Item 1. Business
GENERAL DEVELOPMENT OF BUSINESS
Thackeray Corporation ("Thackeray" or the "Company") is a Delaware corporation which holds real estate for investment.
DESCRIPTION OF BUSINESS
Thackeray's business is the management of its real estate investments. The Company does not presently intend to acquire additional real estate assets. For information with respect to Thackeray's real estate, see Notes 1 and 3 of Notes to Consolidated Financial Statements included in the Annual Report, which Notes are incorporated herein by reference.
On May 20, 1996, the Company and affiliates of Belz Enterprises ("Belz") entered into an Agreement of Limited Partnership of BT Orlando Limited Partnership. Pursuant to this agreement, the Company agreed to contribute approximately 140 acres of its Orlando, Florida property to the partnership, which property was valued at $15,246,000 for capital account purposes. The partnership, with an affiliate of Belz and Brennand-Paige Industries, Inc., a subsidiary of the Company, as general partners, will develop, construct, operate and lease a retail and entertainment shopping center complex on the property. The Company will participate in the cash flow, sales proceeds and refinancing proceeds from the development, financing or disposition of such project.
In addition, on May 20, 1996, the Company and Belz Investco entered into a letter agreement regarding the development of the remaining approximately 78 acres of the Company's Orlando, Florida property, which property will be valued at $8,487,000 for capital account purposes. Pursuant to this letter agreement, the parties agreed to form a new partnership to develop 22.5 acres of such property as commercial property and 55.5 acres thereof as multi-family residential property. The Company, through a subsidiary, and Belz, or one of its affiliates, will be 50% owners of such partnership.
In August 1996, the Company sold its 90.9 acre Dade County, Florida property for $2,159,000, realizing a gain on the transaction of $1,009,000.
In November 1996, the Company entered into an agreement for the sale of its Sumter County, Florida property for $104,000, generating a loss on the transaction of $49,000. The transaction closed in January 1997. For financial reporting purposes the transaction is being recorded as having closed in 1996.
Indebtedness
For information with respect to the Company's indebtedness, see Note 4 of Notes to Consolidated Financial Statements included in the Annual Report, which Note is incorporated herein by reference.
General
As of December 31, 1996, the Company had two employees.
Item 2.

Item 2. Properties
For additional information with respect to the Company's investments in real estate and to its lease obligations, see Notes 1, 3 and 7 of Notes to Consolidated Financial Statements included in the Annual Report, which Notes are incorporated herein by reference.
Thackeray's executive offices are located at 400 Madison Avenue, New York, New York. The lease at this location expires in December 1997 and provides for an annual base rent of $32,000.
Item 3.

Item 3. Legal Proceedings
There are no legal proceedings currently pending against the Company or its subsidiaries.
Item 4.

Item 4. Submission of Matters to a Vote of Stockholders
During the quarter ended December 31, 1996, no matters were submitted to a vote of stockholders through the solicitation of proxies or otherwise.
PART II
Item 5.

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
Reference is made to the information set forth in the section entitled "Market for Thackeray's Common Stock and Related Stockholder Matters" in the Annual Report, which section is incorporated herein by reference.
Item 6.

Item 6. Selected Financial Data
Reference is made to the information set forth in the section entitled "Selected Financial Data" in the Annual Report, which section is incorporated herein by reference.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Reference is made to the information set forth in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report, which section is incorporated herein by reference.
Item 8.

Item 8. Financial Statements and Supplementary Data
Reference is made to the information set forth in the following sections of the Annual Report, which sections are incorporated herein by reference:
1. Report of Independent Public Accountants.
2. Consolidated Balance Sheets -- December 31, 1996 and 1995.
3. Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994.
4. Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994.
5. Notes to Consolidated Financial Statements -- December 31, 1996, 1995 and 1994.
Item 9.

Item 9. Change in and Disagreements with Accountants on Accounting and Financial Disclosure
Not Applicable.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant
Reference is made to the information to be set forth in the section entitled "Election of Directors" in the definitive proxy statement involving the election of directors in connection with the Annual Meeting of Stockholders of the Company to be held on May 8, 1997 (the "Proxy Statement"), which section is incorporated herein by reference. The Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 1996 pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended.
Item 11.

Item 11. Executive Compensation
Reference is made to the information to be set forth in the section entitled "Election of Directors" in the Proxy Statement, which section is incorporated herein by reference.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management
Reference is made to the information to be set forth in the sections entitled "Ownership of Voting Securities" and "Election of Directors - Security Ownership of Management" in the Proxy Statement, which sections are incorporated herein by reference.
Item 13.

