SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

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

For the Fiscal Year Ended December 31, 1999

                         JANUS HOTELS AND RESORTS, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>

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


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) 994-4800

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)

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Exchange  Act 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 |_|

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

The issuer's revenues for its most recent fiscal year were $51,173,422

The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates  of the issuer  was  approximately  $14,467,000,  as of March 21,
2000. 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 21, 2000: 8,671,092

Transitional Small Business Disclosure Format: Yes |_| No |X|

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  registrant's  definitive  proxy statement  relating to the 2000
Annual  Meeting of  Stockholders,  to be filed with the  Securities and Exchange
Commission,  are incorporated by reference in Part III, Items 9-12 of the Annual
Report on Form 10-KSB as indicated herein.

<PAGE>
                                     PART I

Item 1.   Description of Business.

Background of the Company

Janus  Hotels  and  Resorts,   Inc.  (the  "Company"  or  "Janus"),  a  Delaware
corporation,  is engaged in the ownership and management of hotels.  The Company
has  ownership  interests  in 16 hotels  (the  "Owned  Hotels")  and  manages an
additional  33 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) 994-4800.

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 and the other of which is secured by a
first mortgage on a campground,  which are both 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.

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,  all  of the
outstanding shares of which are beneficially owned by them.

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.

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 "Description of Business--History of
the Company's Reorganization."

Prior to entering the hospitality  business,  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.




                                       2
<PAGE>


The Hospitality Business

     The 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 either  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.  With the  exception  of the Best Western  hotel  located at the Kings
Dominion  amusement  park and the Days Inn,  Pompano Beach,  Florida,  the Owned
Hotels are wholly owned by the Company. The Best Western Kings Quarters hotel is
owned by Kings Dominion Lodge, a general partnership in which the Company has an
85%  interest and Messrs.  Beck and Yeaggy,  through a  partnership,  have a 15%
interest.  An  unrelated  party holds a 25%  interest  in the Days Inn,  Pompano
Beach,  Florida.  Each of the Owned  Hotels is subject to mortgage  indebtedness
which is described  below.  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 known as Holiday Inn, Independence; Holiday Inn, North
Canton;    Holiday   Inn,   Hudson;   and   Comfort   Inn,   Akron,   which   is
cross-collateralized by those hotels.

The following charts present a summary of the operations of the Owned Hotels for
the calendar years ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>

                                      1999
<S>                                                               <C>               <C>           <C>         <C>
HOTEL AND LOCATION                                            RMS AVAIL. 1         OCC% 2        ADR 3     Rev PAR 4
------------------                                            -----------          -----         ----      --------
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, OH5                                    29,539             57%         $36.60      $20.92
Knights Inn, Lafayette, IN                                       40,880             71%         $39.92      $28.14
Knights Inn, Michigan City, IN6                                  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>











                                       3
<PAGE>

<TABLE>
<CAPTION>

                                      1998
<S>                                                                <C>              <C>          <C>          <C>
HOTEL AND LOCATION                                            RMS AVAIL. 1         OCC% 2        ADR 3     Rev PAR 4
------------------                                            -----------          -----         ----      --------
Days Inn, Sharonville, OH                                          52,195            60%         $44.37      $26.45
Best Western Kings Quarters, Doswell, VA                           90,520            48%         $63.24      $30.32
Knights Inn, Westerville, OH                                       39,785            63%         $36.22      $22.81
Knights Inn, Lafayette, IN                                         40,880            71%         $37.18      $26.52
Knights Inn, Michigan City, IN                                     37,595            56%         $40.96      $23.08
Days Inn Crabtree, Raleigh, NC                                     44,530            68%         $47.94      $32.66
Days Inn RTP, Raleigh, NC                                          40,515            88%         $68.44      $60.28
Holiday Inn, Independence, OH                                     132,860            65%         $84.01      $54.63
Holiday Inn, North Canton, OH                                      70,810            79%         $59.72      $46.97
Holiday Inn, Hudson, OH                                           105,534            63%         $76.85      $48.29
Comfort Inn, Akron, OH                                             48,910            64%         $56.76      $36.32
</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 September 29, 1999.
6    Hotel was sold December 29, 1999.

The following is a description of each of the Owned Hotels at December 31, 1999:

Days Inn Hotel,  Raleigh,  NC. Built in 1979,  the 122-room  hotel is located on
2.79 acres on the south side of Glenwood Avenue in the Crabtree area of Raleigh.
Glenwood   Avenue  is  a  major  roadway  through  the  area  and  connects  the
Raleigh-Durham  airport  (approximately  11 miles northwest of the property) and
Interstate Highway 440 (one mile southeast).  The hotel is well located relative
to the  area's  universities  and  freeways.  The  improvements  consist  of two
two-story,  concrete block buildings with brick and glass exteriors,  an outdoor
swimming  pool and a one-story  building  consisting of the hotel lobby and a 65
seat restaurant. Access to the guest rooms is from exterior corridors.

The hotel is subject to a first  mortgage  with a balance  of  $2,637,561  as of
December 31, 1999,  which amount is to be amortized on a monthly  basis  through
its maturity date of July 1, 2015. The mortgage carries a fixed interest rate of
8.875% per annum.  At December  31,  1999,  the loan was in its fifth loan year.
Prepayment  in loan years 8 through 14 is subject to a prepayment  penalty of 7%
in year 8, decreasing by 1% each year thereafter.

Capital  improvements  of  $675,299  were  made to the  property  in 1999.  Such
improvements  were paid from  working  capital  and  replacement  reserves.  The
capital  expenditures for 2000 are anticipated to cost  approximately  $266,000.
All  expenditures  will be paid from existing  replacement  reserves and working
capital.

Best Western Kings Quarters,  Doswell,  VA. Built in 1977, the 248 room hotel is
located on 10.5 acres on the eastern side of Interstate Highway 95 and the south
side of  Route 30 in  Hanover  County  (Doswell),  Virginia,  20 miles  north of
Richmond,  Virginia.  The  hotel is  located  adjacent  to the  Paramount  Kings
Dominion theme park.

The hotel's lobby is incorporated  into one of the guest  buildings.  There is a
140  seat  Denny's  restaurant  adjacent  to the  hotel  that  is  owned  by the
partnership  that owns the hotel. The amenities also include an outdoor swimming
pool, two tennis courts, a putting green, shuffleboard,  volleyball,  ping-pong,
horseshoes,  children's playground, video arcade, meeting room, lounge, exterior
lighting and a paved parking lot for 360 cars.

The hotel is subject to a first  mortgage  with a balance  of  $4,820,218  as of
December 31, 1999,  which amount is to be amortized on a monthly  basis  through
January 1, 2016. The mortgage  carries a fixed interest rate of 9.75% per annum.
At December 31, 1999,  the loan was in its fourth loan year.  Under the terms of
the  mortgage,  the  loan may not be  prepaid  prior to the  eighth  loan  year.
Prepayment  in loan years 8 through 14 is subject to a prepayment  penalty of 7%
in year 8, decreasing by 1% each year thereafter.

