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Itec Attractions Inc · 10KSB · For 12/31/99

Filed On 3/30/00 · SEC File 0-21070 · Accession Number 96313-0-65

  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 3/30/00  Itec Attractions Inc              10KSB      12/31/99    3:50                                     Tanner & Co/FA

Annual Report -- Small Business · Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       42    112K 
 2: EX-10       Material Contract                                      7     33K 
 3: EX-27       Financial Data Schedule                                1      4K

10KSB · Annual Report -- Small Business
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Certain Relationships and Related Transactions Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Description of Business Description of Property Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act Executive Compensation Exhibits and Reports on Form 8-K Financial Statements Legal Proceedings Management's Discussion and Analysis or Plan of Operation Market for the Company's Common Equity and Related Stockholder Matters McFarlain's Family Restaurant Security Ownership of Certain Beneficial Owners and Management Submission of Matters to a Vote of Security Holders
1	1st Page
2	Item 1. Description of Business
4	McFarlain's Family Restaurant
6	Item 2. Description of Property
7	Item 3. Legal Proceedings
"	Item 4. Submission of Matters to a Vote of Security Holders
"	Item 5. Market for the Company's Common Equity and Related Stockholder Matters
8	Item 6. Management's Discussion and Analysis or Plan of Operation
9	Item 7. Financial Statements
"	Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
10	Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
13	Item 10. Executive Compensation
15	Item 11. Security Ownership of Certain Beneficial Owners and Management
16	Item 12. Certain Relationships and Related Transactions
17	Item 13. Exhibits and Reports on Form 8-K

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-KSB

(Mark One)                                                                      
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 1999.                            

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _____________ to _______________.    

Commission file number 0-21070

ITEC Attractions, Inc.

 Nevada                                           66-0426648
-------                                           ----------
  (State of Incorporation)                     (IRS Employer Identification No.)

 3562 Shepherd of the Hills Expressway
 Branson, Missouri 65616
(417) 335-3533

Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value 

Check  whether  the  registrant  (1) filed all  reports  required to be filed by
Section 13 or Section  15(d) of the  Securities  Exchange Act of 1934 during the
preceding 12 months,  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  pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. X                                                
---                 

The  registrant's  revenues  for its fiscal  year ended  December  31, 1999 were
$6,515,863.                                                                     

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  was  approximately  $475,000  as of  March  25,  2000,  computed  by
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock.                                                           

Check whether the issuer has filed all documents and reports required by Section
12, 13 or 15(d) of the Exchange Act after the distribution of securities under a
plan confirmed by a court. Yes X No    .                                        
--   ---          
The number of shares  outstanding of the registrant's  class of common equity as
of March 25, 2000:                                                              

 Class                                        Shares Outstanding
 -----                                        ------------------
Common Stock, $.001 par value                             7,937,638             

Transitional Small Business Disclosure Format (check one):  Yes     No  X   .   
                                                           ----   ------

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PART I

Item 1.  Description of Business                                                
-----------------------                                       

         International  Tourist  Entertainment  Corporation  was formed  June 3,
1986.  At a  shareholders  meeting held October 16, 1999,  the  shareholders  of
International   Tourist  Entertainment   Corporation,   a  U.S.  Virgin  Islands
corporation,   approved  the  merger  of  International   Tourist  Entertainment
Corporation  with  ITEC  Attractions,  Inc.,  a  Nevada  corporation  which  was
incorporated September 3, 1999. The sole purpose of the merger was to change the
domicile  from the U.S.  Virgin  Islands  to  Nevada.  Hereafter,  International
Tourist Entertainment Corporation, the predecessor, and ITEC Attractions,  Inc.,
the successor, together and separately, are referred to as the Company.         

         The  Company  owns and  operates a major,  giant  screen  entertainment
facility in Branson,  Missouri,  known as the IMAX(R) Entertainment Complex. The
Branson  facility was  constructed  by the Company and  commenced  operations on
October  8, 1993.  The  IMAX(R)  Entertainment  Complex  consists  of the Ozarks
Discovery IMAX(R) Theater,  a giant screen motion picture theater,  the Remember
When Theater  which  features  live  performances,  McFarlain's,  a full service
restaurant, retail shops, various food concessions and related amenities.       

         The Company  produced and owns an IMAX(R) theme film entitled  "Ozarks:
Legacy and Legend." The theme film  premiered on April 28, 1995 and is exhibited
only at the Ozarks  Discovery  IMAX(R)  Theater.  The  Company  also rents giant
screen films and 35mm feature  films from third  parties for  exhibition  at its
Branson facility.                                                               

         Revenues  from the Branson  facility  are  generated  from four general
sources:  (1) ticket sales for  admission to the IMAX(R)  Theater;  (2) lease of
retail  space;  (3)  operation  of  restaurant  facilities,  retail  shops,  and
concessions owned by the Company in the Branson  facility;  and (4) ticket sales
for admission to the Remember When Theater.                                     

         On January 25, 1996, the Company filed a voluntary  petition for relief
under Chapter 11 of the United States  Bankruptcy  Code, Case No.  96-60122-S-11
(Chapter 11),  with the United  States  Bankruptcy  Court,  Western  District of
Missouri,  Southern Division. On December 18, 1996, the Company filed its Second
Amended Plan of  Reorganization  (the "Plan of  Reorganization")  and its Second
Amended Disclosure Statement in Support of Proposed Debtor's Second Amended Plan
of Reorganization Dated December 18, 1996 (the "Disclosure  Statement") with the
United States  Bankruptcy  Court.  On February 6, 1997, an Order  Confirming the
Plan of Reorganization  was entered by the United States Bankruptcy Court in the
matter of In Re: International  Tourist  Entertainment  Corporation,  Debtor and
Debtor-in-Possession.                                                           

         The Plan of  Reorganization  has  proven  effective.  The  Company  has
operated with significant positive cash flow since emerging from Chapter 11.    

2 

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IMAX(R) Entertainment Complex, Branson, MO                                      
------------------------------------------                                      

         The Branson facility is known as the IMAX(R) Entertainment Complex. The
Complex  features a 532 seat IMAX(R) giant screen  theater with a screen that is
approximately  6 stories (62 feet) tall and 83 feet wide.  This theater is known
as the "Ozarks  Discovery  IMAX(R) Theater." Other features of the Complex which
are operated by the Company are:                                                

-        "McFarlain's  Family  Restaurant," one of Branson's most popular eating
         establishments.  The Restaurant seats 600 people and features  regional
 food specialties as well as home baked pies and other desserts.

-        The Back Porch, an Ozark style deli. The Back Porch was operated during
    1999 but is now in the process of being converted to a food court.

-        The  Remember  When  Theater,  a 200  seat  live  performance  theater.
         Currently,  the theater  stars Mike  Radford and Jimmie  Rodgers.  Mike
         Radford  presents a comedy and patriotic  show called the Remember When
         Show. A show which honors our heritage and pays tribute to our country.
         Jimmie  Rodgers,  a popular  singer  during the '60's,  presents a show
         called Jimmie Rodgers  Remembers.  In his show,  Jimmie shares his life
and his music.                                                

-        Legacy & Legends  Gift Shop  offers  products  which tie to the IMAX(R)
         films being  presented  in the  theater,  reflect the  lifestyle of the
Ozarks and a large line of gift shop items.                   

         The Complex also houses some 13 other tourist  related retail shops and
kiosks,  consisting of approximately 10,000 square feet, which are leased to and
operated by third parties.                                                      

Ozarks Discovery IMAX(R) Theater and Projection Formats                         
-------------------------------------------------------                         

         The  Company's  giant  screen  theater was  designed  initially to take
advantage of only the IMAX(R) film and projection format. This IMAX(R) format is
ten times  larger than the 35mm film used in the  typical  movie  theater.  This
specially  designed giant screen theater is configured with  amphitheater  style
seating and uses a special  projection  and sound system.  The  projected  image
fills the screen  that is 62 feet high and is 83 feet  wide.  The result is that
giant screen films can be displayed with great clarity at much larger than usual
viewing  size,  bringing  the viewer  "into" the film action on the screen.  The
visual image is complemented with a digital,  22,000-watt,  44 speaker, surround
sound system, which management believes is one of the best theater sound systems
in the world.                                                                   

         The Company is leasing the giant screen projection system, sound system
and projection screen from IMAX(R) Corporation.                                 

         The  Company's  exclusive  film,  "Ozarks:  Legacy & Legend,"  which is
exhibited three to five times per day, was produced in the IMAX(R)  format.  The
Company typically  exhibits two to four other IMAX(R) films in its regular daily
schedule, in addition to the "Ozarks: Legacy & Legend" film.                    

3 

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         In December of 1997,  the Company  installed a 35mm  projection  system
with  special  lenses  that  allow  the  image of  regular  feature  films to be
projected  in such a way as to fill  approximately  60% of the  six  story  tall
screen.  The projection  system is tied into the powerful  IMAX(R) sound system.
This  combination of the largest  possible  visual image and perhaps the nations
most sophisticated and effective sound system,  make viewing a feature 35mm film
a memorable experience.                                                         

         The  reception  of  this  unique  35mm   projection   system  has  been
outstanding  from both the local  citizens and tourists.  35mm feature films are
typically  longer than IMAX(R) and as a result,  concession sales have increased
dramatically during the past year.                                              

         As a result of the experience the Company has had with exhibiting 35-mm
movies, the Company board gave management approval to explore the feasibility of
building a small 35-mm  complex  adjacent  to the IMAX  Complex.  A  preliminary
design of the proposed  complex has been completed.  The proposed  complex would
have three  theaters,  two of which  would seat 175 people and one,  which would
seat 135  people.  One of the 175 seat  theaters  would have a stage so it could
also be used as a live theater.                                                 

         All three theaters  would have stadium  seating and would have state of
the art sound and projection  systems. If the Company is successful in obtaining
financing,  construction  on the theater  complex  will begin in early summer of
2000.                                                                           

         The new theater complex requires  approximately 165 new parking spaces.
In late 1999,  the Company had an  opportunity to lease the land needed to build
the new parking lot. The land  involved  requires that a large amount of fill be
brought in to prepare  for the parking  lot.  The  Company is  currently  in the
process of having the fill delivered.                                           

McFarlain's Family Restaurant                                                   
-----------------------------                                                   

         The  Company  acquired  the  restaurant  operation  in May 1995 and has
increased the total seating to slightly over 600.                               