Item 13. Certain Relationships and Related Transactions
Reference is made to the information to be set forth in the section entitled "Election of Directors - Compensation and Interest of Management in Certain Transactions" in the Proxy Statement, which section is incorporated herein by reference.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) and (2) - The response to this portion of Item 14 is submitted as a separate section of this report entitled "List of Financial Statements and Financial Statement Schedules."
(3) - Exhibits:
3(a)(i) - Certificate of Incorporation of the Company. (1)
3(a)(ii) - Certificate of Designation of $4.15 Cumulative Preferred Stock. (2)
3(a)(iii) - Amendment to Certificate of Incorporation of the Company.(3)
3(b) - By-Laws of the Company. (1)
10(a) - Agreement of Limited Partnership of BT Orlando Limited Partnership, dated May 20, 1996, among BEF, Inc., Brennand-Paige Industries, Inc., BT Partnership and EST Orlando, Ltd. (4)
10(b)-Number 2 Partnership Letter Agreement, dated May 20, 1996, between the Company and Belz Investco L.P. (4)
11 - Statement re Computation of Per Share Data.
13 - The Company's 1996 Annual Report to Stockholders.
21 - Subsidiaries of the Company.
27 - Financial Data Schedule.
--------------------
(1) Incorporated by reference to the Company's Registration Statement on Form S-14 (SEC File No. 2-73435).
(2) Incorporated by reference to the Company's Registration Statement on Form S-11 (SEC File No. 2-84299).
(3) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992.
(4) Incorporated by reference to the Company's Proxy Statement, dated August 5, 1996.
(b) - During the quarter ended December 31, 1996, the Company did not file any reports on Form 8-K.
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.
Date: March 26, 1997 THACKERAY CORPORATION (Registrant)
By: /s/ Martin J. Rabinowitz --------------------------------- Name: Martin J. Rabinowitz Title: President
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.
Signature Title Date - --------- ----- ----
Chairman of the Board, President and Director /s/ Martin J. Rabinowitz (Principal Executive Officer) March 26, 1997 - --------------------------- Martin J. Rabinowitz
Vice President, Finance, Treasurer, Secretary and Director (Principal Financial /s/ Jules Ross and Accounting Officer) March 26, 1997 - --------------------------- Jules Ross
/s/ Ronald D. Rothberg Director March 26, 1997 - --------------------------- Ronald D. Rothberg
/s/ Moses Rothman Director March 26, 1997 - --------------------------- Moses Rothman
/s/ John Sladkus Director March 26, 1997 - --------------------------- John Sladkus
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1996
THACKERAY CORPORATION
NEW YORK, NEW YORK
Form 10-K -- Items 14(a)(1) and (2)
THACKERAY CORPORATION
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Thackeray Corporation, included in the Annual Report to Stockholders for the year ended December 31, 1996, are incorporated by reference in Item 8 of this report.
1. Report of Independent Public Accountants.
2. Consolidated Balance Sheets -- December 31, 1996 and 1995.
3. Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994.
4. Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994.
5. Notes to Consolidated Financial Statements -- December 31, 1996, 1995 and 1994.
The following financial statement schedules of Thackeray Corporation are filed herewith:
Report of Independent Public Accountants on Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Stockholders of Thackeray Corporation:
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Thackeray Corporation's 1996 Annual Report to Stockholders incorporated by reference in this Form 10-K, and have issued our report thereon dated March 24, 1997. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the List of Financial Statements and Financial Statement Schedules is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.
Arthur Andersen LLP
New York, New York March 24, 1997
EXHIBIT INDEX
TO
THACKERAY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1996
Exhibit No. Description of Document - ----------- -----------------------
3(a)(i) -- Certificate of Incorporation of the Company. (1)
3(a)(ii) -- Certificate of Designation of $4.15 Cumulative Preferred Stock. (2)
3(a)(iii)-- Amendment to Certificate of Incorporation of the Company. (3)
3(b) -- By-laws of the Company. (1)
10(a) -- Agreement of Limited Partnership of BT Orlando Limited Partnership, dated May 20, 1996, among BEF, Inc., Brennand-Paige Industries, Inc., BT Partnership and EST Orlando, Ltd. (4)
10(b) -- Number 2 Partnership Letter Agreement, dated May 20, 1996, between the Company and Belz Investco L.P. (4)
11 -- Statement re Computation of Per Share Data.*
13 -- The Company's 1996 Annual Report to Stockholders.*
21 -- Subsidiaries of the Company.*
27 -- Financial Data Schedule.* ___________________________________ * Filed herewith (1) Incorporated by reference to the Company's Registration Statement on Form S-14 (SEC File No. 2-73435). (2) Incorporated by reference to the Company's Registration Statement on Form S-11 (SEC File No. 2-84299). (3) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992. (4) Incorporated by reference to the Company's Proxy Statement, dated August 5, 1996.


