goodwill:  Goodwill,  which  represents  the  excess  of the  costs of  acquired
businesses  over the fair value of the net  assets  acquired  at the  respective
dates of  acquisition,  is  amortized  using the  straight-line  method over the
estimated useful lives of the assets (40 years).

Impairment of long-lived assets: The Company applies the provisions of Statement
of Financial  Accounting  Standards No. 121,  Accounting  for the  Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed  of ("SFAS  121").
Under SFAS 121,  impairment  losses on long-lived  assets,  such as property and
equipment and goodwill,  are recognized when events or changes in  circumstances
indicate  that the  undiscounted  cash flows  estimated  to be generated by such
assets are less than their carrying value and, accordingly,  all or a portion of
such carrying value may not be recoverable.  Impairment losses are then measured
by comparing the fair value of assets to their carrying amounts.  As of December
31, 2000, there was no such impairment.

Deferred loan costs:  Costs incurred to obtain long-term  financing are deferred
and amortized using the  straight-line  method (which  approximates the interest
method) over the terms of the loans.

Revenue recognition:  The Company recognizes all revenues on an accrual basis as
earned.

Advertising  costs:  The costs of  advertising  and  promotion  are  expensed as
incurred.   Advertising   costs  charged  to  operations,   all  of  which  were
attributable  to the Company's hotel  operations,  amounted to $951,758 in 2000,
$814,322 in 1999 and $415,400 in 1998.

Income taxes:  The Company  accounts for income taxes  pursuant to the asset and
liability  method  which  requires  deferred  tax assets and  liabilities  to be
computed annually for temporary  differences between the financial statement and
tax bases of assets and  liabilities  that will result in taxable or  deductible
amounts in the  future  based on enacted  tax laws and rates  applicable  to the
periods  in which the  temporary  differences  are  expected  to affect  taxable
income. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount  expected to be realized.  The income tax  provision or
credit is the tax payable or refundable  for the period plus or minus the change
during the period in  deferred  tax assets and  liabilities.  Income tax credits
attributable  to  benefits  from  net  operating  loss  carryforwards  or  other
temporary  differences that existed at the time the Company adopted  fresh-start
accounting are reflected as a contribution to stockholders' equity in the period
in which the tax benefits are realized.

As  explained  in Note 1, the assets  and  liabilities  of USL and  USL-SA  were
initially  transferred  to  the  Reorganization  Trust  in  February  1990.  The
Reorganization  Trust is  considered  a grantor  trust for income tax  purposes.
Accordingly,  any taxable  income or loss  associated  with the  disposition  of
assets and the settlement of liabilities by the Reorganization Trust is recorded
in the Federal and state income tax returns of the Company; however, such assets
and liabilities are not presented in these consolidated financial statements.

Stock options: In accordance with the provisions of Accounting  Principles Board
Opinion No. 25,  Accounting  for Stock  Issued to  Employees,  the Company  will
recognize  compensation costs as a result of the issuance of stock options based
on the excess,  if any, of the fair value of the underlying stock at the date of
grant or award  (or at an  appropriate  subsequent  measurement  date)  over the
amount the employee must pay to acquire the stock.  Therefore,  the Company will
not be required to recognize compensation expense because of any grants of stock
options at an exercise price that is equivalent to or greater than fair value.

Reclassification:  Certain prior year amounts have been  reclassified to conform
to current year presentation.

Income  (loss) per common  share:  Basic net income  (loss) per common  share is
calculated  by dividing net income or loss,  as adjusted for required  preferred
stock  dividends,  by the weighted  average number of common shares  outstanding
during the period. The calculation of diluted net income (loss) per common share
is similar to that of basic net income (loss) per common share,  except that the
denominator is increased to include the number of additional  common shares that
would  have  been  outstanding  if  all  potentially   dilutive  common  shares,
principally those issuable upon the exercise of stock options and warrants, were
issued during the period.

The Company's  reported net income represents its net income available to common
stockholders for purposes of computing both measures.  The following  reconciles
shares  outstanding at the beginning of the year to average  shares  outstanding
used to compute both income per share measures.