The Company completed capital improvements in 1999 of $236,157. The expenditures
were  financed  from  existing  replacement  reserves and working  capital.  The
capital  expenditures for 2000 are anticipated to cost  approximately  $202,000.
All  expenditures  will be paid from existing  replacement  reserves and working
capital.

                                       4
<PAGE>

Days Inn,  Sharonville,  OH. Built in 1974,  the 142-room hotel is located along
the  southwest  quadrant  of the  Interstate  Highway  Loop  275/State  Road  42
intersection.   The  property's  visibility  from  the  two  major  highways  is
considered  excellent.  The  property  consists  of  three  two  story  concrete
buildings.  The  buildings  have  both  interior  and  exterior  corridors.  The
lobby/reception   area  is   integrated   into  one  of  the  guest   buildings.
Additionally,  there is a  one-story  restaurant  located on the  property.  The
restaurant is leased to and managed by an unrelated third party.

The hotel is subject to a first  mortgage  with a balance  of  $2,498,186  as of
December  31,  1999.  The  mortgage  requires  monthly  payments  and matures on
September  1,  2002  with  a  remaining  balance,  assuming  no  prepayment,  of
approximately  $2,119,000.  The mortgage  carries an interest  rate of 7.75% per
annum.

The Company spent $242,333 in capital  expenditures at the hotel in 1999.  These
expenditures  were financed from working capital.  The capital  expenditures for
2000 are anticipated to be approximately $64,000.

Days Inn (Research Triangle), Morrisville, NC. Built in 1987, the 110-room hotel
is located on  approximately  3.47 acres on Airport  Blvd.,  south of Interstate
Highway  40 and the  Raleigh-Durham  Airport.  The  three-story  concrete  block
building is faced with a brick and glass facade and is well located  relative to
area universities,  research facilities and freeways.  The building has interior
corridors and a port cochere,  which provides a protected entry into the hotel's
lobby.  Amenities include a fitness room, two meeting rooms, an outdoor swimming
pool and two airport shuttle vans.

The hotel is subject to a first  mortgage  with a balance  of  $2,705,191  as of
December 31, 1999,  which amount is to be amortized on a monthly  basis  through
its maturity date of July 1, 2015. The mortgage carries a fixed interest rate of
8.875% per annum.  At December  31,  1999,  the loan was in its fifth loan year.
Under the terms of the mortgage, the loan may not be prepaid prior to the eighth
loan year.  Prepayment  in loan  years 8 through  14 is subject to a  prepayment
penalty of 7% in year 8 decreasing by 1% in each year thereafter.

The Company spent $194,496 in capital  expenditures at the hotel in 1999.  These
expenditures  were financed from replacement  reserve funds and working capital.
The capital expenditures for 2000 are anticipated to be approximately  $119,000,
and all expenditures will be paid from existing replacement reserves and working
capital.

Knights  Inn,  Lafayette,  IN. Built in 1987,  the 112-room  hotel is located on
approximately  3.24 acres on the north side of State Road 26  approximately  1/2
mile west of  Interstate  Highway 65. The property is highly  visible from State
Road 26. The property  consists of four  one-story  modular  buildings with wood
trimmed stone and stucco  exteriors and an outdoor  swimming  pool. The building
has exterior corridors. The lobby consists of a reception area and an office.

The hotel is subject to a first  mortgage  with a balance  of  $2,056,673  as of
December  31,  1999.  The  mortgage  matures  on April 1, 2006 with a  remaining
balance,  assuming no  prepayment,  of  approximately  $1,453,000.  The mortgage
carries an interest  rate of 9.5% per annum  subject to  adjustment  every three
years to a rate equal to 100 basis  points  above the defined  prime  rate.  The
interest  rate on the  mortgage  was last  adjusted on April 1, 1997.  Under the
terms of the  mortgage,  the loan may be prepaid in whole or in part at any time
with no prepayment penalty.

The Company spent  $97,219 on capital  expenditures  at the hotel in 1999.  Such
expenditures  were financed from working capital.  The capital  expenditures for
2000 are anticipated to be approximately  $96,000,  and all expenditures will be
paid from working capital.

Holiday Inn,  Independence,  OH. Built in 1974, the 364-room hotel is located on
approximately  8.5 acres on Rockside Road  approximately 11 miles from Cleveland
Hopkins International Airport and approximately 8 miles from downtown Cleveland.
The  property  is  situated  at the  junction  of  Interstate  Highway  480  and
Interstate  Highway 77. The property consists of two five-story  concrete block,
brick and  stucco  buildings  with 14  meeting  rooms,  1 Grand  Ballroom  (or 4
separate  Ballrooms),  business  center,  gift  shop,  restaurant,  lounge and a
full-size indoor swimming pool.

The hotel is subject to a first  mortgage  with a balance of  $21,475,143  as of
December  31, 1999.  The mortgage  matures on September 1, 2008 with a remaining
balance,  assuming no prepayment,  of  approximately  $18,059,054.  The mortgage
carries an interest  rate of 8.09% per annum.  Under the terms of the  mortgage,
the loan may be prepaid in whole.

The Company spent $1,001,111 on capital  expenditures at the hotel in 1999. Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures for 2000 are anticipated to cost  approximately  $428,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.

Holiday Inn,  North Canton,  OH. Built in 1970, the 196-room hotel is located on
approximately  4.75  acres  on  Everhard  Road  approximately  5 miles  from the

                                       5
<PAGE>

Akron-Canton  Regional  Airport and  approximately 5 miles from downtown Canton.
The property is situated off Interstate Highway 77. The property consists of two
three-story  concrete  block and stucco  buildings with one Grand Ballroom (or 4
separate Ballrooms),  two meeting rooms,  restaurant,  lounge, full-size outdoor
swimming pool, fitness center and game room.

The hotel is subject to a first  mortgage  with a balance  of  $5,319,531  as of
December  31, 1999.  The mortgage  matures on September 1, 2008 with a remaining
balance,  assuming no  prepayment,  of  approximately  $4,473,343.  The mortgage
carries an interest  rate of 8.09% per annum.  Under the terms of the  mortgage,
the loan may be prepaid in whole.

The Company spent $411,899 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated to be  approximately  $218,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.

Holiday  Inn,  Hudson,  OH.  Built in 1967,  the  289-room  hotel is  located on
approximately  15 acres on Hines Hill Road  approximately 22 miles from downtown
Cleveland  and  approximately  14 miles from  downtown  Akron.  The  property is
situated at the junction of the Ohio Turnpike and Route 8. The property consists
of two two-story concrete block and stucco buildings with one Grand Ballroom (or
6 separate  Ballrooms),  six banquet  rooms,  three meeting rooms, a restaurant,
lounge,  game room, an indoor swimming pool,  outdoor swimming pool,  basketball
courts, tennis courts, volleyball courts and fitness center.

The hotel is subject to a first  mortgage  with a balance of  $13,101,808  as of
December  31, 1999.  The mortgage  matures on September 1, 2008 with a remaining
balance,  assuming  no  prepayment,  of  $12,017,680.  The  mortgage  carries an
interest rate of 8.09%. Under the terms of the mortgage, the loan may be prepaid
in whole.