         The key factors in the  success of  McFarlain's  are  quality  food and
extra special service.  Unique  specialties like fried green tomatoes and french
fried sweet potatoes are provided to entice customers.                          

         McFarlain's can accommodate up to 15 motor coach groups per hour. While
tour groups are important, they represent only 33% of the restaurant's business.
In 1999, the restaurant served over 380,000 people.                             

The Back Porch Deli                                                             
-------------------                                                             

         The Company  acquired The Back Porch Deli operation in January 1997. In
late 1999,  because of continuing  operating  losses at The Back Porch Deli, the
Company's board approved the conversion of The Back Porch to a food court called
The IMAX Food Court.  The  Company  will own and operate The IMAX Food Court and
has acquired  franchises for Quiznos Subs,  Baskin Robbins and Breadeaux  Pizza.
The Company expects The IMAX Food Court to open by May 1, 2000.                 

4 

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Remember When Theater                                                           
---------------------                                                           

         To better utilize space and broaden the entertainment  offerings of the
Complex,  in 1998 the Company completed the construction of a 220 seat, intimate
live  performance  theater in an area of the  facility  which had been a holding
area for the IMAX(R) Theater.                                                   

         This theater was completed in March of 1998 and currently features Mike
Radford's Remember When Show and the Jimmie Rodgers Remembers Show. The Remember
When Show has a comedy and  patriotic  theme that is both  nostalgic and fun and
has a lot of audience participation. Tony Orlando, a popular singer, has stated,
"The  Mike  Radford  Remember  When  Show is the best  tribute  to  Veterans  in
Branson." In the Jimmie Rodgers  Remembers Show,  which was added in early 1999,
Jimmie shares his life and his many popular hit songs from the '60's and '70's. 
He also performs a number of new songs he has written.                          

Legacy & Legends Gift Shop                                                      
--------------------------                                                      

         The Legacy & Legends Gift Shop is a  full-fledged  specialty gift shop.
It generates the highest percentage profit of any of the Company's  departments.
Sales for calendar 1999, especially after the relocation to a larger space, have
continued to increase substantially.                                            

Retail Shops                                                                    
------------                                                                    

         Since the  inception  of the Complex in 1993,  retail sales have been a
very important factor in creating a total experience for visitors. There are now
13 retail shops and kiosks in the Complex that are leased to third parties.  The
Complex  boasts the most  atmospheric,  comfortable  and unique indoor  shopping
experience in Branson and is able to demand some of the highest rents for retail
space in Branson.                                                               

Competition                                                                     
-----------                                                                     

         The Company operates a single facility in Branson,  Missouri  providing
entertainment,  food, and shopping for tourists. The Company competes with other
entertainment  attractions,  restaurants,  and retail shops in the Branson area.
The Company is also impacted by the  competitive  draw of Branson in relation to
other locations across the country.                                             

         Branson has many live performance  theaters with presentations  ranging
from music to comedy to drama. These theaters generally operate from May through
mid-December,  although  more of  these  theaters  are now  offering  a  limited
performance  schedule  in March and  April.  On  average,  a theater  offers two
performances  each day,  for six days a week,  during the peak  season,  but may
offer only one  performance per day or reduce the number of days per week during
slower months. Seasonality causes a definite business cycle within each year for
the Company's Branson facility.                                                 

5 

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         The major  attraction  in Branson is Silver  Dollar City,  an amusement
park with an 1890's theme,  which attracts almost 2 million  visitors each year.
Several  other  attractions  exist in Branson,  including  water  parks,  family
amusements,  and activities  related to the lake in the region.  The Company has
entered  into cross  promotion  arrangements  with  Silver  Dollar City and with
several of the major  entertainers  and  timeshare  developers  in Branson.  The
IMAX(R)  Entertainment  Complex  has  become  established  as one  of the  major
attractions in Branson and  approximately  1,000,000 people visited the facility
in 1999.                                                                        

Employees                                                                       
---------                                                                       

         At December  31,  1999,  the Company had  approximately  140  full-time
employees and all of them work at the  IMAX(R)Entertainment  Complex in Branson,
Missouri.                                                                       

Forward-Looking Statements                                                      
--------------------------                                                      

         Statements in this Form 10-K,  including those concerning the company's
expectations regarding its business, and certain of the information presented in
this report,  constitute  forward looking  statements  within the meaning of the
Private  Securities  Litigation  Reform Act of 1995. As such, actual results may
vary  materially  from such  expectations.  There can be no  assurance  that the
company's  results of operations will not be adversely  affected by factors that
could cause actual results to differ from  expectations.  The company undertakes
no obligation to revise or publicly release the results of any revision to these
forward looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements,  which reflect management's opinion only as of
the date hereof.                                                                

Item 2.  Description of Property                                                
-----------------------                                       

         The Company  entered  into a 50-year  ground lease in July 1993 for the
5.5-acre site on which its Branson facility is located.  The Company has prepaid
the first 20 years of the lease with a payment of $1,025,000.  Commencing in the
21st year of the lease,  the annual  lease  payment  will be $145,000  per year,
adjusted to reflect inflationary  increases. In conjunction with the anticipated
construction  of a new 35-mm theater  complex,  the Company leased an additional
one-acre of land at an annual  lease  payment of $20,000  per year.  The term of
this lease is the same as the 5.5-acre lease. The Company is presently preparing
this ground for the commencement of construction of the parking lot.            

         The Company  completed the construction of its Branson facility in 1993
on the  5.5-acre  site  leased by the  Company.  The  Company  owns the  Branson
facility,  subject  to a  mortgage  in the  principal  amount  of  approximately
$3,222,000 in favor of the Bank of America.                                     

         The Company owns a condominium  in Branson,  Missouri which it acquired
in 1994 for  $148,000 and which is subject to a mortgage at December 31, 1999 in
the  approximate  principal  amount of $102,000 in favor of Great  Southern Bank
with monthly payments of $741. The condominium is used as a part-time  residence
by the Company's Chairman, Paul Bluto.                                          

The Company owns no other real properties.                    

         The Company  produced  and owns the giant  screen  theme film  "Ozarks:
Legacy and Legend."                                                             

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         The Company has registered the service mark "ITEC  Attractions" and the
"McFarlain's" Logo with the U.S. Patent and Trademark Office.                   

         The properties  and  facilities of the Company are deemed  adequate and
suitable for its operations.                                                    

Item 3.  Legal Proceedings                                                      
-----------------                                             

         There are no material pending legal proceedings to which the Company is
a party or of which any of its property is the subject.                         

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

         At a shareholders  meeting held October 16, 1999, the  shareholders  of
International   Tourist  Entertainment   Corporation,   a  U.S.  Virgin  Islands
corporation,   approved  the  merger  of  International   Tourist  Entertainment
Corporation  with  ITEC  Attractions,  Inc.,  a  Nevada  corporation  which  was
incorporated September 3, 1999. The sole purpose of this merger was to change   
the domicile from the U.S. Virgin Islands to Nevada.                            

 PART II

Item 5.  Market for the Company's Common Equity and Related Stockholder Matters 
        ----------------------------------------------------------------------

(a) Market Information.  Since February 1998 the Company's common stock has been
traded in the  over-the-counter  market and  reported on the NASD's OTC Bulletin
Board.  The current  symbol is "ITAT." The common stock of the Company was first
publicly   traded  in  December  1992.   Over-the-counter   quotations   reflect
inter-dealer prices, without retail mark-up,  markdown or commission and may not
necessarily  represent actual transactions.  The following table shows the range
of high and low bid  information  available  to the Company for its common stock
for the quarterly periods indicated.                                            

                                            High                   Low
                                            ----                   ---

1998                                                          
----                                                          
     1st Quarter                             1.55                   0.60
     2nd Quarter                             1.20                   0.40
     3rd Quarter                             0.00                   0.26
     4th Quarter                             0.00                   0.26

1999                                                          
----                                                          
     1st Quarter                             0.37                   0.25
     2nd Quarter                             0.35                   0.18
     3rd Quarter                             0.50                   0.25
     4th Quarter                             0.41                   0.18

         (b) Holders.  The approximate  number of record holders as of March 25,
2000 of the Company's  common stock,  $.001 par value, was 380. This number does
not include  beneficial  owners of shares held in  "nominee"  or "street"  name.
Including those  beneficial  owners,  the Company  estimates the total number of
shareholders exceeds 1,200.                                                     

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         (c)  Dividends.  The Company has not paid cash  dividends on its common
stock during the past two years. At the present time, the Company's  anticipated
capital  requirements  are such that it intends to follow a policy of  retaining
any earnings in order to finance the operation and development of its business. 

         The Company's  loan  agreement  with the Bank of America  restricts the
payment of dividends to an amount not  exceeding  the Company's net profits plus
depreciation  plus  interest  expense,  less  1.25  times the  Company's  annual
principal  and  interest  payments  unless  otherwise  agreed  to by the Bank of
America. Recent Sales of Unregistered Securities                                

         As part of the Company's plan of reorganization,  in February 1997, the
Company issued  4,433,490  restricted  shares of its common stock to Mr. Paul M.
Bluto in  consideration  of $600,000  cash. No  underwriter or selling agent was
used in connection with this sale. The sale of these shares was made pursuant to
available  exemptions  under Section 4(2) and Section 4(6) of the Securities Act
of 1933, as amended, and the regulations promulgated pursuant thereto.          

         Commencing  February 28, 1997 and concluding on September 10, 1997, the
Company  offered  and  sold  2,000,000  Units at a price of $.30 per Unit for an
aggregate  consideration  of $600,000.  Each Unit  consisting of one  restricted
share of the  common  stock of the  Company  and one  warrant  to  purchase  one
restricted  share of the  common  stock of the  Company  at a price of $1.00 per
share.  No underwriter  or selling agent was used in connection  with this offer
and sale.  The sale of these shares was made  pursuant to  available  exemptions
under Section 4(2) and Section 4(6) of the  Securities  Act of 1933, as amended,
and the regulations promulgated pursuant thereto.                               