                                      F-8
<PAGE>


<TABLE>
<CAPTION>

                                                       December 31,        December 31,        December 31,
                                                           2000                1999                1998
                                                      --------------     --------------      -------------
<S>                                                         <C>                 <C>                 <C>
Average shares outstanding-basic                         8,659,846           8,673,996           8,693,545
Effect of dilutive securities- dilutive shares
    contingently issuable upon the exercise of
    stock options and warrants                               -                   -                   -
                                                         ---------           ---------           ---------
Average shares outstanding- Assuming dilution            8,659,846           8,673,996           8,693,545
                                                         =========           =========           =========
</TABLE>


Note 3 - Acquisitions:

Effective January 1, 1999 the Company acquired all of the outstanding  shares of
Beck  Hospitality,  Inc. II ("Beck II"),  which owned seven hotels and two hotel
management  contracts  with respect to the hotels known as Knights Inn West Palm
Beach in West  Palm  Beach,  Florida  and Days Inn Inner  Harbor  in  Baltimore,
Maryland.  The purchase price of $6,336,200  approximated  the fair value of the
net assets  acquired.  The  acquisition  was  accounted  for under the  purchase
method.  The results of operations of the acquired  business are included in the
consolidated  financial  statements from the effective date of acquisition.  The
consideration  exchanged by the Company  pursuant to the merger  agreement  with
Beck II was the issuance of 6,336.20  shares of Series B preferred  stock with a
liquidation preference of $1,000 per share for a total value of $6,336,200.

On August 14, 1998,  the Company  acquired four hotels from  unrelated  commonly
controlled sellers (the "Cornerstone Hotel Group"). The total purchase price was
$44,110,500 in cash, financed by four mortgage loans in substantially the amount
of the total purchase price, secured by the acquired  properties.  The loans are
cross-defaulted and cross-collateralized  among the four hotels but otherwise of
limited  recourse to the Company.  The  financing was for an initial term of ten
years, based upon a 25-year amortization  schedule,  at a fixed interest rate of
8.09% per annum.  During the third  quarter of 1999,  the Company  finalized the
allocation  of the  purchase  price  based on  appraised  values  between  land,
buildings,  equipment,  and furniture and  fixtures.  As a result,  depreciation
expense was reduced by approximately $549,000 in 1999.

The following  unaudited  information  shows the pro forma results of continuing
operations  of the  Company for the twelve  months  ended  December  31, 1998 as
though each of the Beck II and the Cornerstone  Hotel Group had been acquired as
of January 1, 1998. In each case,  the results of the  discontinued  oil and gas
services operations are excluded.

               (in  thousands,  except per
               share amounts)                            1998
               ----------------------------         -------------
               Revenues                              $51,514,669
               Net income from continuing
               operations                                952,444
               Earnings per share:
                  Basic                                 $0.11
                  Diluted                               $0.11


The  unaudited  pro forma  results of  operations  shown above do not purport to
represent  what the combined  results of operations  actually would have been if
the acquisition of the Beck II and the  Cornerstone  Hotel Group had occurred as
of January  1, l998  instead of the  actual  dates of  consummation  or what the
results of operations will be for any future periods.







                                      F-9
<PAGE>



Note 4 - Mortgage notes receivable:

The mortgage  note at December 31, 2000 is secured by a campground in Kissimmee,
Florida.  The  campground is owned by an entity  controlled by Messrs.  Beck and
Yeaggy.  Messrs.  Beck and Yeaggy have personally  guaranteed the mortgage note.
The note secured by the Westerville  property was paid off early.  The early pay
off  reflected  a $75,000  discount  which was  included  in other  income.  The
balances at December 31, 2000 and 1999 consisted of the following:
<TABLE>
<CAPTION>
                                                                                 2000            1999
                                                                                 ----            ----
<S>                                                                               <C>              <C>
   Note secured by campground, with interest at 8%                            $3,238,729      $3,331,419

   Note secured by Westerville hotel property, with interest at 10.0%             -              243,516
                                                                               ---------       ---------
                                             Total long-term receivable        3,238,729       3,574,935
   Less current portion                                                          100,384         182,226
                                                                               ---------       ---------
                              Long-term portion, net of current portion       $3,138,345      $3,392,709
                                                                               =========       =========
</TABLE>

The mortgage note is payable in monthly  installments  of principal and interest
through April 2003 with final  installments of remaining  principal and interest
due in May 2003.