The Company spent $903,980 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated to be  approximately  $112,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.

Comfort  Inn,  Akron,  OH.  Built in 1989,  the  134-room  hotel is  located  on
approximately  3.5  acres  on  Montrose  West  Avenue  at  the  intersection  of
Interstate  Highway  77 and Route 18. The  property  consists  of two  two-story
concrete block and brick buildings with an indoor swimming pool.

The hotel is subject to a first  mortgage  with a balance  of  $3,447,844  as of
December  31, 1999.  The mortgage  matures on September 1, 2008 with a remaining
balance, assuming no prepayment, of $2,899,390. The mortgage carries an interest
rate of 8.09%  per  annum.  Under  the  terms of the  mortgage,  the loan may be
prepaid in whole.

The Company spent  $73,165 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated to be  approximately  $169,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.

Days Inn East,  Cincinnati,  OH. Built in 1979,  the 93-room hotel is located on
approximately  4.3 acres on Mt.  Carmel-Tobasco  Road near  Interstate  275. The
property  consists of one three-story  concrete block and brick building with an
outdoor swimming pool.

The hotel is subject to a first  mortgage  with a balance  of  $1,541,753  as of
December  31,  1999.  The  mortgage  matures on August 1, 2001 with a  remaining
balance, assuming no prepayment, of $1,486,675. The mortgage carries an interest
rate of 8.0% per annum. Under the terms of the mortgage, the loan may be prepaid
in whole or in part subject to a prepayment penalty.

The Company spent  $44,269 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated to be  approximately  $220,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.

Holiday Inn Express,  Juno Beach,  FL. Built between 1961 and 1989; the 106-room
hotel is  located on  approximately  3.6 acres on U.S.  Highway 1. The  property
consists  of two  two-story  and  one  three-story  concrete  block  and  stucco
buildings.

The hotel is subject to a mortgage with a balance of $424,945 as of December 31,
1999. The mortgage  matures on August 1, 2000. The mortgage  carries an interest
rate of 8.52% per annum.

The Company spent $203,236 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated to be  approximately  $157,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.


                                       6
<PAGE>

Red Roof Kings  Island,  Mason,  OH. Built  between 1973 and 1979,  the 124 room
hotel is  located  on  approximately  4.8 acres on  Bardes  Road.  The  property
consists of two two-story concrete block and brick buildings.

The hotel is subject to a first  mortgage  with a balance  of  $2,448,124  as of
December 31, 1999. The mortgage matures on October 1, 2015. The mortgage carries
an interest rate of 9.74% per annum.  Under the terms of the mortgage,  the loan
may not be prepaid  prior to the eighth  loan year.  Prepayment  in loan years 8
through 14 is subject to a prepayment  penalty of 7% in year 8, decreasing by 1%
each year thereafter.

The Company spent  $98,823 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated  to be  approximately  $77,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.

Days Inn Kings Island,  Mason,  OH. Built in 1976, the 124 room hotel is located
on approximately  4.2 acres on  Mason-Montgomery  Road. The property consists of
two two-story  concrete  block and brick motel  buildings and a one-story  brick
office.

The hotel is subject to a first  mortgage  with a balance  of  $1,985,955  as of
December 31, 1999. The mortgage matures on October 1, 2015. The mortgage carries
an interest rate of 9.74% per annum.  Under the terms of the mortgage,  the loan
may not be prepaid  prior to the eighth  loan year.  Prepayment  in loan years 8
through 14 is subject to a prepayment  penalty of 7% in year 8, decreasing by 1%
each year thereafter.

The Company spent $127,499 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated  to be  approximately  $93,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.

Days Inn Cambridge,  Cambridge, OH. Built in 1973, the 103 room hotel is located
on  approximately  3.6  acres on the east  side of  Southgate  Parkway  north of
Interstate 70. The property consists of one four-story  concrete block and brick
building.

The hotel is subject to a first  mortgage  with a balance  of  $2,039,951  as of
December 31, 1999. The mortgage matures on October 1, 2015. The mortgage carries
an interest rate of 9.74% per annum.  Under the terms of the mortgage,  the loan
may not be prepaid  prior to the eighth  loan year.  Prepayment  in loan years 8
through 14 is subject to a prepayment  penalty of 7% in year 8, decreasing by 1%
each year thereafter.

The Company spent  $75,950 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated  to be  approximately  $29,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.

Best  Western  Cambridge,  Cambridge,  OH.  Built in 1973,  the 95 room hotel is
located on approximately  10.4 acres on the east side of Southgate Parkway north
of Interstate  70. The property  consists of four  buildings of brick,  wood and
masonry construction. One building contains the lobby and lounge.

The hotel is subject to a first  mortgage  with a balance  of  $2,104,929  as of
December 31, 1999. The mortgage matures on October 1, 2015. The mortgage carries
an interest rate of 9.74% per annum.  Under the terms of the mortgage,  the loan
may not be prepaid  prior to the eighth  loan year.  Prepayment  in loan years 8
through 14 is subject to a prepayment  penalty of 7% in year 8, decreasing by 1%
each year thereafter.

The Company spent  $38,422 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated to be  approximately  $130,000,  and all
expenditures  will  be paid  from  existing  replacement  reserves  and  working
capital.

Days Inn  Pompano,  Pompano  Beach,  FL.  Built in 1974,  the 183 room  hotel is
located on approximately  4.9 acres on NW 31st Avenue.  The property consists of
two three-story concrete block and brick buildings.

The hotel is  subject  to a first  mortgage  with a balance  of  $238,231  as of
December 31, 1999. The mortgage matures on January 1, 2001. The mortgage carries
an interest rate of 8.78% per annum.  Under the terms of the mortgage,  the loan
may be prepaid in whole subject to a prepayment penalty.

The Company spent  $84,316 on capital  expenditures  at the hotel in 1999.  Such
expenditures   were  financed  from  the   replacement   reserve.   The  capital
expenditures  for 2000 are  anticipated  to be  approximately  $96,000,  and all
expenditures will be paid from working capital.

                                       7
<PAGE>


     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 for 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."

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.

In 1998,  the Company  derived  management  fee income  from a  marketing  joint
venture  with  Summit  Hotel  Management  Company.   The  Company  also  derived
management  fee income  through a management  joint  venture with DePalma  Hotel
Corporation of Dallas. In an effort to increase profitability, the joint venture
with Summit Hotel  Management  Company was  terminated  in December 1998 and the
joint  venture  with  DePalma  Hotel  Corporation  of Dallas was  terminated  in
February 1999.

    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
eleven 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


                                       8
<PAGE>

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. During 1998, because of 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.

    Employment and Other Governmental Regulation

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.  Also,  the  Company  and  HELP  are  subject  to  laws  governing
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 overall wage rates,  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 the Hotels are
substantially in compliance 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 such 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 a claim of liability or of
remediating a contaminated  property could have a material adverse effect on the
results of operations for the Company.