Item 1. Business
(a) General Development of Business
Qualified Properties 80, L.P. (the "Registrant" or the "Partnership") (formerly Hutton/GSH Qualified Properties 80, L.P.) is a Virginia limited partnership formed on January 13, 1981, of which QP80 Real Estate Services Inc. ("QP80 Services"), formerly Hutton Real Estate Services, Inc. (See Item 10 "Certain Matters Involving Affiliates of QP80 Services) and HS Advisors, Ltd. ("HS Advisors"), are the general partners (the "General Partners"). The Partnership was originally formed to acquire, operate and hold for investment the following five commercial properties (the "Properties" or individually a "Property"): Diamond Springs Warehouse Facility ("Diamond Springs"), a warehouse located in Virginia Beach, Virginia; 959 Ridgeway Office Building, a two-story office building located in Memphis, Tennessee; 889 Ridgelake Office Building, a three-story office building located in Memphis, Tennessee; Swenson Business Park - Building A, a one-story research and development facility located in San Jose, California; and Stevens Creek Office Building, a class-A office property located in San Jose, California. The Partnership does not plan to invest in any additional properties.
Diamond Springs was sold on March 1, 1995 for a gross sales price, including non-refundable extension fees, of $3,195,000 resulting in net proceeds to the Partnership of $2,978,654, excluding the extension fees in the amount of $70,000. Additional information regarding the sale is incorporated by reference to Note 4 "Real Estate Investments" of the Notes to the Consolidated Financial Statements contained in the Partnership's Annual Report to Unitholders for the year ended December 31, 1996 filed as an exhibit under Item 14.
Additional information regarding the historical development of business is incorporated by reference to Note 1 "Organization" and Note 4 "Real Estate Investments" of the Notes to the Consolidated Financial Statements in the Partnership's Annual Report to Unitholders for the year ended December 31, 1996 filed as an exhibit under Item 14.
(b) Financial Information About Industry Segment
The Partnership's sole business is the ownership and operation of the Properties. All of the Partnership's revenues, operating profits or losses and assets relate solely to such industry segment.
(c) Narrative Description of Business
The Partnership's principal investment objectives with respect to the Properties (in no particular order of priority) are:
- - Capital appreciation;
- - Distributions of Net Cash From Operations attributable to rental income;
- - Preservation and protection of capital and;
- - Equity build-up through principal reduction of mortgage loans, if any, on the Properties.
Distributions of Net Cash From Operations will be the Partnership's objective during its operational phase, while the preservation and appreciation of capital will be the Partnership's long-term objectives. The attainment of the Partnership's investment objectives will depend on many factors, including successful management of the operations of the Properties. Future economic conditions in the United States as a whole and, in particular, in Memphis, Tennessee and San Jose, California, where the remaining Properties are located, will also be important factors, especially with regard to the achievement of capital appreciation.
The Partnership expects to market Swenson Business Park - Building A and Stevens Creek Office Building for sale during 1997. No Property will be sold, financed or refinanced by the Partnership without the agreement of both General Partners. Proceeds from any future sale, financing or refinancing of the Properties will not be reinvested but will be distributed to the Partners, so that the Partnership will, in effect, be self-liquidating. As partial payment for Properties sold, the Partnership may receive purchase money obligations collateralized by mortgages or deeds of trust. In such cases, the amount of such obligations will not be included in Net Proceeds From Sale or Refinancing (distributable to the Partners) until and to the extent the obligations are realized in cash, sold or otherwise liquidated.
Additional information is incorporated by reference to Note 1 "Organization" and Note 4 "Real Estate Investments" of the Notes to the Consolidated Financial Statements contained in the Partnership's Annual Report to Unitholders for the year ended December 31, 1996 filed as an exhibit under Item 14.
(d) Competition
Incorporated by reference to the section entitled "Property Profiles & Leasing Update" in the Partnership's Annual Report to Unitholders for the year ended December 31, 1996 filed as an exhibit under Item 14.
(e) Employees
The Partnership has no employees.
Item 2.