Note 5 - Property Held for Sale:

The  property  held for sale at December  31,  1999,  has been  reclassified  to
property used in  operations  as of December 31, 2000.  The decision to take the
property off the market was influenced by a downturn in the economy.  Management
feels  that the  maximum  value  cannot  be  obtained  in the  present  economic
environment.  In accordance with Statement of Financial Accounting Standards No.
121,  Accounting  for the  Impairment  of Long  Lived  Assets and for Long Lived
Assets  to be  Disposed  Of  ("SFAS  121"),  an  adjustment  was made to  record
depreciation  of $569,344  not taken during the period the property was held for
sale.  Further,  as provided by SFAS 121, an evaluation of the carrying value of
the property was performed. Because the hotel is presently performing at optimum
standards in the current state of the economy,  the estimated  fair market value
of the property is in excess of its  carrying  value.  No reserve is  considered
necessary at December 31, 2000.

Note 6 -- Property and equipment:

Property and  equipment at December 31, 2000 and December 31, 1999  consisted of
the following:
<TABLE>
<CAPTION>
                                                           December 31,        December 31,
                                                               2000                1999
                                                          -------------       -------------
<S>                                                            <C>                   <C>
Land                                                       $ 15,538,359         $12,952,015
Hotels                                                       72,758,745          65,100,455
Hotel furniture and fixtures                                 14,317,153          11,707,571
Equipment and vehicles                                        1,003,791             383,629
                                                            -----------          ----------
                                                            103,618,048          90,143,670
Less accumulated depreciation and amortization               10,306,364           6,084,157
                                                            -----------          ----------
Totals                                                     $ 93,311,684         $84,059,513
                                                            ===========          ==========
</TABLE>

Effective July 1, 1999, Janus completed significant renovations of its portfolio
of properties in accordance with its operating plan. These renovations  upgraded
the  facilities  and  improved  the ability to sell rooms at  competitive  rates
within respective  markets.  The Company provided the liquidity to perform these
renovations  and management  continues to anticipate  that further  acquisitions
will be subjected to the same operating  plan. The result of these  improvements
is that the useful life of the previously  acquired  properties was increased to
reflect the upgrades.  Building and mechanical improvement lives were changed to
reflect  this  renovation  and are now  depreciated  from  15 to 40  years.  The
equipment  has a life range of 5 to 10 years.  Management  believes  the revised
estimated  useful lives  provide a better  matching of costs and  revenues.  The
effect of this change on income from  continuing  operations  for the year ended
December  31,  1999 was to increase  it by  approximately  $605,000 or $0.07 per
diluted share.

                                      F-10
<PAGE>



Note 7 -- Long-term debt:
Long-term debt at December 31 consisted of the following:
<TABLE>
<CAPTION>

                                                                 2000                 1999
                                                                 ----                 ----
<S>                                                              <C>                  <C>
Fixed rate mortgage notes payable in monthly
  installments, including interest at rates ranging
  from 7.75% to 9.75%; the mortgage notes
  mature from August 2001 through March 2016                 $63,822,094          $66,792,508
Variable rate mortgage notes payable in monthly
  installments,  including  interest at rates varying
  with the prime commercial lending rate and
  rates on U.S.  Treasury  securities  (the effective
  rates at December 31, 2000 ranged from 8.52%
  to 10.0%); the mortgage notes mature from
  August 2001 through April 2006                               4,203,332            4,394,854
Equipment notes with various maturities through
  December 2003 and interest at rates ranging from
  8.98% to 15%                                                   580,215              522,944
                                                              ----------           ----------
                                Total long-term debt          68,605,641           71,710,306
Less current portion                                           3,659,241            3,776,846
                                                              ----------           ----------
              Long-term debt, net of current portion         $64,946,400          $67,933,460
                                                              ==========           ==========
</TABLE>