     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.

     Employees

As of December 31, 1999,  approximately  twenty-five  full-time employees of the
Company were engaged in management,  business  operations and  administration of
its  hospitality  business.  In  addition,  at  that  date  approximately  2,010
individuals  employed by HELP  provided  services at the Hotels  under a service
agreement    between    HELP   and   the   Company.    See   "The    Hospitality
Business--Operations."


                                       9
<PAGE>

     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,
1999, 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  current
limitations  on the Company's  ability to raise capital  through the issuance of
Common   Stock   and   certain   types   of   preferred    stock.    See   "Risk
Factor--Competition";  and --  "Possible  Need  for  Additional  Financing"  and
"Management's  Discussion  and  Analysis  or  Plan of  Operation--Liquidity  and
Capital Resources."

     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
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, 1999,  4,183,056 shares have been distributed by the Reorganization Trust to
former  creditors.  During 1999, 8,114 shares  previously  issued in the name of
certain  creditors,  whose claims were  expunged in 1998,  were  returned to the
Reorganization Trust.

The  balance of 816,944  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.


                                       10
<PAGE>

The Trust Agreement provides for the Reorganization  Trust to make contributions
to Janus and JI  Subsidiary  from time to time of 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 1999 and 1998.  Through  December 31,  1999,  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, 1999, the  Reorganization  Trust reported total cash and cash
equivalents  of  $3,252,693  of which  $438,480 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.


Risk Factors

The Common  Stock of the Company is  speculative  in nature and  involves a high
degree of risk. The risk factors below are not listed in order of importance.

     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

While under the terms of their employment  agreements with the Company,  Messrs.
Beck and Yeaggy are prohibited from acquiring  additional interests in hotels or
hotel  management  companies while they serve as officers of the Company,  their
present  independent  businesses  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 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


                                       11
<PAGE>

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. Several of the Company's competitors
are larger than it and possess  greater  financial,  operational  and managerial
resources.  There can be no  assurance  that in the  markets in which the Hotels
operate,  competing  hotels will not pose  greater  competition  for guests than
presently  exists,  or that new hotels will not be  constructed in such locales.
New or existing  competitors  could  significantly  lower rates or offer greater
conveniences,  services  or  amenities,  or  significantly  expand,  improve  or
introduce  new  facilities  in  markets  in which the  Hotels  compete,  thereby
adversely affecting the Company's operations.  See "Description of Business--The
Hospitality Business--Competition."

     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.  Also, 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.


                                       12
<PAGE>

     Ownership of Hotel Real Estate

The Company currently owns sixteen 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
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 or
Plan of Operation--Liquidity and Capital Resources."

     Control of the Company by Principal Officers

Messrs.  Beck and Yeaggy  beneficially own  approximately 44% 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.

     Irregular Trading Market

The actual "float" of shares  available for sale in the market is  approximately
25% of the 8,671,092 shares  outstanding as of December 31, 1999.  Approximately
5,658,060 shares,  comprised of 3,799,999 shares held by Messrs. Beck and Yeaggy
and their affiliate and 1,858,061  shares held by five percent  shareholders for
purposes of the federal income tax net operating loss  preservation  rules,  are
subject to transferability restrictions until April 24, 2001. In addition, as of
December 31, 1999,  816,944 shares were still held by the  Reorganization  Trust
for the benefit of former unsecured creditors of U.S. Lines. See "Description of
Business--The  Reorganization  Trust." Moreover,  among the approximately  3,700
holders of record of the Common Stock there are  numerous  holders of very small
numbers of shares.

When  the   transferability   restrictions   expire,   and  because  of  certain
registration rights that have been granted to Messrs. Beck and Yeaggy,  sales of
substantial  amounts of Common Stock,  or the  perception  that such sales could
occur, would adversely affect prevailing market prices for the Common Stock.




                                       13
<PAGE>



     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,  Louis S. Beck, its Vice Chairman,  Harry Yeaggy, its
President,  James E. Bishop and its  President of Hotel  Operations,  Michael M.
Nanosky. Although the Company has entered into an employment agreement with each
of Messrs.  Beck,  Yeaggy,  Bishop and  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 16,788.08 shares of preferred stock  outstanding with
an annual dividend expense of $1,259,106. The Company was current in the payment
of dividends on the preferred stock as of December 31, 1999.

     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.
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.           Description of Property.

The Company  conducts its  corporate  and business  operations  activities  from
offices in Cincinnati,  Ohio and Boca Raton, Florida. The Company occupies 4,300
square  feet of  office  space  in  Cincinnati,  Ohio  under a  sublease,  which
terminates  in April 2000 and  occupies  2,200  square feet of office space Boca
Raton, Florida under a sublease,  which terminates in April 2000. Both subleases
are from an  affiliate  of  Messrs.  Beck and  Yeaggy,  and are  expected  to be
renewed.

See "Description of Business--The Hospitality Business" for a description of the
Hotels.

     Investment Policies

General.  The Company's business is the management and/or acquisition of hotels,
recreation,  entertainment  or other related  entities that the Company believes
may benefit from the Company's management expertise.

Investments  in  Real  Estate  or  Interests  in  Real  Estate.  Investments  in
properties may include the acquisition and redevelopment of existing properties,
the  acquisition  of  existing   properties  in  concert  with  a  third  party,
acquisition  of  existing  new  management  contracts  related  to  hospitality,
recreation,  health care or entertainment  properties or, in  circumstances  the
Company deems potentially  advantageous,  the acquisition of unimproved property
and the subsequent development or sale of such property.


                                       14
<PAGE>

There is no  limitation on the  percentage  of the Company's  assets that may be
invested in any one investment or in any one type of  investment,  including the
geographic  location or distribution of such  investments.  The Company however,
intends  to  acquire  properties  and  obtain  management  contracts  that  will
eventually put it in all large market cities in the United  States.  The Company
may also seek to acquire resort  properties  outside of the United  States.  The
Company's  investment  policy  may be  changed  without a vote of the  Company's
security  holders.  The  primary  purpose  of  the  Company's   acquisition  and
investment  policy is to acquire assets that will provide income to the Company.
Capital  gains  related to the  disposition  of assets held by the Company are a
secondary consideration.

While the Company is unrestricted in terms of the type of properties in which it
may  invest,  the  Company  intends  to focus  its real  estate  investments  on
hospitality or  entertainment-related  properties  without  specific  geographic
limitations.  Financing  for  any  acquisitions  undertaken  by the  Company  is
expected  to be  provided  through  a  combination  of cash on hand,  internally
generated  cash,  capital stock  transactions  (to the extent such capital stock
transactions  can  be  accomplished   without  jeopardizing  the  Company's  net
operating loss carryforwards) and through borrowings.  There can be no assurance
that the  enumerated  sources of financing will be available to the Company on a
timely basis nor that  borrowings  by the Company will be available on terms the
Company deems acceptable,  or at all. There is no limitation as to the amount of
indebtedness  the Company may incur nor the amount or number of  mortgages  that
the Company may place on any one piece of property.