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

Financial Condition and Results of Operations                                   
---------------------------------------------                                   

         At December 31, 1999,  the Company had a cash balance of $644,706.  The
Company had  working  capital at December  31, 1999 of  $372,182,  and a current
ratio of 1.53 to 1. The  Company  maintains  a $400,000  secured  line of credit
facility  with the Bank of America.  No  borrowings  were made under the line of
credit during the year ended December 31, 1999 and no amounts are owed.         

         Going forward, the Company expects to be able to finance its operations
and immediate capital  requirements from currently available capital,  cash flow
from  operations,  and  available  sources of  borrowings  including the line of
credit.                                                                         

         The Company has not been  unusually  impacted by  inflation or changing
prices during the past two years.                                               

         The Company does not expect any other significant changes in the number
of employees during the current fiscal year.                                    

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         The Company's  revenues for the year ended December  31,1999  increased
approximately 11% to $6,515,863 compared to $5,893,074 for the fiscal year ended
June 30, 1998.  These increases were primarily due to increased  revenues at the
Remember When Theater,  from the addition of the Jimmie Rodgers  Remembers Show,
the  McFarlain's  Family  Restaurant,  and the Legacy & Legend  Gift  Shop.  The
increase in revenues at the Gift Shop was related to the shop's  relocation to a
substantially larger space.  Revenues from 35mm feature films actually decreased
in the year ended  December 31, 1999 as compared to feature film revenue for the
fiscal year June 30, 1998.                                                      

         The Company's  operating  expenses for the year ended December 31, 1999
increased  approximately 5% to $4,313,599  compared to $4,091,689 for the fiscal
year ended June 30, 1998. These increases were primarily  related to an increase
in cost of sales due to increased revenues in the Legacy & Legends Gift Shop and
increased  royalties  paid for the  additional  revenues  in the  Remember  When
Theater  from the  addition  of the Jimmie  Rodgers  Remembers  Show.  Operating
expense for the IMAX theater and McFarlain's  Restaurant actually decreased as a
result of cost control programs implemented in 1999.                            

         Selling  and  general and  administrative  expenses  for the year ended
December 31, 1999  increased 17 percent to  $1,586,799 as compared to $1,355,806
for the fiscal year ended June 30, 1998.  This  increase was primarily due to an
increase in advertising and marketing  expense  incurred in marketing the Jimmie
Rodgers  Remembers Show and from the creation of a new marketing program for the
complex.                                                                        

         Income  from  operations  for the  year  ended  December  31,  1999 was
$150,710 compared to $38,130 for the fiscal year ended June 30, 1998.           

         Interest  expense for the year ended  December  31, 1999 and the fiscal
year ended June 30, 1998,  primarily  reflects  carrying  costs of the Company's
mortgage on the Branson facility.                                               

         Net loss  applicable to common stock for the fiscal year ended December
31, 1999  totaled  $145,628 as compared to a net loss of $252,526 for the fiscal
year ended June 30, 1998.                                                       

Item 7.  Financial Statements                                                   
--------------------                                          

         The  Financial  Statements  of the  Company  required  by this Item are
attached as a separate section of this report and are listed in Part IV, Item 13
of this Form 10-KSB.                                                            

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

         There has been no change in the Company's  independent certified public
accountants,  Tanner + Co.  during the  Company's  two most recent fiscal years.
Tanner + Co. have served as the Company's accountant since June 30, 1996.       

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PART III

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

Directors and Executive Officers                                                

         The directors  and executive  officers of the Company at March 25, 2000
are:                                                                            

Name                              Age           Position in Company             
----                              ---           -------------------             

Paul M. Bluto                      71     Chairman of the Board of Directors,   
                             Chief Executive Officer
                                 and Chief Financial Officer

Lourette Ann Bluto                 67     Director                              

Thomas J. Carlson                  47     Director                              

Kelvyn H. Cullimore                64     Director                              

Kelvyn H. Cullimore, Jr.           43     Director                              

Francis E. McLaughlin              58     Director                              

Kumar V. Patel                     54     Director                              

Paul Rasmussen                     58     President and Chief Operating Officer 

Michael L. Pitman                  44     Senior Vice President of Marketing    

Dennis Berard                      52     Vice President - Restaurant Operations

Randy S. Brashers                  32     Vice President of Operations          

Robert J. Cardon                   36     Secretary/Treasurer                   

         Kelvyn H.  Cullimore  is the  father of  Kelvyn  H.  Cullimore,  Jr and
Lourette  Ann  Bluto is the wife of Paul M.  Bluto.  There  are no other  family
relationships among any of the above-named persons.                             

         All  directors  of the Company  are  elected to hold  office  until the
annual  meeting of the  shareholders  following  their  election and until their
successors  have been duly  elected and  qualified.  Officers of the Company are
elected by the Board of Directors at the first meeting after the annual  meeting
of the Company's  shareholders and hold office until their successors are chosen
and  qualify,  or until their  death,  or until they resign or have been removed
from office.                                                                    

         All staff  personnel  employed by the  Company  devote full time to the
business of the Company as salaried  employees,  with the exception of Robert J.
Cardon and Paul M. Bluto. Paul M. Bluto is employed by GS&W Services,  a Company
owned by Lourette Ann Bluto,  and provides  services to GS&W, such as marketing,
special projects and  computerization.  Mr. Paul M. Bluto devotes  approximately
50% of his time to his duties for the Company.  Robert  Cardon is an employee of
Dynatronics  Corporation  and  provides  services to the Company on an as-needed
basis.  Mr. Cardon  devotes  approximately  5% of his time to his duties for the
Company. Dynatronics Corporation is a public company, which manufactures devices
for the  physical  medicine  market.  .See  "CERTAIN  RELATIONSHIPS  AND RELATED
TRANSACTIONS."                                                                  
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         Paul M. Bluto has been a Director of the Company  since April 1995.  He
became Chairman of the Board and Chief Financial Officer in February 1997 and on
March 1, 1999 became Chief  Executive  Officer.  Since 1990,  Mr. Bluto has been
employed by GS&W Services in marketing,  special  projects and  computerization.
From 1966 to 1990, Mr. Bluto was employed with the United Automobile, Aerospace,
Agriculture  Implement  Workers of America  (U.A.W.),  most recently as a Senior
Vice President of Operations and Human Resources.                               

         Lourette  Ann Bluto was elected a director of the Company on October 3,
1997.  She is President  and sole owner of GS&W  Services,  Inc., a full service
printing and mailing corporation.  Mrs. Bluto founded GS&W Services in 1969, and
currently has 31 employees. GS&W Services is located in Walnut, California. Mrs.
Bluto is active in community and civic affairs,  having served as Vice-President
of  Edison  Elementary  School  P.T.A.,  President  of  the  Walnut/Diamond  Bar
Soroptimist  Club,  Board member of the Santa Ana YWCA Hotel for Women.  She has
presided as President of the California  Chapter of M.A.S.A.,  and has served on
the Board of Directors of several businesses, including Local 509 Federal Credit
Union.                                                                          

         Thomas J. Carlson  became a Director in June 1997. Mr. Carlson has been
in a private law practice for over 14 years in Springfield,  Missouri. From 1987
to 1993, he served as Mayor of Springfield  and currently  serves as a member of
Springfield's  City Council.  He serves on various  community  service boards of
directors.  Mr. Carlson  received a JD degree from the University of Missouri at
Kansas  City in 1979  and a BA  degree  in  Journalism  from  George  Washington
University in 1975.                                                             

         Kelvyn H.  Cullimore  has served as President of the Company  since its
incorporation  in 1986,  resigned  as  President  and  Chief  Executive  Officer
effective  February  28, 1999.  He has been a director  since 1986 and served as
Chairman of the Board from 1986 to February  1997.  Mr.  Cullimore  continues to
serve as a Director of the Company.  Mr. Cullimore  received a B.S. in Marketing
from Brigham Young University in 1957 and,  following  graduation,  worked for a
number of years as a partner in a  family-owned  home  furnishings  business  in
Oklahoma City, Oklahoma.  Mr. Cullimore has participated in the organization and
management of various enterprises,  becoming the president or general partner in
several business  entities,  including real estate,  the motion picture industry
and equipment  partnerships and has served on the board of directors of Brighton
Bank and a  privately-owned  wholesale travel agency.  Since 1975, Mr. Cullimore
has consulted for independent film production and distribution companies and has
been  involved in the raising of capital for the  production  of  feature-length
films.  From 1979 to 1992,  Mr.  Cullimore  served as  chairman of the board and
president of American Consolidated  Industries ("ACI"), a corporate affiliate of
Dynatronics  Corporation,  which in 1992 was  merged  with and into  Dynatronics
Corporation.  ACI was a privately-owned holding company for various investments.
From 1983 to 1992,  Mr.  Cullimore  also  served  as  president  of  Dynatronics
Corporation and from 1983 to present,  he has served as chairman of the board of
Dynatronics Corporation, a publicly-held company whose securities are registered
under the Securities Exchange Act of 1934, as amended.                          