Item 2. Properties
Description of Properties and material leases incorporated by reference to the section entitled "Property Profiles & Leasing Update" and Note 4 "Real Estate Investments" and Note 6 "Rental Income Under Operating Leases" of the Notes to the Consolidated Financial Statements in the Partnership's Annual Report to Unitholders for the year ended December 31, 1996, filed as an exhibit under Item 14.
Item 3.

Item 3. Legal Proceedings
Neither the Partnership nor any of the Properties is subject to any material pending legal proceedings.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the year ended December 31, 1996, no matter was submitted to a vote of security holders through the solicitation of proxies or otherwise.
PART II
Item 5.

Item 5. Market for Registrant's Limited Partnership Units and Related Unitholder Matters
(a) Market Information - An established public market for Interests does not exist and is not likely to develop.
(b) Holders - As of December 31, 1996, the number of holders of Units was 1,978.
(c) Distributions Cash distributions paid to the Limited Partners for the two years ended December 31, 1996 incorporated by reference to the section entitled "Message to Investors" in the Partnership's Annual Report to the Unitholders for the year ended December 31, 1996 filed as an exhibit under Item 14.
Item 6.

Item 6. Selected Financial Data
Incorporated by reference to the Partnership's Annual Report to Unitholders for the year ended December 31, 1996, which is filed as an exhibit under Item 14.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources - ------------------------------- The Partnership had cash and cash equivalents totaling $383,531 at December 31, 1996 compared with $1,062,602 at December 31, 1995. The decrease primarily reflects cash distributions, real estate additions and mortgage principal payments exceeding net cash provided by operating activities. The cash and cash equivalents balance includes funds held as a working capital reserve to fund tenant improvements and leasing commissions, in addition to cash generated from operations. In addition, the Partnership had a restricted cash balance of $187,237 at December 31, 1996, which is made up of funds reserved for property tax payments.
Diamond Springs was sold on March 1, 1995 for a gross sales price, plus non- refundable extension fees, totaling $3,195,000 million. The gain on disposition of the property totaled $1,870,743.
Prepaid expenses totaled $500,469 at December 31, 1996 compared with $456,924 at December 31, 1995. The increase is primarily attributable to the capitalization of leasing commissions for Stevens Creek Office Building partially offset by the amortization of leasing commissions.
Accounts payable and accrued expenses totaled $265,809 at December 31, 1996 compared with $185,215 at December 31, 1995. The increase is largely due to an accrued leasing commission resulting from the renewal of a major lease at Stevens Creek Office Building during 1996.
For the year ended December 31, 1996, the Partnership declared cash distributions to the Limited Partners totaling $35.20 per unit, including the fourth quarter cash distribution of $6.50 per Unit which was paid on February 11, 1997. The timing and amount of future distributions will depend on several factors, including the adequacy of rental income generated by current leases and Partnership cash flow. Additional information pertaining to cash distributions is incorporated by reference to the section entitled "Message to Investors" in the Partnership's Annual Report to Unitholders for the year ended December 31, 1996 filed as an exhibit under Item 14.
In light of the stable high occupancy rates at Swenson Business Park - Building A and Stevens Creek Office Building, and improved conditions in San Jose, California where the two properties are located, the General Partners have recently engaged brokers to assist in marketing both properties for sale. As a result of the possible pending sales, the properties were reclassified on the consolidated balance sheet as of December 31, 1996 as "Real estate assets held for disposition." However, there can be no assurance that the General Partners will be successful in selling either property during 1997.
A discussion of leasing activity at all of the Partnership's properties is incorporated by reference to the sections entitled "Message to Investors" and "Property Profiles & Leasing Update" contained in the Partnership's Annual Report to Unitholders for the year ended December 31, 1996 filed as an exhibit under Item 14.