Investment  in Real Estate  Mortgages.  The Company does not intend,  within its
core business,  to invest in real estate  mortgages,  except as ancillary to the
acquisition of other assets. It is not the Company's  intention to service or to
warehouse real estate mortgages,  nor is it the Company's intention to invest in
real estate  mortgages as a passive investor in such  investments.  In 1997, the
Company acquired a mortgage on the Holiday Inn Express,  Juno Beach, Florida and
on the KOA  Campground in Kissimmee,  Florida.  Effective  January 1, 1999,  the
Company  acquired the Juno Beach property.  As of December 31, 1999, the balance
on the Kissimmee mortgage was $3,331,419.

Securities  of  or  Interests  in  Persons  Primarily  Engaged  in  Real  Estate
Activities.  The  Company  does not  intend to invest in  securities  of persons
primarily engaged in real estate activities, except where such investment may be
ancillary or incidental to  transactions  involving  hospitality,  recreation or
entertainment-related  properties or management agreements to be acquired by the
Company. In this respect,  the Company may acquire positions in corporate common
stock,  real  estate  investment  trusts,   partnerships  or  limited  liability
companies.


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 1999.

                                     PART II

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

Market Information:

Quotation  of the  Common  Stock on the  Nasdaq  Stock  Market  SmallCap  Market
(symbol:  JAGI)  commenced  on January 22,  1998.  The Company is not aware that
there  were  any  publicly  available  quotations  of the  Common  Stock  in the
over-the-counter market prior to January 22, 1998.













                                       15
<PAGE>


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 Nasdaq SmallCap.
<TABLE>
<CAPTION>

                                                     High              Low
<S>                                                   <C>              <C>
      Quarter ended December 31, 1999               $2.125            $1.00

      Quarter ended September 30, 1999               $2.50            $1.375

      Quarter ended June 30, 1999                   $3.875           $1.9375

      Quarter ended March 31, 1999                   $4.00           $2.1875

      Quarter ended December 31, 1998                $5.00           $1.8125

      Quarter ended September 30, 1998               $5.00           $2.4375

      Quarter ended June 30, 1998                    $6.00            $3.50

      January 22, 1998-March 31, 1998                $7.00            $3.00
</TABLE>


Holders:

As of March 21, 2000,  there were  approximately  3,672 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.

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

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

Overview

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

The Company had net income of $1,172,784  for 1999  compared to  $1,887,241  for
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
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%.


                                       16
<PAGE>

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 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.

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.  The  Company  has no  committed
lines of credit and 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 increased from $108,683,792 at December 31, 1998 to $127,692,489 at
December  31,  1999.  The  increase  in  total  assets  was  the  result  of the
acquisition  of the Beck II properties  described in Note 3 of the  Consolidated
Financial Statements.

Accounts  receivable,  property and equipment,  other current assets,  goodwill,
notes receivable,  other assets, accounts payable,  accrued expenses,  long-term
debt, paid-in-capital, preferred stock and common stock all increased because of
the acquisitions.  The decrease in cash and cash equivalents from $12,383,741 in
1998 to $8,859,888 in 1999 is attributable to operations.

During the year ended  December 31, 1999,  the Company  invested  $4,953,847  in
capital  improvements  for the Owned Hotels as part of its operating  plan.  The
Company plans to spend $2,476,000 on capital improvements during the year ending
December  31,  2000 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 an
aggregate $2,200,000 line of credit with two financial institutions. There is no
outstanding  balance on the lines of credit at December 31, 1999. 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.

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


                                       17
<PAGE>

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, 1999 totals  $71,710,307.  Mortgage
debt totals  $71,187,363,  which  consists of $67,659,175 in fixed rate mortgage
loans and $3,528,188 in adjustable  rate (3-5 year adjustment  period)  mortgage
loans.  Such  adjustable rate loans have maturity dates ranging from August 2000
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, 1999.  The  approximate
scheduled  repayments of principal on the long-term  debt of the Company for the
next five years are: 2000 -- $3,776,846; 2001 -- $3,332,590; 2002 -- $3,738,095;
2003 --  $1,627,644;  2004 --  $1,754,602.  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.

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

The Company  conducted a review of its computer  systems to identify the systems
that could be affected  by the "Year 2000" issue and  executed a plan to resolve
the issue.  In  addition,  the Company  worked  with each of its hotel  property
general  managers  to  complete  a plan to ensure  that all of the  computerized
operations  at each of the hotels  continue to run properly on and after January
1, 2000.  All hotels had a Year 2000 test prior to September  30, 1999 to ensure
that the Year 2000 problem would not disrupt the hotels' reservation systems.

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.

Forward Looking Statements

When used in this and in future  filings by the Company with the  Securities and
Exchange Commission, in the Company's press releases and in oral statements made
with the approval of an authorized  executive officer of the Company,  the words
or phrases  "will likely  result,"  "expects,"  "plans,"  "will  continue,"  "is
anticipated,"   "estimated,"  "project"  or  "outlook"  or  similar  expressions
(including  confirmations by an authorized  executive  officer of the Company of
any such  expressions  made by a third party with  respect to the  Company)  are
intended to identify forward-looking  statements.  The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements, each
of which speak only as of the date made.  Such statements are subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from  historical  earnings and those  presently  anticipated or projected.  Such
risks and other aspects of the Company's  business and  operations are described
in  "Description of Business"  "Risk Factors" and  "Management's  Discussion and
Analysis  or Plan of  Operation."  The  Company  has no  obligation  to publicly
release  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.



                                       18
<PAGE>



Item 7.           Financial Statements.

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

                                    PART III

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

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 May 19, 2000 is
hereby incorporated by reference.

Item 10. 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 May
19, 2000 is hereby incorporated by reference.

Item 11. 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 May 19, 2000 is hereby incorporated by reference.

Item 12. 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 May 19, 2000 is hereby incorporated by reference.

                                     PART IV

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


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

    Exhibit No.     Description
<S>                           <C>
       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 Form 10-KSB filed
                    with the Securities and Exchange Commission on March 22,
                    1999.

       10.1         Employment Agreement with James E. Bishop dated April 4,
                    1997 incorporated by reference to Exhibit 10.1 to Form
                    10-SB of the Company filed with the Securities and
                    Exchange Commission on June 24, 1997.

       10.3         Employment Agreement with Louis S. Beck dated April 24, 1997
                    incorporated  by  reference to Exhibit 10.3 to Form 10-SB of
                    the  Company   filed  with  the   Securities   and  Exchange
                    Commission on June 24, 1997.
</TABLE>


                                       19
<PAGE>


<TABLE>
<CAPTION>

<S>                                      <C>

       10.4         Employment  Agreement  with Harry G. Yeaggy  dated April 24,
                    1997 incorporated by reference to Exhibit 10.4 to Form 10-SB
                    of the  Company  filed  with  the  Securities  and  Exchange
                    Commission on June 24, 1997.

       10.5         Employment Agreement with Michael M. Nanosky dated April 24,
                    1997  incorporated  by  reference  to Exhibit  10.5 to  Form
                    10-SB of the Company filed with the  Securities and Exchange
                    Commision on June 24, 1997.