Long-term  debt is secured  by the  Company's  notes,  property  and  equipment.
Principal payments in years subsequent to December 31, 2000 are as follows:


         Year Ending December 31              Amount
         -------------------------       ------------------
                   2001
                                            $3,659,241
                   2002                      3,825,104
                   2003                      2,144,520
                   2004                      1,694,980
                   2005                      1,775,972


Note 8 -- Commitments and contingencies:

Concentration of credit risk:

     Financial   instruments   that   potentially   subject   the   Company   to
     concentrations  of  credit  risk  consist  principally  of cash  in  banks,
     accounts receivable and the mortgages.

     The Company  maintains its cash balances in bank deposit accounts which, at
     times, may exceed the Federal Deposit Insurance Corporation coverage limits
     thereby  exposing  the  Company to credit  risk.  The  Company  reduces its
     exposure  to  credit  risk by  maintaining  such  deposits  with  financial
     institutions which management believes are high quality.

     Exposure to credit risk with respect to trade receivables is limited by the
     short payment  terms and,  generally,  the low balances  applicable to such
     instruments and the Company's routine  assessment of the financial strength
     of its customers.

     Exposure to credit risk with respect to the  mortgages  is limited  because
     they are secured by real estate with an estimated market value in excess of
     the mortgage balance.

Litigation:

     The  Company is a party to various  legal  proceedings.  In the  opinion of
     management,  these  actions  are  routine  in  nature  and  will not have a
     material adverse effect on the Company's  consolidated financial statements
     in subsequent years.





                                      F-11
<PAGE>



Note 9 - Income taxes:

For financial statement purposes, there was a provision for Federal income taxes
at  December  31,  2000,  1999  and  1998.  Benefits  to be  realized  from  the
utilization  of the net  operating  loss  carryforwards  generated  prior to the
Company's  reorganization  in  February  1990 will be reported as an increase in
additional paid-in capital and not as a credit to results of operations. In 1999
and 1998,  the Company  increased  paid-in-capital  by $508,000 and  $2,566,000,
respectively, as a result of such benefits.

Section 382 of the  Internal  Revenue  Code limits the amounts of net  operating
loss carryforwards  usable by a corporation  following a change of more than 50%
in the ownership of the corporation  during a three-year  period. As of December
31, 2000, management believes that such a change in ownership has not occurred.

During the period  ended  December 31, 1998,  the Company  received  $261,215 in
refunds  from the  Internal  Revenue  Service (the  "Service")  attributable  to
amended returns filed for previous years, plus interest of $154,280. The Company
recorded  such  refunds as income  upon  receipt as such  amended  returns  were
subject to review by the Service and accepted in the current year.

The provision for income taxes consists of the following:
<TABLE>
<CAPTION>

                                                                    2000                1999               1998
                                                                    ----                ----               ----
<S>                                                                  <C>                 <C>                 <C>
     Federal income tax provision:
        Current                                                      $ 16,000           $ 259,171         $(219,449)
        Deferred for net operating loss carryforward                  404,000             628,000           463,100
                                                                      -------             -------          --------
          Total federal income tax provision                          420,000             887,171           243,651
                                                                      -------             -------          --------

     State and local income tax provision:
        Current                                                       290,275             356,496            228,373
        Deferred                                                      (95,275)            (89,866)           232,774
                                                                      -------             -------          --------
          Total state and local provision                             195,000             266,630            461,147
                                                                      -------             -------          --------

     Provision for income taxes                                      $615,000          $1,153,801          $ 704,798
                                                                      =======           =========           ========
</TABLE>


A  reconciliation  of  the  statutory  Federal  income  tax  rate  of 34% to the
effective  tax rate for the provision  for income taxes  attributable  to income
from continuing operations follows:
<TABLE>
<CAPTION>

                                                                      2000         1999         1998
                                                                    ---------    ---------    ---------
<S>                                                                    <C>            <C>          <C>
     Statutory rate                                                    34.0%        34.0%        34.0%
     Write-off of goodwill related to Pretek                                                     (2.5)
     Refund of Federal income tax (a)                                                            (8.6)
     Nondeductible amortization of goodwill                             1.0          0.4          1.6
     State and local tax                                                8.0          6.2          5.9
     Gain (loss) on hotel properties sold                              (2.1)         1.4
     Reorganization Trust loss                                         (3.6)        (1.8)        (1.4)
     Other                                                             (0.8)         0.7         (1.3)
                                                                       ----         ----         ----
               Total                                                   36.5%        40.9%        27.7%
                                                                       ====         ====         ====
</TABLE>


(a) Refund of taxes for prior years after IRS review.