         Kelvyn H.  Cullimore,  Jr. has been a Director of the Company since its
incorporation  in 1986. He graduated from Brigham Young University with a degree
in Financial and Estate Planning in 1980. Since graduation,  Mr. Cullimore,  Jr.
has  served  on  the  board  of  directors  of  several  businesses,   including
Dynatronics   Corporation,    Dynatronics   Marketing   Company,   ACI   and   a
privately-owned   wholesale  travel  agency.  In  addition,  he  has  served  as
secretary/treasurer of each of the foregoing companies.  Mr. Cullimore, Jr. also
served as Executive  Vice  President and Chief  Operating  Officer of ACI and he
currently  serves as  President  and a Director of  Dynatronics  Corporation,  a
publicly-held  company whose  securities  are  registered  under the  Securities
Exchange Act of 1934, as amended.                                               

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         Francis E. McLaughlin has been a Director of the Company since 1988. He
is the founder and principal owner of the McLaughlin  Companies,  which includes
the  largest  real  estate firm in the U.S.  Virgin  Islands,  as well as a real
estate  appraisal  company,  and  property  management  companies.  He has  been
involved in the  development of several  residential  and commercial real estate
projects there. An original investor in the First Virgin Islands Federal Savings
Bank, he currently serves as chairman of the board of the institution.  Over the
years,  Mr.  McLaughlin has held  leadership  positions in civic,  community and
professional organizations.                                                     

         Kumar V. Patel was  elected a director  of the  Company in April  1995.
Since 1976,  Mr.  Patel has been  self-employed  in real estate  investment  and
management in Southern  California.  He received a B.A. in Honors  Economics and
Accounting from the University of  Newcastle-Upon-Tyne,  Great Britain.  He is a
licensed Real Estate Broker and a licensed General Contractor in California.  He
is also  President  of Great  Designs  Realty  and  Development  Inc.,  a family
business offering service in foreclosure, property management and construction. 

         Paul  Rasmussen  was  elected  President  and Chief  Operating  Officer
effective March 1, 1999.  Prior to being named  President,  he had served as the
Company's Controller. Mr. Rasmussen has held a number of financial and operation
positions in the airline industry prior to joining ITEC. Mr. Rasmussen  received
a Bachelor of Science  degree in  accounting  from the  University of Montana in
1972.                                                                           

         Michael L.  Pitman has been with the Company  since  April of 1993.  He
served as  Marketing  Director  until June of 1997 at which time he was  elected
Senior Vice  President of  Marketing.  Prior to his  employment  with ITEC,  Mr.
Pitman was a salesman for a natural sugar company and a regional food brokerage.
Prior to that time, he managed  Ike's Candy Company in Salt Lake City,  Utah for
five years.                                                                     

         Dennis  Berard was elected  Vice-President  - Restaurant  Operations on
October  31,  1998.  He joined the  Company in June of 1995 as a  co-manager  of
McFarlain's  Restaurant.  Prior to joining the Company, he was the co-owner of a
restaurant  in  Kimberling  City,  Missouri.  Before moving to the Branson area,
Dennis held various  management  positions with a number of national  restaurant
chains.                                                                         

         Randy S.  Brashers was elected Vice  President  of  Operations  for the
Company in June of 1997. Mr. Brashers is a life-long  resident of the Ozarks. He
grew up in the retail and wholesale  broker  business and graduated  with a B.S.
degree  from  Southern  Missouri  State  University.  He  was  employed  by  the
Kimberling  City Chamber of Commerce  prior to joining ITEC in December of 1993.
He has served as floor manager,  assistant  operations manager and as operations
manager prior to his current position.                                          

         Robert J. Cardon was  appointed  Corporate  Secretary of the Company in
February 1992 and became  Treasurer of the Company in February  1997. Mr. Cardon
is Corporate  Secretary and is a full time employee of Dynatronics  Corporation.
From 1987 to 1988, Mr. Cardon was employed as a registered  representative of an
investment-banking  firm.  He received his B.A. in 1987 and his M.B.A.  in 1990,
both from Brigham Young University.                                             

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Section 16(a) Beneficial Ownership Reporting Compliance                         
-------------------------------------------------------                         

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's directors,  officers and persons who own more than 10% of a registered
class of the  Company's  equity  securities,  to file reports of  ownership  and
changes in ownership  with the Securities  and Exchange  Commission.  Directors,
officers  and  beneficial  owners  of more than 10% of the  Company's  stock are
required by regulations of the Securities and Exchange Commission to furnish the
Company with copies of all Section 16(a) forms which they file.                 

         Based solely upon a review of reports furnished to the Company pursuant
to Section  16(a) for its most recent  fiscal year,  the Company is not aware of
any reports  required  by Section  16(a) to be filed by  directors,  officers or
beneficial owners of more than 10% of the Company's stock that were not filed on
a timely basis.                                                                 

Item 10.  Executive Compensation                                                
----------------------                                      

Compensation of Executive Officers                                              
----------------------------------                                              

         The following table sets forth the  compensation of the Company's chief
executive  officer  during the fiscal years ended June 30, 1998 and 1997 and for
the six month transition  period ended December 31, 1998 and year ended December
31, 1999. No other executive officer or individual had a total annual salary and
bonus exceeding  $100,000 for any of these periods.  No officer had total annual
salary and bonuses in excess of $100,000 for the year ended December 31, 1999.  

                                                        [Enlarge/Download Table]


                                                      Summary Compensation Table                                     

                                                                                 Long Term Compensation              
                                                                                 ----------------------              
                                        Annual Compensation                     Awards                 Payouts       
                           -----------------------------------------    ---------------------   -------------------- 
                                                           Other        Restricted                                   
Name and                                                  Annual          Stock                   LTIP     All Other 
Principal                                                 Compen-        Award(s)    Options/    Payouts    Compen-  
Position                   Year   Salary($)   Bonus($)    sation($)         ($)        SAR(#)       ($)     sation($)
---------                  ----   ---------   --------   -----------    ----------   --------   --------   ----------

                                                                                                                     
Paul M. Bluto              1999       -0-         -0-     $52,500         $ -0-          -0-      $ -0-     $ -0-    
(CEO)(1)                                                                                                             

Kelvyn H. Cullimore        1998   $ 50,400  $ 43,421      $29,406(3)      $ -0-          -0-      $  -0-    $  -0-   
(CEO) (2)                  1998   $100,800  $ 32,500      $44,019(3)      $ -0-          -0-      $  -0-    $  -0-   

                           1997   $100,800  $    -0-(4)   $37,076(3)      $ -0-          -0-      $  -0-    $  -0 (4)

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


(1)           Mr.  Bluto was  elected  the  Company's  Chief  Executive  Officer
              effective  March 1,  1999.  Mr.  Bluto  is not  paid a salary  for
              holding the position of Chief Executive Officer.  He was, however,
              paid $52,500 for director's fee and consultation services rendered
              to the Company for the year ended  December  31,  1999.  Mr. Bluto
              maintains a home in California but visits Branson  several times a
              year. The Company does provide Mr. Bluto with the use of a Company
              owned  condominium  during  his  visits to  Branson.  The  Company
              payments  for the  condominium  were  $9,583 for the months  March
              through  December  1999.  This  amount  is  not  included  in  the
compensation table above.                           

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(2)           Mr.  Cullimore  resigned as the Company's Chief Executive  Officer
              and  President  effective  February  28,  1999.  The  table  above
              represents Mr.  Cullimore's  compensation for the two-month period
              ended  February 28, 1999,  the six-month  transition  period ended
              December  31,  1998;  and the two fiscal years ended June 30, 1998
              and 1997.  Mr.  Cullimore's  presence  in Branson on behalf of the
              Company  was  considered  temporary  and,  therefore,   the  above
              Compensation  Table  does not  include  any  amount for use by Mr.
              Cullimore of the  condominium  owned by the  Company.  The Company
              payments for the condominium were $1,917 for the months of January
              and February  1999;  $5,750 for the  six-month  transition  period
              ended  December 31, 1998; and $11,500 for each of the fiscal years
ended June 30, 1998 and 1997.                       

(3)           Included  in these  amounts  are  premiums  of $5,704 for the year
              ended  December 31,  1999,  $17,112 for the  six-month  transition
              period ended December 31, 1998,  $39,967 for the fiscal year ended
              June 30, 1998, and $34,224 for the fiscal year ended June 30, 1997
              and on insurance  policies funding a salary  continuation plan for
              Mr.  Kelvyn  H.  Cullimore.   Also  included  are  life  insurance
              premiums,  disability  insurance  premiums and personal usage of a
Company automobile or car allowance.                

(4)           Mr. Cullimore  received 201,523 shares of restricted  common stock
              as part of the Company's  Plan of  Reorganization  in fiscal 1997.
              The stock had no value at that  time,  and since the value was not
determinable, no value was placed on the stock.     

         The  Company  did not  grant  to  executive  officers  nor  were  there
outstanding any stock options or stock  appreciation  rights during fiscal years
ending June 30, 1997 and 1998 or during the transition period ended December 31,
1998 or for the calendar year ended December 31, 1999.                          

         During the last completed fiscal year, the Company made no awards under
any long-term  incentive plan. The Company does not maintain any defined benefit
or actuarial plan.                                                              

Compensation of Directors                                                       
-------------------------                                                       

         Directors  of the  Company  receive  $1,050 per  meeting for service as
directors of the Company.  The Board of  Directors  will meet  quarterly or more
often as needed. Directors are reimbursed for expenses incurred on behalf of the
Company in attending directors' meetings.                                       

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

         The  following  table  sets  forth,  as  of  March  25,  2000,  certain
information  with  respect to any  person who is known to the  Company to be the
beneficial owner of more than five percent (5%) of the Company's  capital stock,
each director,  certain executive  officers and as to all directors and officers
as a group:                                                                     

 Common Stock Beneficially Owned
 -------------------------------

                  Number
      Name                               of shares           % of Class(1)
      ----                               ---------           -------------

Paul M. Bluto (2)                           6,296,572                71.1%      

Lourette Ann Bluto (2)                      6,296,572                71.1%      

Kelvyn H. Cullimore (3)                       480,649                 6.0%      

Kelvyn H. Cullimore, Jr. (4)                  230,339                 2.9%      

Francis E. McLaughlin (5)                     177,764                 2.2%      

Kumar V. Patel (6)                            200,000                 2.5%      

Thomas J. Carlson(7)                          133,334                 1.7%      

Michael L. Pitman                              70,563                 0.9%      

Randy S. Brashers                              70,543                 0.9%      

All Directors and Officers                                                      
of the Company as a Group                   7,429,445                81.6%      
(9 persons)(8)                                                                  

(1)         These  calculations  are  based  upon a total  of  7,937,638  shares
            outstanding  as of March 25, 2000.  In addition,  for each person or
            group  the  number  of  shares  owned  and  the  calculation  of the
            percentage  ownership  includes  the number of shares that person or
group has the right to acquire.                         