       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 Commision 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 Commision 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 Commision on June 24, 1997.

       10.11        Client   Service  Agreement  between   Hospitality  Employee
                    Leasing  Program,  Inc.  and  the  Company  incorporated  by
                    reference to  Exhibit 10.12 to  Form  10-SB of  the  Company
                    filed with the Securities and Exchange Commision 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.

       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 Commision 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 Commision 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 Commision
                    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 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.
</TABLE>


                                       20

<PAGE>


<TABLE>
<CAPTION>

<S>                                          <C>

       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 Captial,
                    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.

       10.32        Asset Purchase and Agreement and Plan of Merger by and among
                    the Company, Beck Hospitality Inc. II, Beck Hospitality Inc.
                    III, Louis S. Beck  and Harry Yeaggy  dated as of January 1,
                    1999  incorporated  by  reference  to  Exhibit 10.32 to Form
                    8-K for the event dated February 2, 1999.

       10.33        Stock   Appreciation   Right  Certificate  incorporated   by
                    reference to Exhibit 10.33 t o  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.

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

       21           Subsidiaries of the Company.

       24           Powers of Attorney.

       27           Financial Data Schedule.
</TABLE>

(b) Reports on Form 8-K:

          There were no reports on Form 8-K filed for the period October 1, 1999
          through December 31, 1999.








                                       21
<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 29, 2000              /s/ James E. Bishop
                                    -----------------------------------------
                                    James E. Bishop
                                    President

Dated:  March 29, 2000              /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 29, 2000                               *
                                    ----------------------------------------
                                    Louis S. Beck
                                    Chairman



Dated:  March 29, 2000                               *
                                    ----------------------------------------
                                    James E. Bishop
                                    President and Director


Dated:  March 29, 2000                               *
                                    ----------------------------------------
                                    Harry G. Yeaggy
                                    Vice Chairman


Dated:  March 29, 2000                               *
                                    ----------------------------------------
                                    Arthur Lubell
                                    Director


Dated:  March 29, 2000                               *
                                    ----------------------------------------
                                    Richard P. Lerner
                                    Director


Dated:  March 29, 2000                               *
                                    ----------------------------------------
                                    Vincent W. Hatala, Jr.
                                    Director


Dated:  March 29, 2000                               *
                                    ----------------------------------------
                                    Lucille Hart-Brown
                                    Director


Dated:  March 29, 2000                               *
                                    ----------------------------------------
                                    C. Scott Bartlett, Jr.
                                    Director


                                       22
<PAGE>


Dated:  March 29, 2000                               *
                                    ----------------------------------------
                                    Michael M. Nanosky
                                    President of Hotel Operation and Director


Dated:  March 29, 2000                               *
                                    ----------------------------------------
                                    Paul Tipps
                                    Director






* /s/ James E. Bishop
  -------------------------
  James E. Bishop
  Attorney-in-Fact














































                                       23
<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, 1999 AND 1998                                F-3

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED                   F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999           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, 1999 and 1998, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the two years in the period ended  December 31,  1999.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Janus Hotels and Resorts, Inc.
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows  for each of the two years in the  period  ended  December  31,  1999,  in
conformity with generally accepted accounting principles.




/s/ GRANT THORNTON LLP
March 7, 2000
























                                      F-2

<PAGE>
                         JANUS HOTELS AND RESORTS, INC.
<TABLE>
<CAPTION>
                          CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 1999 AND 1998

                                                                                     December 31,      December 31,
                                                                                         1999              1998
                                                                                   ----------------  ----------------
                                     ASSETS
<S>                                                                                      <C>                 <C>
Current assets:
   Cash and cash equivalents                                                          $  8,859,888      $ 12,383,741
   Restricted cash                                                                       1,251,297           802,746
   Accounts receivable                                                                   1,743,241         1,422,327
   Current portion of notes receivable                                                     182,226           322,043
   Other current assets                                                                    212,082           239,206
                                                                                       -----------       -----------
     Total current assets                                                               12,248,734        15,170,063
                                                                                       -----------       -----------

Property held for sale                                                                  12,641,199          -
Property and equipment, net                                                             84,059,513        74,550,300
Notes receivable                                                                                             453,194
Mortgage notes receivable                                                                3,392,709         5,425,046
Goodwill, net                                                                            7,542,376         6,536,996
Deferred tax asset                                                                       2,566,000         2,566,000
Other assets                                                                             5,241,958         5,868,067
                                                                                       -----------       -----------
                                                                                      $127,692,489      $110,569,666
                                                                                       ===========       ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Payable for redemption of preferred stock                                          $     35,621      $     41,370
   Current portion of long-term debt                                                     3,776,846         2,683,504
   Accounts payable                                                                      2,179,417         1,495,253
   Accrued expenses                                                                      1,959,960         1,910,248
                                                                                       -----------       -----------
     Total current liabilities                                                           7,951,844         6,130,375
                                                                                       -----------       -----------

Long-term debt, net of current portion                                                  67,933,460        60,582,883
Deferred tax liabilities                                                                 2,345,275         1,885,874
Minority interest                                                                        2,465,995         1,773,960

Stockholders' equity:
   Preferred stock, series B; par value $0.01 per share; 20,000 shares authorized;
    16,788.08 and 10,451.88 shares issued and outstanding at December 31,
    1999 and 1998, respectively                                                                168               105
   Common stock, par value  $0.01 per share; 15,000,000 shares authorized;
     11,883,220 shares issued at December 31, 1999 and 1998, respectively                  118,833           118,833
   Additional paid-in capital                                                           52,582,257        45,738,120
   Accumulated deficit                                                                  (4,288,844)       (4,244,185)
   Treasury stock, 3,212,128 and 3,192,128 common shares, at cost                       (1,416,499)       (1,416,299)
                                                                                       -----------       -----------
     Total stockholders' equity                                                         46,995,915        40,196,574
                                                                                       -----------       -----------
                                                                                      $127,692,489      $110,569,666
                                                                                       ===========       ===========
</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, 1999 and 1998

                                                                                   1999             1998
                                                                              ---------------  ---------------
<S>                                                                                  <C>             <C>
Revenues:
   Room and related services                                                     $37,712,563      $20,489,850
   Food and beverage                                                              10,578,433        6,298,770
   Management fees                                                                 2,039,565        1,754,610
   Other                                                                             842,861          513,595
                                                                                  ----------       ----------
     Total revenues                                                               51,173,422       29,056,825
                                                                                  ----------       ----------

Operating expenses:
   Direct:
     Room and related services                                                     9,341,472        4,918,908
     Food and beverage                                                             8,113,617        5,122,426
     Selling and general                                                           2,047,006        1,495,796
                                                                                  ----------       ----------
       Total direct expenses                                                      19,502,095       11,537,130
                                                                                  ----------       ----------
   Occupancy expenses                                                              6,768,557        3,451,122
   Selling, general and administrative expenses                                   12,363,032        6,484,960
   Depreciation                                                                    3,688,997        2,392,300
   Amortization                                                                      356,877          222,922
                                                                                  ----------       ----------
       Total operating expenses                                                   42,679,558       24,088,434
                                                                                  ----------       ----------