                                      F-12
<PAGE>



Deferred taxes at year-end were comprised of the following:
<TABLE>
<CAPTION>


                                                                    2000                1999
                                                                 -----------         -----------
<S>                                                                  <C>                 <C>
Deferred tax liabilities:
   Depreciation and other                                        $ 2,250,000         $ 2,345,275
                                                                  ----------          ----------
Deferred tax assets:
   Net operating loss carryforwards                               81,600,000          81,898,000
   Valuation allowance                                            79,034,000          79,332,000
                                                                  ----------          ----------
     Net deferred tax assets                                       2,566,000           2,566,000
                                                                  ----------          ----------
                          Net deferred tax (liability) asset     $   316,000         $   220,725
                                                                  ==========          ==========
</TABLE>

Net  operating  loss   carryforwards   consist  of  federal   carryforwards   of
$240,000,000 principally expiring in years 2001 through 2011.

Note 10 -- Discontinued operations:

In April 1998, the Company entered into an agreement for the sale of its oil and
gas  services  operations.  An  amendment  to this  agreement  was  completed in
September  1999. As part of the amended  agreement,  the buyers had the right to
make a payment of $356,372 on or before  December  31, 1999 in  settlement  of a
$500,000  note.  If the payment was not made,  the note would be paid out over a
period of sixty  months  at an 8% rate of  interest.  As a  result,  a loss from
disposal of discontinued  operations of $500,000 has been accrued.  During 2000,
the Company received $121,658 as a recovery on the note.

At  December  31,  1998,  the  Company   recognized   liquidating   income  from
discontinued operations of $136,186.

Note 11 -- Fair value of financial instruments:

The  Company  assumes  that  the fair  values  of  current  assets  and  current
liabilities are equal to their reported carrying amounts due to their relatively
short period of maturity.  The fair values of  noncurrent  financial  assets and
liabilities are as follows:
<TABLE>
<CAPTION>

                                            2000                                  1999
                              ------------------------------         -------------------------------
                                Carrying                               Carrying
                                 Amount           Fair Value            Amount           Fair Value
                               ----------         ----------          ----------         ----------
<S>                                <C>               <C>                   <C>                <C>
Mortgage notes receivable     $ 3,238,729        $ 3,129,524         $ 3,574,935         $ 3,438,205

Long-term debt                 68,605,641         66,174,083          71,710,306          68,933,192
</TABLE>



Mortgage notes  receivable and fixed rate long-term debt are valued based on the
expected  future cash flows  discounted  at risk adjusted  rates.  Variable rate
mortgage  notes are valued at their  carrying  amounts  since they bear  current
interest  rates.   Equipment   notes  are  valued  at  carrying   amounts  since
determination of the fair value of capital lease is not practicable.

Note 12 -- Minority interest:

The Company owns an interest of  approximately  90% in JIS and  interests of 85%
and 75% in a hotel partnership and corporation, respectively. The balance of the
minority  interest in these  consolidated  subsidiaries at December 31, 2000 and
December 31, 1999 and the changes in the minority interest are set forth below:
<TABLE>
<CAPTION>


                                           JIS         HOTEL PARTNERSHIPS       TOTAL
                                        ---------      ------------------    -----------
<S>                                        <C>                 <C>              <C>
Balance at December 31, 1998              $91,113            $1,682,848      $1,773,961

Acquisition                                                     657,427         657,427

Net Income                                                       34,606          34,606

                                           ------             ---------       ---------
Balance at December 31, 1999               91,113             2,374,881       2,465,994

Net Income                                                       74,034          74,034