(2)         Mr. Paul Bluto and Mrs. Lourette Ann Bluto jointly own 11,013 shares
            as a result of their  pre-bankruptcy  holdings.  Mr. Bluto  acquired
            4,433,490  restricted  shares  pursuant  to the  Company's  Plan  of
            Reorganization.  Mr. Bluto acquired 539,573  restricted  shares in a
            private placement by the Company,  and Mrs. Bluto owns 6,257 shares.
            In  addition,  Mr. Bluto is a trustee of the GS&W  Services  Defined
            Benefit Plan, which acquired 383,333  restricted shares in a private
            placement  by  the  Company  and  Mr.  Bluto  is  deemed  to be  the
            beneficial  owner of these  shares.  Mr. Bluto also owns warrants to
            purchase  539,573  restricted  shares at a price of $1.00 per share.
            The GS&W  Services  Defined  Benefit  Plan  also  owns  warrants  to
            purchase  383,333  restricted  shares at a price of $1.00 per share.
            All shares  owned  directly or  beneficially  by either Mr. Bluto or
    Mrs. Bluto are deemed to be beneficially owned by the other.

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(3)         Mr.  Cullimore  owns  10,453  shares  as a  result  of  pre-petition
            holdings,  he received  201,523 shares as part of the Company's Plan
            of  Reorganization  and he owns 5,000  shares,  which he received in
            satisfaction  of claims as a creditor of the  Company.  In addition,
            Mr. Cullimore  acquired 16,667  restricted shares of common stock in
            the Company's private placement. Mr. Cullimore may be deemed to be a
            control  person  of  Dynatronics  Corporation,  which  owns  230,339
shares, which are included in Mr. Cullimore's holdings. 

(4)         Mr.  Cullimore,  Jr.  may  be  deemed  to  be a  control  person  of
            Dynatronics  Corporation,  which  owns  230,339  shares,  which  are
included in Mr. Cullimore, Jr.'s holdings.              

(5)         Mr.  McLaughlin  owns  9,430  shares  as a  result  of  pre-petition
            holdings and he acquired 66,667  restricted  shares in the Company's
            private  placement.   He  also  owns  warrants  to  purchase  66,667
            restricted  shares of the Company's common stock at a price of $1.00
          per share. He has also purchased 35,000 shares in the open market.

(6)         Mr.  Patel  acquired  100,000  restricted  shares  in the  Company's
            private  placement.  He  also  owns  warrants  to  purchase  100,000
            restricted  shares of the Company's common stock at a price of $1.00
per share.                                              

(7)         Mr.  Carlson  acquired  66,667  restricted  shares in the  Company's
            private  placement.   He  also  owns  warrants  to  purchase  66,667
            restricted  shares of the Company's common stock at a price of $1.00
per share.                                              

(8)         The  calculation  of  beneficially  owned  shares  of all  executive
            officers and directors as a group  eliminates the duplicate  entries
            of shares owned by Dynatronics which are reflected in the beneficial
            ownership of both Kelvyn H. Cullimore and Kelvyn H. Cullimore,  Jr.,
            as well as shares owned by GS&W Services, Inc. and the Bluto family,
            which are  reflected  in the  beneficial  ownership of both Paul and
Lourette Ann Bluto.                                     

Item 12.  Certain Relationships and Related Transactions                        
----------------------------------------------              

         Mr.  Kelvyn H.  Cullimore is the  Chairman of the Board of  Dynatronics
Corporation.  Mr.  Kelvyn H.  Cullimore,  Jr. is the President and a Director of
Dynatronics Corporation. Kelvyn H. Cullimore and Kelvyn H. Cullimore, Jr. may be
considered  to be  affiliates  of  Dynatronics  Corporation  by  virtue of their
positions  with  Dynatronics  Corporation.  Robert J.  Cardon,  an  employee  of
Dynatronics Corporation,  is the Company  Secretary/Treasurer and is paid $1,050
for each board meeting.  Dynatronics  Corporation  owns  approximately 3% of the
common stock of the Company (post reorganization).                              

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 PART IV

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

         Financial  Statements  Filed  as part  of Form  10-KSB:  See  Index  to
Financials on Page F1                                                           

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ITEC ATTRACTIONS, INC.                                                          
Financial Statements                                                            
December 31, 1999                                                               

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                                                          ITEC ATTRACTIONS, INC.
                                                   Index to Financial Statements

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

                                                                            Page
                                                                            ----

Independent Auditors' Report                                                 F-2

Balance Sheet                                                                F-3

Statement of Operations                                                      F-4

Statement of Stockholders' Equity                                            F-5

Statement of Cash Flows                                                      F-6

Notes to Financial Statements                                                F-7

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

See accompanying notes to financial statements.                                 
                                                                             F-1

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                                                    INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of                                   
ITEC Attractions, Inc.                                                          

We have audited the balance sheet of ITEC  Attractions,  Inc. as of December 31,
1999, and the related  statements of operations,  stockholders'  equity and cash
flows for the years ended  December  31, 1999,  and June 30,  1998,  and the six
months  ended   December  31,  1998.   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 ITEC Attractions,  Inc. as of
December 31, 1999,  and the results of its operations and its cash flows for the
years ended  December  31,  1999,  and June 30,  1998,  and the six months ended
December 31, 1998, in conformity with generally accepted accounting principles. 

            TANNER + Co.

Salt Lake City, Utah                                                            
February 24, 2000                                                               
                                                                             F-2

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                                                        [Enlarge/Download Table]


                                                                                    ITEC ATTRACTIONS, INC. 

                                                                                             Balance Sheet 

                                                                                         December 31, 1999 
---------------------------------------------------------------------------------------------------------- 

              Assets                                                                                       
              ------                                                                                       
                                                                                                           

Current assets:                                                                                            
     Cash                                                                               $          644,706 
     Receivables                                                                                    80,688 
     Inventories                                                                                    95,753 
     Prepaid expenses                                                                               88,322 
     Current portion of prepaid leases                                                             166,915 
                                                                                        ------------------ 

                  Total current assets                                                           1,076,384 

Property and equipment, net                                                                      5,691,421 
Prepaid leases                                                                                     965,188 
Deposits                                                                                            13,072 
                                                                                        ------------------ 

                                                                                        $        7,746,065 
                                                                                        ------------------ 

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

              Liabilities and Stockholders' Equity                                                         
              ------------------------------------                                                         

Current liabilities:                                                                                       
     Accounts payable                                                                   $          237,725 
     Accrued expenses                                                                              287,144 
     Current portion of long-term debt                                                             179,333 
                                                                                        ------------------ 

                  Total current liabilities                                                        704,202 

Long-term debt                                                                                   3,304,034 
Accrued lease expense                                                                              366,261 
Deferred revenue                                                                                    40,557 
Deposits                                                                                            17,700 
                                                                                        ------------------ 

                  Total liabilities                                                              4,432,754 
                                                                                        ------------------ 

Commitments and contingencies                                                                            - 

Stockholders' equity:                                                                                      
     Common stock, $.001 par value; authorized 40,000,000                                                  
       shares; issued and outstanding 7,937,638 shares                                               7,938 
     Additional paid-in capital                                                                 10,781,076 
     Accumulated deficit                                                                        (7,475,703)
                                                                                        ------------------ 

                  Total stockholders' equity                                                     3,313,311 
                                                                                        ------------------ 

                                                                                        $        7,746,065 
                                                                                        ------------------ 

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

See accompanying notes to financial statements.                                                            
                                                                                                       F-3 

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                                                        [Enlarge/Download Table]


                                                                                    ITEC ATTRACTIONS, INC. 

                                                                                   Statement of Operations 
---------------------------------------------------------------------------------------------------------- 

                                                Year Ended     Year Ended          Six Months Ended        
                                               December 31,     June 30,             December 31,          
                                             ------------------------------------------------------------- 
                                                                                                1997       
                                                   1999           1998           1998        (Unaudited)   
                                             ------------------------------------------------------------- 
                                                                                                           
Revenues:                                                                                                  
     Theater admissions and concessions      $      2,473,767  $   2,286,232  $   1,441,875  $   1,267,498 
     Restaurant and deli                            2,985,221      2,843,511      1,918,358      1,863,511 
     Retail sales                                     596,931        333,120        336,822        205,451 
     Retail rental income                             459,944        430,211        241,503        251,470 
                                             ------------------------------------------------------------- 
                                                    6,515,863      5,893,074      3,938,558      3,587,930 
                                             ------------------------------------------------------------- 
Costs and expenses:                                                                                        
     Direct exhibition film costs and                                                                      
       concessions                                  1,188,131      1,054,714        696,495        676,498 
     Direct restaurant and deli costs               2,327,693      2,396,087      1,509,632      1,514,234 
     Direct retail costs                              436,628        241,257        207,349        142,821 
     Direct mall operating costs                      361,147        399,631        196,147        225,500 
                                             ------------------------------------------------------------- 
                                                    4,313,599      4,091,689      2,609,623      2,559,053 
                                             ------------------------------------------------------------- 

              Gross profit                          2,202,264      1,801,385      1,328,935      1,028,877 
                                             ------------------------------------------------------------- 

General and administrative expenses                   779,610        830,325        457,829        173,269 
Advertising and marketing expenses                    807,189        525,481        305,533        173,434 
Depreciation and amortization expenses                464,755        407,449        209,637        201,129 
                                             ------------------------------------------------------------- 

              Operating income                        150,710         38,130        355,936        481,045 

Other income (expense):                                                                                    
     Interest expense                                (313,641)      (340,674)      (170,100)      (169,719)
     Interest income                                   17,303         26,018         12,843         19,054 
     Other                                                  -         24,000              -         12,000 
                                             ------------------------------------------------------------- 
                                                     (296,338)      (290,656)      (157,257)      (138,665)
                                             ------------------------------------------------------------- 

              (Loss) income before                                                                         
                provision for                                                                              
                income taxes                         (145,628)      (252,526)       198,679        342,380 

Provision for income taxes                                  -              -              -              - 
                                             ------------------------------------------------------------- 

              Net (loss) income              $       (145,628) $    (252,526) $     198,679  $     342,380 
                                             ------------------------------------------------------------- 

Net (loss) income  per share -                                                                             
  basic and dilu$ed                          $           (.02) $        (.03) $         .03  $         .05 
                                             ------------------------------------------------------------- 

Weighted average common shares -                                                                           
  basic and diluted                                 7,938,000      7,716,000      7,938,000      7,573,000 
                                             ------------------------------------------------------------- 

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

See accompanying notes to financial statements.                                                            
                                                                                                       F-4 

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                                                        [Enlarge/Download Table]


                                                                                    ITEC ATTRACTIONS, INC. 