Operating income                                                                   8,493,864        4,968,391

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

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

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

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

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

Weighted average common shares:
   Basic                                                                           8,673,996        8,693,545
                                                                                   =========        =========
   Diluted                                                                         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, 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)
                                             =========        ====    ==========     ========     ===========     ===========





                                                  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
                                             =========     ===========     ===========
</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, 1999 AND 1998


                                                                            1999            1998
                                                                       ---------------  --------------
<S>                                                                         <C>                <C>
Operating activities:
Net income                                                                $ 1,172,784     $ 1,887,241
Adjustments to reconcile net income  to net cash provided by (used
in) operating activities:
   Depreciation and amortization                                            3,688,997       2,392,300
   Amortization of intangible assets                                          356,877         222,922
   Deferred taxes                                                             967,401         695,874
   Minority Interest                                                           34,606          84,992
   Gain on sale of property                                                  (110,787)
   Discontinued operations                                                    499,800         (73,948)
Changes in operating assets and liabilities, excluding acquisitions:
   Accounts receivable                                                       (320,914)     (1,013,853)
   Other current assets                                                        27,124         342,043
   Other asset                                                                638,526      (4,348,888)
   Accounts payable and accrued expenses                                   (1,458,009)      1,716,232
                                                                           ----------      ----------
      Net  cash provided by operating activities                            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                                        (4,953,847)    (42,595,244)
Proceeds from sale of property                                              4,250,000          14,161
Collections of notes receivable                                               233,599         127,884
                                                                           ----------      ----------
      Net cash used in investing activities                                  (258,240)    (42,457,475)
                                                                           ----------      ----------

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

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

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

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

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

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

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, 1999, the continuing  operations of Janus Hotels and Resorts,
Inc. and its Subsidiaries  ("Janus" or the "Company"),  which until May 21, 1999
had been named Janus  American  Group,  Inc.,  were  comprised  primarily of the
operations  of  sixteen  hotels  (of which  fourteen  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 3, four hotels were
acquired on August 14, 1998 and seven  hotels were  acquired  January 1, 1999 in
transactions that were accounted for as purchases. Accordingly, the accompanying
consolidated  financial statements reflect the accounts for the hotel operations
for the years ended December 31, 1999 and 1998 from the  applicable  acquisition
dates.  The  financial  statements  for  periods  prior to those  dates  are not
comparable.

As further  described in Note 9,  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.


                                      F-7
<PAGE>


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.

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 has adopted 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, 1999, 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 $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  are
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, 1999         December 31, 1998
<S>                                                       <C>                      <C>
Averages shares outstanding-basic                      8,673,996                 8,693,545
Effect of dilutive securities- dilutive shares
    contingently issuable upon the exercise of
    stock options and warrants                             -                         -
                                                       ---------                 ---------
Averages shares outstanding- Assuming dilution         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 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.
<TABLE>
<CAPTION>

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


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 notes are secured by a campground in Kissimmee, Florida and a hotel
property in Westerville,  Ohio. The campground is owned by an entity  controlled
by Messrs. Beck and Yeaggy.  Messrs. Beck and Yeaggy have personally  guaranteed
the mortgage  note.  The balances at December 31, 1999 and 1998 consisted of the
following:
<TABLE>
<CAPTION>
                                                                                         1999              1998
                                                                                         ----              ----
<S>                                                                                       <C>               <C>
   Note secured by campground, with interest at 8%                                   $3,331,419        $3,417,006

   Note secured by Westerville hotel property, with interest at 10.0%                   243,516

   Note secured by Juno Beach hotel property, with interest at 0.5% above the
   prime rate (an effective rate of 9.0% at December 31, 1998)                          -               2,141,749
                                                                                      ---------         ---------
                                                       Total long-term receivable     3,574,935         5,558,755
   Less current portion                                                                 182,226           133,709
                                                                                      ---------         ---------
                                        Long-term portion, net of current portion    $3,392,709        $5,425,046
                                                                                      =========         =========
</TABLE>

The mortgage notes are 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:

At December  31, 1999,  the Company  held one hotel  property for sale which was
determined by the board of directors and  management to be performing at optimum
standards  but  located in a market  where the growth  potential  in real estate
value is limited and not  conducive to the long range plans of the  Company.  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, a property is  considered  to be held for sale when the Company has made the
decision to dispose of the  property.  At that time,  the  Company  discontinues
depreciating  the asset and estimates the fair value of such asset.  If the fair
value of a hotel  property held for sale is less than net book value,  a reserve
for losses is established.  Because the hotel is presently performing at optimum
standards  the  estimated  fair market value of the property is in excess of its
carrying value. No reserve is considered necessary at December 31, 1999. Company
management and the board of directors designated three hotel properties held for
sale prior to July 1, 1999,  of which two were sold prior to December  31, 1999.
As a result,  depreciation  in the  amount  of  approximately  $368,000  was not
recorded.  The Company  expects to dispose of the remaining  property within the
next twelve months.

Note 6 -- Property and equipment:

Property and  equipment at December 31, 1999 and December 31, 1998  consisted of
the following:
<TABLE>
<CAPTION>

                                                            December 31,           December 31,
                                                                1999                    1998
                                                            ------------           ------------
<S>                                                              <C>                     <C>
Land                                                         $12,952,015            $10,167,507
Hotels                                                        65,100,455             56,004,760
Hotel furniture and fixtures                                  11,707,571             11,541,553
Equipment and vehicles                                           383,629                103,098
                                                              ----------             ----------
                                                              90,143,670             77,816,918
Less accumulated depreciation and amortization                 6,084,157              3,266,618
                                                              ----------             ----------
Totals                                                       $84,059,513            $74,550,300
                                                              ==========             ==========
</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 average daily room rate.  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>

                                                                   1999                    1998
                                                                   ----                    ----
<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 2000 through March 2016                    $67,659,174              $54,320,332
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, 1999 ranged from 8.52%
  to 9.5%); the mortgage notes mature from
  August 2000 through April 2006                                  3,528,188                8,823,009
Equipment notes with various maturities through
  December 2003 and interest at rates ranging
  from 8.98% to 15%                                                 522,944                  123,046
                                                                 ----------               ----------
                                Total long-term debt             71,710,306               63,266,387
Less current portion                                              3,776,846                2,683,504
                                                                 ----------               ----------
              Long-term debt, net of current portion            $67,933,460              $60,582,883
                                                                 ==========               ==========
</TABLE>

Long-term  debt is secured  by the  Company's  notes,  property  and  equipment.
Principal payments in years subsequent to December 31, 1999 are as follows:

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

                     2000                 $3,776,846

                     2001                  3,322,590

                     2002                  3,738,095

                     2003                  1,627,644

                     2004                  1,754,602

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.


                                      F-11
<PAGE>



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.