                                           ------             ---------       ---------
Balance at December 31, 2000              $91,113            $2,448,915      $2,540,028
                                           ======             =========       =========
</TABLE>




                                      F-13
<PAGE>


Note 13 - Stockholders' equity:

Capital stock: Information regarding the capital stock of Janus follows:
   Preferred  stock, par value $.01 per share;  5,000,000 shares  authorized and
   none outstanding at December 31, 2000 and 1999; and

   Preferred  stock,  par value  $.01 per share;  20,000  shares  authorized  at
   December  31,  2000 and  1999,  respectively;  16,788.08  shares  of Series B
   preferred  stock were issued and  outstanding  at December 31, 2000 and 1999,
   respectively.

   Common stock, par value $.01 per share;  15,000,000  shares  authorized;  and
   11,883,220  shares  issued at December 31, 2000 and 1999;  and  3,412,347 and
   3,212,128  shares  held as  treasury  shares at  December  31, 2000 and 1999,
   respectively.  At December 31, 2000 and 1999, the  Reorganization  Trust held
   shares of Janus common stock for possible future  distribution under the Plan
   which the Reorganization  Trust was originally required to vote in proportion
   to the votes cast by the Company's other stockholders.

   On April 14, 1997, the Bankruptcy  Court issued an order  modifying the terms
   under which the  Reorganization  Trust votes the shares of Janus common stock
   it holds. As a result, the Reorganization  Trust is now required to vote such
   shares  in  proportion  to  the  votes  cast  by  other   stockholders,   but
   disregarding shares issued after March 16, 1997.

The Series B preferred stock has a par value of $.01 per share and a liquidating
and  redemption  price of $1,000  per share.  Holders of the Series B  preferred
stock are entitled to cumulative  dividends at the annual rate of $75 per share.
Unless dividends remain unpaid for a specified  period,  holders will not derive
any voting rights from the Series B preferred stock.

During  1998,  the Company was  obligated  to  repurchase  2,996 shares of Janus
common stock for $100,000 under a put agreement.

Warrants:

   In July 1996, the Company issued warrants to purchase 500,000 shares of Janus
   common stock,  which were deemed to have a nominal fair value, as part of the
   consideration for the acquisition of Pre-Tek. All of the warrants will expire
   on July 15, 2001. At December 31, 2000 and 1999, warrants to purchase 110,627
   shares were  exercisable  at $3.00 per share;  warrants  to  purchase  55,312
   shares were  exercisable at $4.00 per share;  and warrants to purchase 55,308
   shares were exercisable at $5.00 per share. However, the warrants may only be
   sold pursuant to an effective registration statement under the Securities Act
   of 1933 or an appropriate exemption from such registration.

   In May 1999, the warrants became subject to redemption by the Company at $.25
   per warrant on 30 days prior written  notice if the market price of the Janus
   common stock equals or exceeds  $10.00 per share for 10  consecutive  trading
   days.

Note 14 -- Stock options and stock appreciation rights:

During 1996, the  stockholders of the Company approved the adoption of the Janus
Industries,  Inc.  1996 Stock Option Plan (the " Plan").  The Plan  provides for
grants of incentive  stock  options  ("ISOs")  and  nonstatutory  stock  options
("NSOs"). ISOs may be issued to any key employee or officer of the Company; NSOs
may be  issued to any key  employee  or  officer  of the  Company  or any of the
Company's independent contractors,  agents or consultants other than nonemployee
directors.  A  committee  of at  least  two  directors  (the  "Committee")  will
determine the dates on which options become exercisable and terminate  (provided
that  options may not expire  more than ten years after the date of grant).  All
outstanding  options  will  become  immediately  exercisable  in the  event of a
"change in control" (as defined) of the  Company.  The exercise  price of an ISO
must be at least 100% of the fair market value on the date of grant (110% for an
optionee  that holds more than ten percent of the  combined  voting power of all
classes of stock of the  Company).  NSOs may be granted  at any  exercise  price
determined by the Committee.  The Company has reserved  300,000 shares of common
stock for issuance under the Plan.