On March 15, 1996, based upon, among other things, the advice of legal counsel, Skadden, Arps, Slate, Meagher & Flom, the General Partners adopted a resolution that states, among other things, if a Change of Control (as defined below) occurs, the General Partners may distribute the Partnership's cash balances not required for its ordinary course of day-to-day operations. "Change of Control" means any purchase or offer to purchase more than 10% of the Units that is not approved in advance by the General Partners. In determining the amount of the distribution, the General Partners may take into account all material factors. In addition, the Partnership will not be obligated to make any distribution to any partner and no partner will be entitled to receive any distribution until the General Partners have declared the distribution and established a record date and distribution date for the distribution.
Results of Operations - ---------------------
1996 versus 1995 - ---------------- The Partnership's operations for the year ended December 31, 1996 resulted in net income of $259,629 compared with $2,291,800 for the year ended December 31, 1995. The decrease is primarily attributable to the $1,870,743 gain recognized in 1995 on the sale of Diamond Springs. Income before gain on sale of real estate for the year ended December 31, 1996 was $259,629 compared to $421,057 for the year ended December 31, 1995. The decrease is due primarily to lower interest and other income.
Rental income totaled $3,390,655 for the year ended December 31, 1996, compared with $3,488,485 a year earlier. The decrease is primarily due to lower occupancy at 959 Ridgeway Office Building and the sale of Diamond Springs. Other income totaled $403,298 for the year ended December 31, 1996, compared with $580,687 for the year ended December 31, 1995. The decrease is primarily attributable to lower tenant reimbursable income at all of the Properties and the sale of Diamond Springs Warehouse in 1995. Interest income decreased to $19,441 for the year ended December 31, 1996 compared to $75,844 for the year ended December 31, 1995, reflecting the Partnership's lower average cash balances.
Property operating expenses totaled $1,706,859 for the year ended December 31, 1996, relatively unchanged from $1,651,942 for the year ended December 31, 1995. Depreciation and amortization decreased to $1,240,363 for the year ended December 31, 1996 from $1,432,461 for the year ended December 31, 1995, largely due to tenant improvements totaling $757,990 at Stevens Creek Office Building becoming fully depreciated in 1995.
General and administrative expenses totaled $185,101 for the year ended December 31, 1996 compared with $206,419 for the year ended December 31, 1995. The decrease is primarily attributable to the payment in 1996 of 1995 distributions to the coventurers of Stevens Creek Boulevard Joint Venture.
As of December 31, 1996, lease levels at each of the Properties were as follows: Swenson Business Park-Building A - 100%; 959 Ridgeway Office Building - - 11%; Stevens Creek Office Building - 100% and 889 Ridgelake Office Building - 100%.
1995 versus 1994 - ---------------- The Partnership's operations resulted in net income of $2,291,800 for the year ended December 31, 1995, compared with net income of $475,347 for the year ended December 31, 1994. The increase was primarily attributable to the $1,870,743 gain recognized on the sale of Diamond Springs.
Rental income totaled $3,488,485 for the year ended December 31, 1995, compared with $3,736,211 a year earlier. The decrease was primarily due to the sale of Diamond Springs, partially offset by higher rental income generated at 889 Ridgelake Office Building, Stevens Creek Office Building and Swenson Business Park - Building A. Interest income increased to $75,844 for the year ended December 31, 1995 compared to $52,955 for the year ended December 31, 1994, reflecting higher interest rates earned on the Partnership's higher average cash balances.
Property operating expenses totaled $1,651,942 for the year ended December 31, 1995, compared with $1,755,374 for the year ended December 31, 1994. The decrease was primarily attributable to the acceleration of leasing commissions in connection with the sale of Diamond Springs, lower repairs and maintenance expenses at Stevens Creek Office Building and lower utility costs at Swenson Business Park - Building A. Depreciation and amortization decreased to $1,432,461 for the year ended December 31, 1995 from $1,536,864 for the year ended December 31, 1994, largely reflecting the sale of Diamond Springs.
General and administrative expenses totaled $206,419 for the year ended December 31, 1995 compared with $137,539 for the year ended December 31, 1994. The increase was primarily attributable to the payment in 1995 of 1994 distributions to the coventurers of Stevens Creek Boulevard Joint Venture in the amount of $63,379.
As of December 31, 1995, lease levels at each of the Properties were as follows: Swenson Business Park-Building A - 100%; 959 Ridgeway Office Building - - 100%; Stevens Creek Office Building - 100% and 889 Ridgelake Office Building - - 98%.
Item 8.