Note 9 - Income taxes:

For financial statement purposes, there was a provision for Federal income taxes
at December 31, 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, 1999, 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>

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

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

     Provision for income taxes                                              $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>

                                                               1999                 1998
                                                          -------------        -------------
<S>                                                             <C>                 <C>
     Statutory rate                                            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                     2.1                 1.6
     State and local tax                                        5.3                 5.9
     Other                                                     (0.5)               (2.7)
                                                               ----                ----
               Total                                           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>


                                                                  1999                1998
                                                             ---------------     ----------------
<S>                                                                 <C>                  <C>
Deferred tax liabilities:
   Depreciation and other                                       $ 2,345,275         $  1,885,874
                                                                 ----------          -----------
Deferred tax assets:
   Net operating loss carryforwards                              81,898,000          165,355,000
   Valuation allowance                                           79,332,000          162,789,000
                                                                 ----------          -----------
     Net deferred tax assets                                      2,566,000            2,566,000
                                                                 ----------          -----------
                                     Net deferred tax asset     $   220,725         $    680,126
                                                                 ==========          ===========
</TABLE>

Net  operating  loss   carryforwards   consist  of  federal   carryforwards   of
$240,876,000 principally expiring in years 2000 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 is not made,  the note shall 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.

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

Note 11 -- Fair value of financial instruments:

The Company's  financial  instruments at December 31, 1999 and 1998 consisted of
cash, accounts receivable, mortgage notes receivable, accounts payable and fixed
and  variable  rate  mortgage and  equipment  notes  payable.  In the opinion of
management,  (i) cash,  accounts receivable and accounts payable were carried at
values  that  approximated   their  fair  values  because  of  their  short-term
maturities and (ii) mortgage notes  receivable and mortgage and equipment  notes
payable were carried at values that approximated  their fair values because they
had interest  rates  equivalent  to those  currently  prevailing  for  financial
instruments with similar characteristics.

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, 1999 and
December 31, 1998 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, 1997              $91,113             $1,597,856      $1,688,969

Net Income                                    -0-                 84,992          84,992
                                           ------              ---------       ---------
Balance at December 31, 1998               91,113              1,682,848       1,773,961

Acquisition                                                      657,427         657,427

Net Income                                    -0-                 26,031          26,031
                                           ------              ---------       ---------
Balance at December 31, 1999              $91,113             $2,366,306      $2,457,419
                                           ======              =========       =========
</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 at
   December  31,  1999 and  1998,  respectively,  of  which  4,000  shares  were
   designated  as "Series A" (the "Janus Series A preferred  stock");  the 2,200
   shares of Series A  preferred  stock  that were  issued  and  outstanding  at
   December 31, 1995 were redeemed during 1996; and

   Preferred  stock,  par  value  $.01  per  share;  20,000  and  12,000  shares
   authorized  at  December  31,  1999 and  1998,  respectively;  16,788.08  and
   10,451.88  shares of Series B preferred  stock were issued and outstanding at
   December 31, 1999 and 1998, respectively.

   Common stock, par value $.01 per share;  15,000,000  shares  authorized;  and
   11,883,220  shares  issued at December 31, 1999 and 1998;  and  3,212,128 and
   3,192,128  shares  held as  treasury  shares at  December  31, 1999 and 1998,
   respectively.  At December 31, 1999 and 1998, 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.

Information  regarding the capital stock of JIS follows:  Preferred  stock,  par
value $.01 per share; 5,000,000 shares authorized at December 31, 1999 and 1998,
of which 7,650 shares were designated as "Series A" (the "JIS Series A preferred
stock");  and  Common  stock,  par  value  $.01  per  share;  15,000,000  shares
authorized;  5,000,000  shares  issued at December  31,  1999 and 1998;  409,000
shares held as treasury shares at December 31, 1999 and 1998.

The capitalization of Janus and JIS upon confirmation of the Plan was determined
pursuant to the Stock Purchase Agreement dated May 16, 1989, as amended pursuant
to the Supplemental Agreement dated as of February 23, 1990 (the "Stock Purchase
Agreement"),  among the  subsidiary of DKM, USL and USL-SA.  The Stock  Purchase
Agreement was an integral part of the Plan.

The shares of Janus and JIS common stock and Series A preferred  stock  acquired
by the  Reorganization  Trust were acquired for the benefit of former holders of
claims  against  USL  and  USL-SA.  Such  shares  will  be  distributed  by  the
Reorganization  Trust from time to time to such former creditors as their claims
are liquidated.  However,  shares of Janus or JIS common stock will be issued by
the Reorganization  Trust only to creditors in a manner designed to preserve the
Company's  net  operating  losses in  accordance  with the  requirements  of the
Internal Revenue Code.

The  restated  Certificate  of  Incorporation  of each of Janus and JIS  contain
restrictions  on the  "transfer"  (as  defined)  of  shares of the Janus and JIS
capital stock which are intended to preserve and maintain the Federal income tax
attributes of Janus and JIS. The restated  Certificates of Incorporation of each
of Janus and JIS prohibit the  acquisition of any shares of the capital stock or
securities of Janus or JIS if, at the date of such  acquisition,  such purchaser
would be a holder of 5% or more of the issued and  outstanding  capital stock of
Janus or JIS,  determined based on the fair market value of the capital stock of
Janus or stock of Janus or JIS entitled to vote for the  election of  directors.
However,  such  transfers  and issuances can be made if approved by the Board of
Directors.

The Janus  Series A preferred  stock and the JIS Series A  preferred  stock were
substantially  identical  in their  terms.  The Janus and JIS Series A preferred
stock entitled the holders thereof to cash dividends, payable on the last day of
each  June and  December,  at an  annual  rate  equal to 12% of the  liquidation
preference  value of the Janus or JIS Series A  preferred  stock.  Shares of the
Janus and JIS Series  preferred  stocks were  redeemable  at a price of $100 per
share.  Holders of the Janus and JIS Series A preferred  stock were not entitled
to vote except as required by law.

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.

Based on the  provisions of Janus'  corporate  charter and a separate  agreement
between  Janus  and  Messrs.  Beck  and  Yeaggy,  Messrs.  Beck and  Yeaggy  are
prohibited from purchasing  additional  shares of Janus common stock without the
prior approval of the Board of Directors.


                                      F-14
<PAGE>

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, 1999 and 1998,  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.

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,  all of which  remained
outstanding and exercisable at December 31, 1999 and 1998.

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.
It also granted  SARs with  respect to a total of 40,000  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:

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 has an interest rate of 10%.


                                      F-15
<PAGE>



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 1999 and 1998 include  revenues
and expenses derived from related party transactions as follows:
<TABLE>
<CAPTION>

                                                      1999               1998
                                                    ---------          ---------
<S>                                                    <C>                <C>
Management fee income (a)                           $136,761           $434,316

Personnel leasing fees (b)                           216,600             57,279

Management systems fees (c)                           68,202             50,022

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

Reimbursement for management expenses                -0-                993,124
</TABLE>


(a) 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.

(b) 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.

(c) 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.

(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.




























                                      F-16