The Plan permits the Committee to grant stock  appreciation  rights  ("SARs") in
connection  with any option  granted under the Plan.  SARs enable an optionee to
surrender  an  option  and to  receive a payment  in cash or  common  stock,  as
determined by the Committee,  with a value equal to the  difference  between the
fair market  value of the common  stock on the date of  surrender of the related
option and the option price.


                                      F-14
<PAGE>


The Company  granted options for the purchase of 4,000 shares of common stock at
an exercise  price of $2.75 per share during 1996.  During 2000,  these  options
were forfeited.

During 1997,  the Company  granted SARs with respect to 100,000  shares of Janus
common  stock to an  executive  officer at an exercise  price of $3.25 per share
which vest at the rate of 20,000  shares per year  commencing on April 23, 1997.
During 2000,  these SARs were  forfeited at the time the executive  resigned his
position.  It also granted SARs in 1997 with respect to a total of 35,000 shares
of Janus common stock to directors at an exercise price of $3.25 per share which
will be  exercisable at any time during the period from October 25, 1997 through
April 23, 2003;  however,  the  appreciated  value paid with respect to the SARs
issued to the directors  will be limited to $7.00 per share.  Appreciation  upon
any  exercise  of the  SARs  issued  in 1997  must be paid in  cash.  Management
estimates that the exercise price for the SARs granted in 1997  approximated the
fair value on the respective  dates of grant and throughout the remainder of the
year.  Accordingly,  the Company made no charges to compensation expense related
to the SARs during 1997.  The SARs issued in 1997 were not issued in conjunction
with the Plan. In 1998,  the Company  granted SARs with respect to 25,000 shares
of common stock to a director at an exercise price of $2.48 per share which will
be exercisable at any time through December 17, 2003. These SARs were not issued
in conjunction with the Plan.

Note  15 -- Disposal of Hotel Properties:

The Company  continually  monitors  general  economic  conditions  and the local
economies  where  its  hotels  are  located.  When  purchase  offers  for  hotel
properties present  sufficient  economic benefits over ownership or other market
changes reduce economic returns, the properties are sold.

On  June  15,  2000,  the  Company  disposed  of a  hotel  property  located  in
Cincinnati,  Ohio.  The hotel was sold for cash of $2,700,000  and resulted in a
gain of $29,893.

On December  29,  1999,  the Company  disposed  of a hotel  property  located in
Michigan City,  Indiana.  The hotel was sold for $2,000,000  cash resulting in a
gain of approximately $279,000.

On  September  29, 1999,  the Company  disposed of a hotel  property  located in
Westerville.  Ohio.  The hotel was sold for  $2,500,000  resulting  in a loss of
approximately  $168,000.  The  consideration  was $2,250,000 cash and a $250,000
note receivable that is collectible  through monthly  payments over three years.
The note had an interest rate of 10%. During the third quarter of 2000, an early
payoff of the note receivable was received. The early payoff reflected a $75,000
discount which was included in other income.

Note 16 -- Related party transactions:

The Company  engages in various  transactions  with other  entities in which Mr.
Beck and Mr. Yeaggy have an interest.  In addition to interest  derived from the
mortgages  (see Note 4),  results of operations  in 2000,  1999 and 1998 include
revenues and expenses derived from related party transactions as follows:
<TABLE>
<CAPTION>

                                                      2000           1999            1998
                                                    --------       --------         -------
<S>                                                    <C>             <C>           <C>
Personnel leasing fees (a)                           $213,979       $216,600       $ 57,279

Management systems fees (b)                            38,137         68,202         50,022

Rent for office facilities and equipment               54,520         54,268         44,582

Management fee income (c)                               -0-          136,761        434,316

Reimbursement for management expenses (d)               -0-            -0-          993,124

</TABLE>

(a)  The  Company  pays  administrative  fees to  Hospitality  Employee  Leasing
     Program,  Inc.  ("HELP"),  a corporation  wholly owned by Messrs.  Beck and
     Yeaggy,  which  provides the Company with  personnel for the hotels it owns
     and  manages.  In  addition,  the  Company  reimburses  HELP for the actual
     payments it makes to or on behalf of such employees.