                                                                         Statement of Stockholders' Equity 

                                                                             Year Ended December 31, 1999, 
                                              Six Months Ended December 31, 1998, Year Ended June 30, 1998 
---------------------------------------------------------------------------------------------------------- 

                                                                                                Total      
                                          Common Stock          Additional                   Stockholders' 
                               -------------------------------   Paid-In       Accumulated       Equity    
                                    Shares          Amount        Capital        Deficit        (Deficit)  
                               --------------------------------------------------------------------------- 

                                                                                                           
Balance, July 1, 1997             6,844,397    $      6,844   $  10,432,419   $ (7,276,228)  $   3,163,035 

Issuance of common stock for                                                                               
cash and bankruptcy                                                                                        
conversions and settlements       1,093,241           1,094         348,657              -         349,751 

Net loss                                  -               -               -       (252,526)       (252,526)
                               --------------------------------------------------------------------------- 

Balance, June 30, 1998            7,937,638           7,938      10,781,076     (7,528,754)      3,260,260 

Net income                                -               -               -        198,679         198,679 
                               --------------------------------------------------------------------------- 

Balance, December 31, 1998        7,937,638           7,938      10,781,076     (7,330,075)      3,458,939 

Net loss                                  -               -               -       (145,628)       (145,628)
                               --------------------------------------------------------------------------- 

Balance, December 31, 1999        7,937,638    $      7,938   $  10,781,076   $ (7,475,703)  $   3,313,311 
                               --------------------------------------------------------------------------- 

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

See accompanying notes to financial statements.                                                            
                                                                                                       F-5 

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                                                                                    ITEC ATTRACTIONS, INC. 

                                                                                   Statement of Cash Flows 
---------------------------------------------------------------------------------------------------------- 

                                                     Year Ended    Year Ended       Six Months Ended       
                                                    December 31.    June 30,          December 31,         
                                                    ------------------------------------------------------ 
                                                                                                 1997      
                                                        1999          1998         1998      (Unaudited)   
                                                    ------------------------------------------------------ 
                                                                                                           
Cash flows from operating activities:                                                                      
     Net (loss) income                              $ (145,628)   $  (252,526)  $   198,679  $     342,380 
     Adjustments to reconcile net (loss) income                                                            
       to net cash provided by operating                                                                   
       activities:                                                                                         
         Depreciation and amortization                 464,755        407,449       209,637        201,129 
         Loss on disposition of property                                                                   
            and equipment                                    -            925        12,416              - 
         Deferred revenue                               40,557              -             -              - 
         (Increase) decrease in:                                                                           
              Receivables                              (65,698)        (1,466)       22,621        (32,414)
              Inventories                              (16,945)       (17,766)       (1,103)        (4,199)
              Prepaid expenses and deposits            (77,404)       (25,365)       23,460         (7,012)
              Prepaid leases                           166,915        166,915        83,457         83,457 
         Increase (decrease) in:                                                                           
              Accounts payable and accrued                                                                 
                 expenses                               50,485        212,225        32,741        (42,846)
              Deposits                                  (2,800)        (1,500)            -         (3,000)
                                                    ------------------------------------------------------ 

                  Net cash provided by                                                                     
                  operating activities                 414,237        488,891       581,908        537,495 
                                                    ------------------------------------------------------ 

Cash flows from investing activities-                                                                      
     purchase of property and equipment               (240,259)      (627,737)     (188,939)       (99,506)
                                                    ------------------------------------------------------ 

Cash flows from financing activities:                                                                      
     Payments on debt                                 (184,032)      (120,886)      (89,302)       (62,488)
     Net proceeds from issuance of                                                                         
        common stock                                         -        349,751             -        349,751 
                                                    ------------------------------------------------------ 

                  Net cash (used in) provided                                                              
                  by financing activities             (184,032)       228,865       (89,002)       287,263 
                                                    ------------------------------------------------------ 

(Decrease) increase  in cash                           (10,054)        90,019       303,967        725,252 

Cash beginning of period                               654,760        260,774       350,793        260,774 
                                                    ------------------------------------------------------ 

Cash end of period                                  $  644,706    $   350,793   $   654,760  $     986,026 
                                                    ------------------------------------------------------ 

---------------------------------------------------------------------------------------------------------- 
See accompanying notes to financial statements.                                                            
                                                                                                       F-6 


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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements

                                   December 31, 1999 and 1998, and June 30, 1998
--------------------------------------------------------------------------------

1.   Organization and Summary of Significant Accounting Policies                

Organization                                                                    

The Company's  principal  business is in the tourist  entertainment  sector. The
Company has a giant screen tourist entertainment  complex in Branson,  Missouri,
and began  showing  its own  theme  film  produced  especially  for the  Branson
location.  The Company also  operates a restaurant,  a deli, a live  performance
theater, and a small gift shop in the Branson complex.                          

Change in Fiscal Year                                                           

The Company  changed its fiscal year from June 30 to December 31 beginning  with
the period ended December 31, 1998.                                             

Unaudited Information                                                           

In the opinion of management,  the accompanying  unaudited financial  statements
for the six month  period  ended  December  31,  1997  contain  all  adjustments
(consisting  only of normal  recurring  items)  necessary to present  fairly the
results of  operations  and cash flows for the Company for the six month  period
ended December 31, 1997.                                                        

Cash Equivalents                                                                

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

Inventories                                                                     

Inventories  consist of retail  merchandise,  food, and concession items and are
recorded at the lower of cost or market,  cost being  determined on the first-in
first-out (FIFO) method.                                                        

--------------------------------------------------------------------------------
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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

1.   Organization and Summary of Significant Accounting Policies                

Film Development Costs                                                          

Film  development  costs  reflect the direct  costs  incurred to produce a giant
screen  film  exhibited  by the  Company.  Such  costs are  amortized  using the
straight-line  method over an estimated  useful life of ten years. The estimated
useful life and method of  amortization  are based  principally on  management's
estimates of projected future  revenues,  and the years over which similar theme
films have been exhibited within the giant screen theater industry. As films are
exhibited and historical information becomes available to aid management in film
revenue  projections,  amortization  will be modified,  if  necessary,  so as to
reasonably  relate film costs to  estimated  gross  revenues  expected  over the
estimated  useful  life  of the  films,  not to  exceed  ten  years.  Management
evaluates the unamortized film development costs for possible  impairment giving
consideration  to various  factors  including  revenue trends and projected cash
flows. Impairments determined through the evaluation are expensed currently.    

Property and Equipment                                                          

Property and  equipment  are recorded at cost,  less  accumulated  depreciation.
Depreciation  and  amortization  on capital leases and property and equipment is
determined using the straight-line method over the estimated useful lives of the
assets or terms of the  lease.  Expenditures  of  maintenance  and  repairs  are
expensed when incurred and betterments are capitalized. Gains and losses on sale
of property and equipment are reflected in operations.                          

Income (Loss) Per Share                                                         

The computation of basic income (loss) per common share is based on the weighted
average number of shares outstanding during each period.                        

The  computation  of diluted  income  (loss)  per  common  share is based on the
weighted average number of shares  outstanding during the period plus the common
stock  equivalents  which  would  arise  from  the  exercise  of  stock  options
outstanding  using the treasury  stock  method and the average  market price per
share  during the  period.  Common  stock  equivalents  are not  included in the
diluted earnings per share calculation when their effect is antidilutive.       

--------------------------------------------------------------------------------
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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

1.   Organization and Summary of Significant Accounting Policies                

Income Taxes                                                                    

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

Concentration of Credit Risk                                                    

Financial  instruments which potentially subject the Company to concentration of
credit risk consist primarily of receivables.  In the normal course of business,
the Company  provides  credit terms to its customers.  Accordingly,  the Company
performs  ongoing credit  evaluations of its customers and maintains  allowances
for  possible  losses  which,  when  realized,  have  been  within  the range of
management's expectations.                                                      

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

Use of Estimates in the  Preparation of Financial  Statements                   

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

Reclassifications                                                               

Certain  amounts in the December 1998 and June 1998  financial  statements  have
been reclassified to conform with the current period presentation.              

--------------------------------------------------------------------------------
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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

2.   Property and Equipment                                                     

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

Buildings                                                  $      5,129,092     
Equipment                                                           972,050     
Furniture and fixtures                                              306,410     
Land improvements                                                   150,937     
Film development costs                                              900,000     
                                                      ----------------

                                                             7,458,489

Less accumulated depreciation and                                               
amortization                                                   (1,767,068)  
                                                      ----------------

                                                      $      5,691,421
                                                      ----------------

3.   Lease Obligations                                                          

The Company has a ten-year  operating lease agreement for a giant screen theater
projection and sound system for its Branson Theater Complex.  Under the terms of
this agreement,  the Company was required to make advance rental payments.  Such
amounts,   net  of  amortization,   are  reflected  in  prepaid  leases  in  the
accompanying financial statements. The advance rent payments are being amortized
on a straight-line basis over the initial ten year lease term. Additionally, the
lease agreement  requires the monthly  payments,  adjusted annually based on the
Consumer Price Index,  throughout the remaining lease term, together with annual
percentage  royalties  ranging from one to ten percent based upon the attainment
of certain net theater  admission  revenue  volumes.  The lease  expires in June
2004, and has an option to be renewed for an additional  ten year term.  Advance
and fixed  minimum lease  commitments  related to this lease are included in the
following tables.                                                               

--------------------------------------------------------------------------------
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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

3.   Lease Obligations Continued                                                

The Company  also has a fifty year  operating  lease on land located in Branson,
Missouri,  the site of the Company's giant screen tourist entertainment complex.
An advance  rent payment of  $1,025,000  was made at the time of the lease which
satisfied  the Company's  rent  obligation  for years one through  twenty of the
lease agreement. For years twenty-one through fifty of the lease, the Company is
obligated to make quarterly rent payments aggregating  $145,000 annually,  these
amounts are subject to an annual  consumer  price index  adjustment.  Base rents
including  the  $1,025,000  in  advance  rents and the  $145,000  annual  amount
commencing in the twenty-first  lease year is expensed on a straight-line  basis
over the  fifty-year  lease term,  which under the term of the  agreement  began
October 1, 1993.  Amounts  recorded as accrued lease expense in the accompanying
balance sheet  reflects an accrual for those  portions of the rents that will be
paid during years  twenty-one  through fifty which are expensed  currently using
the straight-line expense recognition method.                                   

In addition, the Company leases a vehicle under a noncancellable operating lease
agreement.                                                                      

Advance rental payments associated with the theater system and land is reflected
in the current portion of prepaid leases and prepaid leases in the  accompanying
balance sheet as summarized below:                                              

Advance rents:                                                                  
Theater system                                          $         436,116   
Land                                                              695,987   
                                                     -----------------

                                                             1,132,103
                                                     -----------------

Less current portion of prepaid leases:                                         
Theater system                                                   (116,298)  
Land                                                              (50,617)  
                                                     -----------------

            Total current portion of prepaid leases            (166,915)
                                                     -----------------

Prepaid leases                                            $         965,188     
                                                     -----------------

--------------------------------------------------------------------------------
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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

3.   Lease Obligations Continued                                                

Annual amortization expense is as follows:                                      

Theater system                                            $         116,298     
Land                                                                 50,617     
                                                     -----------------

                                                     $         166,915
                                                     -----------------

A schedule of future minimum rental  payments  required under  operating  leases
that have initial or remaining  noncancelable  lease terms in excess of one year
as of December 31, 1999, is as follows:                                         

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

                      2000                           $         178,399
                      2001                                     177,500
                      2002                                     177,500
                      2003                                     177,500
                      2004                                      88,750
                      Thereafter                             4,350,000
                                                     -----------------

                                                     $       5,149,649
                                                     -----------------

Rental  expense on  operating  leases for the years ended  December 31, 1999 and
June 30, 1998 and six months ended December 31, 1998 was approximately $238,000,
and $242,000, $120,000, respectively.                                           

The  Company  leases  certain  equipment  under  noncancellable   capital  lease
agreements.  Assets under capital  leases  included in property and equipment at
December 31, 1999 are as follows:                                               

Equipment                                                 $          52,798     

Less accumulated amortization                                       (14,025)    
                                                     -----------------

                                                     $          38,773
                                                     -----------------

--------------------------------------------------------------------------------
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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

3.   Lease Obligations Continued                                                

Amortization  expense for assets  under  capital  leases  during the years ended
December 31, 1999 and June 30, 1998 and six months  ended  December 31, 1998 was
approximately $10,000, $6,000, and $14,000, respectively.                       

The capital lease obligations have imputed interest rates approximately equal to
the Company's  borrowing rate for similar type  transactions  and are payable in
monthly  installments  through  October 2002.  Future  minimum lease payments on
capital lease obligations are as follows:                                       

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

      2000                                           $          17,655
      2001                                                      12,246
      2002                                                       3,102
                                                     -----------------

                                                                33,003

       Less amount representing interest                         (4,064)
                                                     -----------------

      Present value of capital lease obligations     $          28,939
                                                     -----------------

4.   Bank Line-of-Credit                                                        

The  Company has a bank  line-of-credit  agreement  which  allows the Company to
borrow a maximum  amount of  $400,000  at an  interest  rate equal to the bank's
prime rate plus 1%. The  line-of-credit  matures on June 15, 2000, is secured by
real property and has no outstanding balance at December 31, 1999.              

5.   Long-Term Debt                                                             

Long-term debt is comprised of the following:                                   

Note payable to a bank in monthly installments                                  
of $34,000, including interest at prime plus                                    
.75% (9.25% at December 31, 1999) through February                            
2009, secured by the theater complex                      $       3,222,290     

Mortgage payable in monthly installments of $741                                
including adjustable interest from 4% to 12%,                                   
secured by real property                                            102,414     

--------------------------------------------------------------------------------
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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

5.   Long-Term Debt Continued                                                   

Note payable in monthly installments of $1,514,                                 
including interest at 10.8%, secured by equipment                    55,861     

Note payable to a bank in monthly installments of                               
$2,625, including interest at 9.25%, secured by                                 
equipment                                                            49,012     

Note payable in monthly installments of $607,                                   
including interest at 8%, secured by a vehicle                       24,851     

Capital lease obligations (see note 3)                               28,939     
                                                     -----------------

                                                             3,483,367

Less current portion                                               (179,333)    
                                                     -----------------

Long-term debt                                            $       3,304,034     
                                                     -----------------

Future maturities of long-term debt are as follows:                             

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

                      2000                           $         179,333
                      2001                                     194,149
                      2002                                     184,102
                      2003                                     194,944
                      2004                                     191,961
                      Thereafter                             2,538,878
                                                     -----------------

                                                     $       3,483,367
                                                     -----------------

6.   Lessor Lease Agreements                                                    

The Company has  agreements to rent space as lessor to various retail tenants in
its Branson, Missouri theater complex with terms ranging from one to five years.
The agreements  also include certain renewal terms for leases beyond five years,
which are not  included  in the amounts  below.  As of December  31,  1999,  the
Company held $17,700 in deposits related to the leases.                         

--------------------------------------------------------------------------------
                                                                            F-14

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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

6.   Lessor Lease Agreements Continued                                          

A summary of future minimum rentals to be received are as follows:              

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

                      2000                           $         325,493
                      2001                                     252,000
                      2002                                     148,200
                      2003                                     116,775
                      2004                                      63,600
                                                     -----------------

                                                     $         906,068
                                                     -----------------

7.   Income Taxes                                                               

The  provision for income taxes differs from the amounts which would be provided
by  applying  the  statutory  federal  income tax rate to (loss)  income  before
provision for income taxes for the following reasons:                           

                             Year           Year        Six Months
                          Ended           Ended          Ended
                          December 31,     June 30,     December 31,
                          ------------------------------------------------

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

Federal income tax                                                              
(provision) benefit at                                                      
statutory rate             $         53,000  $      84,000   $      (68,000)
Change in valuation                                                             
allowance                           (53,000)       (84,000)          68,000 
                          ------------------------------------------------

                          $              -  $           -   $            -
                          ------------------------------------------------

--------------------------------------------------------------------------------
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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

7.   Income Taxes Continued                                                     

Deferred  tax assets  (liabilities)  at December  31, 1999 are  comprised of the
following:                                                                      

Write-down of assets                                      $       1,666,000     
Net operating loss carry forward                                    884,000     
Depreciation                                                        (68,000)    
Accrued rents                                                       124,000     
                                                     -----------------

                                                             2,606,000

Less valuation allowance                                         (2,606,000)    
                                                     -----------------

                                                     $               -
                                                     -----------------

A valuation  allowance  has ben recorded for the full amount of the deferred tax
asset because it is more likely than not that the deferred tax asset will not be
realized.                                                                       

At December 31, 1999, the Company has approximately  $2,600,000 of net operating
loss carryforwards to offset future taxable income. These carryforwards begin to
expire in 2011.                                                                 

Since certain of the net operating  losses were incurred from  activities in the
U.S.  Virgin Islands and the Company is treated as a foreign  corporation  doing
business in the United States,  net operating  losses generated from U.S. Virgin
Island  activities are not available to offset income from activities within the
United States. In addition,  if substantial  changes in the Company's  ownership
should  occur,  there  would also be an annual  limitation  of the amount of NOL
carryforwards which could be utilized.                                          

8.   Related Party Transaction                                                  

During the year ended June 30, 1998,  the Company paid  Dynatronics  Corporation
(Dynatronics),  a  company  which  had  common  management  a  monthly  fee  for
administrative staff, accounting services, and accounting personnel. The related
costs are  included  in general  and  administrative  expenses  and  amounted to
approximately $64,000.  Management has terminated this agreement,  therefore, no
costs were  incurred for the six months ended  December 31, 1998 or for the year
ended December 31, 1999.                                                        

--------------------------------------------------------------------------------
                                                                            F-16

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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

9.   Supplemental Cash Flow Information                                         

During the year ended  December  31,  1999,  the Company  acquired  property and
equipment in exchange for the long-term debt of $20,809.                        

During the six months ended December 31, 1998, the Company acquired property and
equipment in exchange for long-term debt of $60,030.                            

Actual amounts paid for interest and income taxes are as follows:               

  Year
          Year Ended       Ended          Six Months Ended
       December 31,     June 30,          December 31,
            ----------------------------------------------------------
                                                      1997
                 1999           1998        1998       (Unaudited)
            ----------------------------------------------------------

Interest         $     340,589    $    337,592  $   170,100    $   168,162      
            ----------------------------------------------------------

Income taxes     $           -    $          -  $         -    $         -      
            ----------------------------------------------------------

10.  Fair Value of Financial Instruments                                        

The Company's financial instruments consist of cash, receivables,  payables, and
notes  payable.   The  carrying   amount  of  cash,   receivables  and  payables
approximates  fair value because of the  short-term  nature of these items.  The
carrying  amount of the notes payable  approximates  fair value as te individual
borrowings bear interest at floating market interest rates.                     