(b)  The Company pays  management  systems fees for the use of a hotel  property
     management  system and related  computer  hardware  and  software  under an
     agreement with Computel Computer Systems, Inc., a corporation  wholly-owned
     by Messrs. Beck and Yeaggy.

                                      F-15
<PAGE>

(c)  The Company  managed two hotels and six hotels for entities  controlled  by
     Messrs.  Beck and  Yeaggy in 1999 and 1998,  respectively.  The two  hotels
     managed in 1999 were sold prior to December 31, 1999.

(d)  In 1999  the  Company,  by  merger,  acquired  Beck II and  assumed  direct
     responsibility  for the operating  costs of the  management.  In 1998,  the
     Company paid 50% of the operating costs associated with shared expenses and
     personnel.

Note 17 - Subsequent events

Effective January 1, 2001,  13,688.08 shares of preferred stock were redeemed by
the Company.  The aggregate redemption price of $13,688,080 was paid in the form
of promissory  notes  maturing on December 31, 2011.  The notes bear interest at
the rate of 7.5% per annum.  Interest only is payable on a quarterly  basis. The
following shows the unaudited pro forma  condensed  balance sheet as of December
31, 2000 and the unaudited  pro forma  results of  continuing  operations of the
Company for the year 2000 as though the  redemption  had  occurred on January 1,
2000:
<TABLE>
<CAPTION>
                                                              December 31, 2000
                                               -------------------------------------------------
                                                                   Pro forma
                                                  Actual          Adjustments        Pro forma
                                               ------------       -----------       ------------
<S>                                                <C>                <C>                 <C>
Current assets                                 $ 12,009,729       $         -       $ 12,009,729
Property and equipment, net                      93,311,684                           93,311,684
Goodwill, net                                     7,334,064                            7,334,064
Other assets                                     11,507,208                           11,507,208
                                                -----------        ----------        -----------
Total assets                                   $124,162,685       $         -       $124,162,685
                                                ===========        ==========        ===========

Crrent liabilities                              $ 7,922,873       $   (82,000)      $  7,840,873
Long-term debt, net                              64,946,400        13,688,080         78,634,480
Deferred taxes                                    2,250,000                            2,250,000
Minority interest                                 2,540,028                            2,540,028
Stockholders' equity                             46,503,384       (13,606,080)        32,897,304
                                                -----------        ----------        -----------
Total liabilities and stockholders' equity     $124,162,685       $         -       $124,162,685
                                                ===========        ==========        ===========
</TABLE>


<TABLE>
<CAPTION>
                                                     For The Year Ended December 31, 2000
                                               -------------------------------------------------
<S>                                               <C>                  <C>                <C>
Total revenues                                 $ 49,768,643       $         -       $ 49,768,643
Direct expenses                                  19,381,405                           19,381,405
Occupancy expense                                 6,673,326                            6,673,326
Selling, general and administrative              12,517,409                           12,517,409
Depreciation and amortization                     4,259,439                            4,259,439
                                                -----------        ----------        -----------
     Operating income                             6,937,064                 -          6,937,064
Interest expense                                 (6,053,127)       (1,030,061)        (7,083,188)
Other income, net                                   801,685                              801,685
Income before income taxes
                                                -----------        ----------        -----------
     and minority interest                        1,685,622        (1,030,061)           655,561
Provision for income taxes                          615,000          (376,000)           239,000
                                                -----------        ----------        -----------
Income before minority interest                   1,070,622          (654,061)           416,561
Minority interest                                    74,034                               74,034
                                                -----------        ----------        -----------
Income from continuing operations              $    996,588       $  (654,061)      $    342,527
                                                ===========        ==========        ===========

Basic and diluted income (loss)
     from continuing operations per share      $      (0.03)                        $       0.01
                                                ===========                          ===========

</TABLE>


Effective  March 1, 2001,  the Company  acquired  the 15% of the Kings  Dominion
partnership  that it did not own from an affiliate  of Messrs.  Beck and Yeaggy.
The purchase  price of $600,000  was  financed  through the issuance of a demand
note with an interest rate of 7.5% per annum.



                                      F-16