--------------------------------------------------------------------------------
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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

11.  Stock Options                                                              

The Company has granted stock  options to purchase the  Company's  common stock.
Options  generally  vest over an eighteen  month period.  Information  regarding
these stock options are summarized below:                                       

                                       Number of      Option Price
                                      Options        Per Share
                                     ---------------------------------

Outstanding at July 1, 1997                         829,001   $      1.00       
Granted                                      1,170,999          1.00  
                                     ---------------------------------

Outstanding at December 31, 1998                                                
and June 30, 1998                               2,000,000          1.00     
Expired                                     (2,000,000)         1.00  
                                     ---------------------------------

Outstanding at December 31, 1999                          -   $         -       
                                     ---------------------------------

Options  exercisable  at December  31, 1999 and 1998 and June 30, 1998 were -0-,
2,000,000, and 944,000, respectively.                                           

12.  Stock-Based Compensation                                                   

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting  Standards (SFAS) No. 123,  Accounting for Stock-Based  Compensation.
Accordingly,   no  compensation  cost  has  been  recognized  in  the  financial
statements.  During the year ended  December 31, 1999,  no options were granted,
therefore,  there  would be no pro  forma  effect  on the 1999  operations.  Had
compensation  cost for the Company's stock options been determined  based on the
fair value at the grant date consistent with the provisions of SFAS No. 123, the
Company's net earnings and earnings per share would have been reduced to the pro
forma amounts indicated below:                                                  

                                                    Six Months
                                Years Ended          Ended
                                     June 30,       December 31,
                                   1998             1998
                                   -----------------------------------

Net income (loss)  - as reported        $        (252,526)  $      198,679      
Net income (loss)  - pro forma          $        (476,592)  $        7,423      
Income (loss) per share - as reported   $            (.03)  $          .03      
Income (loss) per share -  pro forma    $            (.06)  $          .00      

--------------------------------------------------------------------------------
                                                                            F-18

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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

12.  Stock-Based Compensation Continued                                         

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:              

                                                    Six Months
                                Years Ended          Ended
                                     June 30,       December 31,
                                   -----------------------------------
                                   1998             1998
                                   -----------------------------------

Expected dividend yield                 $          -       $              -     
Expected stock price volatility                 202%                   202%     
Risk-free interest rate                           6%                     5%     
Expected life of options                   18 months              18 months     
                                   -----------------------------------

The weighted  average fair value options  granted during the year ended June 30,
1998 and the six months ended December 31, 1998 are $.19 and $.18, respectively.

--------------------------------------------------------------------------------
                                                                            F-19

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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

13.  Business Segments                                                          

The Company operates in three business segments: 1) Theater and concessions,  2)
Restaurant and deli services, 3) Retail services.                               

The following tables present  financial  information by business segment for the
years ended  December  31,  1999 and June 30, 1998 and for the six months  ended
December 31, 1998.                                                              

                   Restaurant              Corporate
Year Ended          Theater and   and Deli    Retail        and                 
December 31, 1999   Concessions   Services   Services   Eliminations    Total   
--------------------------------------------------------------------------------

Sales to                                                                        
unaffiliated                                                                    
customers          $2,473,767  $2,985,221  $1,056,875  $         -  $6,515,863  

Operating income                                                                
(loss)             $1,285,636  $  657,528  $  259,100  $(2,051,554) $  150,710  

Identifiable                                                                    
assets             $  843,193  $  620,727  $        -  $ 4,227,501  $5,691,421  

                   Restaurant              Corporate
Year Ended          Theater and   and Deli    Retail        and                 
June 30, 1998       Concessions   Services   Services   Eliminations    Total   
--------------------------------------------------------------------------------

Sales to                                                                        
unaffiliated                                                                    
customers          $2,286,232  $2,843,511  $  763,331  $         -  $5,893,074  

Operating income                                                                
(loss)             $1,231,518  $  447,424  $  122,443  $(1,763,255) $   38,130  

Identifiable                                                                    
assets             $1,011,129  $  526,170  $        -  $ 4,330,893  $5,868,192  

                   Restaurant              Corporate
Six Months Ended    Theater and   and Deli    Retail        and                 
December 31, 1998   Concessions   Services   Services   Eliminations    Total   
--------------------------------------------------------------------------------

Sales to                                                                        
unaffiliated                                                                    
customers          $1,441,875  $1,918,358  $  578,325  $         -  $3,938,558  

Operating income                                                                
(loss)             $  745,380  $  408,726  $  174,829  $  (972,999) $  355,936  

Identifiable                                                                    
assets             $  951,750  $  659,413  $        -  $ 4,283,945  $5,895,108  

--------------------------------------------------------------------------------
                                                                            F-20

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                                                          ITEC ATTRACTIONS, INC.

                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

14.  Recent Accounting Pronouncements                                           

In June  1999,  the  FASB  issued  SFAS  No.  137,  "Accounting  for  Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  date of FASB
Statement No. 133." SFAS 133 establishes  accounting and reporting standards for
derivative  instruments and requires  recognition of all derivative as assets or
liabilities  in the  statement of financial  position and  measurement  of those
instruments at fair value.  SFAS 133 is now effective for fiscal years beginning
after June 15, 2000. The Company believes that the adoption of SFAS 133 will not
have any material effect on the financial statements of the Company.            

--------------------------------------------------------------------------------
                                                                            F-21

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(a)   Exhibits                                      
--------                                

Reg. S-B                                                
Exhibit No.             Description                     
-----------             -----------                     

                3.1        Articles  of  Incorporation  of  the  Registrant,  as
                           amended  (incorporated  by reference to  Registration
                       Statement on Form S-1, Registration No. 33-48630)

                3.2        Bylaws of the Registrant,  as amended and restated on
                           April  6,  1991   (incorporated   by   reference   to
                           Registration  Statement on Form S-1, Registration No.
33-48630)                 

                3.3        Amendments to Bylaws of the  Registrant  dated August
                           28, 1991 and July 24, 1992 (incorporated by reference
                           to Registration  Statement on Form S-1,  Registration
No. 33-48630)             

                4.1        Specimen  Certificate  for the  Common  Stock  of the
                           Registrant (incorporated by reference to Registration
                       Statement on Form S-1, Registration No. 33-48630)

                10.3       Ground  Lease  Agreement  dated July 27, 1993 between
                           Treasure  Lake  RV  Resort  Camping  Club,  Inc.  and
                           International   Tourist   Entertainment   Corporation
                           (incorporated by reference to Registration  Statement
             on Form S-1, Registration No. 33-64132)

                10.4       Loan Agreement  dated July 30, 1993 for loan from the
                           Bank   of    America   to    International    Tourist
                           Entertainment  Corporation (incorporated by reference
                           to Registration  Statement on Form S-1,  Registration
No. 33-64132)             

                10.5       Deed of Trust  dated July 30, 1993 for benefit of the
                           Bank  of  America   (incorporated   by  reference  to
                           Registration  Statement on Form S-1, Registration No.
33-64132)                 

                10.10      Distribution  Agreement  dated July 14, 1995  between
                           IMAX(R) Corporation and the Company  (incorporated by
                           reference  to Form  10-KSB  for year  ended  June 30,
1997).                    

                10.12      Third  Modification  Agreement  dated  March 1,  1997
                           between NationsBank and the Company. (incorporated by
                           reference  to Form  10-KSB  for year  ended  June 30,
1997).                    

                10.13      System  Lease  Agreement  as amended  dated August 1,
                           1993  between  IMAX(R)Corporation  and  the  Company.
                           (incorporated  by  reference  to Form 10-KSB for year
ended June 30, 1997).     

17

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                10.14      Ground  Lease   Agreement  dated  December  18,  1999
                           between  Treasure Lake RV Resort  Camping Club,  Inc.
and ITEC Attractions, Inc.

(b)      Reports on Form 8-K:                                                   
-------------------                                           

The Company filed a current  report on Form 8-K with the Securities and Exchange
Commission on December 17, 1999  reporting the merger of  International  Tourist
Entertainment  Corporation,  a  U.S.  Virgin  Islands  corporation,   into  ITEC
Attractions, Inc., a Nevada corporation.                                        

18

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SIGNATURES

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

 INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION

By  /s/  Paul E. Rasmussen                           Date:  March 25, 2000      
----------------------------                                              
Paul E. Rasmussen,                                            
President and                                                 
Chief Operating Officer                                       

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.                    

                                                                [Download Table]


                                                                         

/s/ Paul M. Bluto             Chairman of the Board of Directors  3/25/00
----------------------------                                             
Paul M. Bluto                 Chief Executive Officer and                
                              Chief Financial Officer                    

/s/ Paul E. Rasmussen         President and                       3/25/00
----------------------------                                             
Paul E. Rasmussen             Chief Operating Officer                    

/s/ Kelvyn H. Cullimore       Director                            3/25/00
----------------------------                                             
Kelvyn H. Cullimore                                                      

/s/ Kelvyn H. Cullimore, Jr.  Director                            3/25/00
----------------------------                                             
Kelvyn H. Cullimore, Jr.                                                 

----------------------------  Director                            3/25/00
Francis E. McLaughlin                                                    

/s/Lourette Ann Bluto         Director                            3/25/00
----------------------------                                             
Lourette Ann Bluto                                                       

----------------------------  Director                            3/25/00
Thomas J. Carlson                                                        

----------------------------  Director                            3/25/00
Kumar V. Patel

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10KSB Filing	Date	First	Last	Other Filings

	7/24/92	40
	7/27/93	40
	7/30/93	40
	8/1/93	40
	10/1/93	29
	10/8/93	2
	4/28/95	2
	7/14/95	40
	1/25/96	2
	6/30/96	9		10-K
	12/18/96	2
	2/6/97	2
	2/28/97	8
	3/1/97	40
	6/30/97	13	40	10KSB, NT 10-K
	9/10/97	8
	10/3/97	11
	12/31/97	25		10QSB
	6/30/98	9	38	10KSB
	10/31/98	12
	12/31/98	13	38	10KSB
	2/28/99	11	14
	3/1/99	11	13
	9/3/99	2	7
	10/16/99	2	7
	12/17/99	41		8-K
	12/18/99	41
For The Period Ended	12/31/99	1	38
	2/24/00	20
	3/25/00	1	42
Filed On / Filed As Of	3/30/00
	5/1/00	4
	6/15/00	31	39

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Itec Attractions Inc · 10KSB · For 12/31/99

Filed On 3/30/00 · SEC File 0-21070 · Accession Number 96313-0-65

Annual Report -- Small Business · Form 10-KSBFiling Table of Contents

10KSB · Annual Report -- Small BusinessDocument Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Annual Report -- Small Business · Form 10-KSB
Filing Table of Contents

10KSB · Annual Report -- Small Business
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