Item 8. Financial Statements and Supplementary Data
Incorporated by reference to the Partnership's Annual Report to Unitholders for the year ended December 31, 1996, which is filed as an exhibit under Item 14.
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Partnership are QP80 Real Estate Services Inc. ("RE Services"), formerly Hutton Real Estate Services, Inc., an affiliate of Lehman Brothers Inc. ("Lehman"), and HS Advisors, Ltd, an affiliate of Goodman Segar Hogan, Inc. See the section captioned "Certain Matters Involving Affiliates of RE Services" for a description of the sale of certain of Shearson Lehman Brothers, Inc. ("Shearson") domestic retail and asset management businesses to Smith Barney, Harris Upham & Co. Incorporated, which resulted in a change in the Lehman General Partner's name. Brief descriptions of the business experience of the directors and officers of the General Partners are provided below. There is no family relationship among any of the persons currently serving as directors or officers of the General Partners.
QP80 Real Estate Services Inc. - ------------------------------ Certain officers and directors of the general partner are now serving (or in the past have served) as officers or directors of entities which act as general partners of a number of real estate limited partnerships which have sought protection under the provisions of the Federal Bankruptcy Code. The partnerships which have filed bankruptcy petitions own real estate which has been adversely affected by the economic conditions in the markets in which that real estate is located and, consequently, the partnerships sought the protection of the bankruptcy laws to protect the partnerships' assets from loss through foreclosure.
Name Office ---------------- --------------- Kenneth L. Zakin Director and President William Caulfield Vice President and Chief Financial Officer Moshe Braver Vice President
Kenneth L. Zakin, 49, is a Senior Vice President of Lehman Brothers and has held such title since November 1988. He is currently a senior manager in Lehman Brothers' Diversified Asset Group and was formerly group head of the Commercial Property Division of Shearson Lehman Brothers' Direct Investment Management Group responsible for the management and restructuring of limited partnerships owning commercial properties throughout the United States. From January 1985 through November 1988, Mr. Zakin was a Vice President of Shearson Lehman Brothers Inc. Mr. Zakin was a director of Lexington Corporate Properties, Inc. from 1993 to 1996. He is a member of the Bar of the State of New York and previously practiced as an attorney in New York City from 1973 to 1984 specializing in the financing, acquisition, disposition, and restructuring of real estate transactions. Mr. Zakin is a member of the Real Estate Lender's Association and is currently an associate member of the Urban Land Institute and a member of the New York District Council Advisory Services Committee. He received a Juris Doctor degree from St. John's University School of Law in 1973 and a B.A. degree from Syracuse University in 1969.
William Caulfield, 37, is a Vice President of Lehman Brothers and is responsible for investment management of commercial real estate in the Diversified Asset Group. Prior to the Shearson/E.F. Hutton merger in 1988, Mr. Caulfield was a Senior Analyst with E.F. Hutton since October 1986 in E.F. Hutton's Partnership Administration Group. Before joining E.F. Hutton, Mr. Caulfield was a Business Systems Analyst at Eaton Corp. from 1985 to 1986. Prior to Eaton Corp., he was an Assistant Treasurer with National Westminster Bank USA. Mr. Caulfield holds a B.S. degree in Finance from St. John's University and an M.B.A. from Long Island University - C.W. Post Campus.
Moshe Braver, 43, is currently a Managing Director of Lehman Brothers and has held such position since October 1985. During this time, he has held positions with the Business Analysis Group, International and Capital Markets Administration and currently, with the Diversified Asset Group. Mr. Braver joined Shearson Lehman Brothers in August 1983 as Senior Vice President. Prior to joining Shearson, Mr. Braver was employed by the accounting firm of Coopers & Lybrand from January 1975 through August 1983 as an Audit Manager. He received a Bachelor of Business Administration degree from Bernard Baruch College in January 1975 and is a Certified Public Accountant.
HS Advisors, Ltd. - ----------------- HS Advisors, Ltd. is a California limited partnership formed on May 20, 1980, the sole general partner of which is Hogan Stanton Investment, Inc. ("HS Inc."), a wholly-owned subsidiary of Goodman Segar Hogan, Inc. The names and ages of, as well as the positions held by, the directors and executive officers of HS Inc. are as set forth below. There are no family relationships between or among any officer and any other officer or director.
Name Office ------------- -------------- Mark P. Mikuta President Donald T. Herrick, Jr. Vice President and Treasurer Julie R. Adie Vice President and Secretary
Mark P. Mikuta, 42, is Senior Vice President of Goodman Segar Hogan, Inc. and is Controller of Dominion Capital, Inc., a wholly-owned subsidiary of Dominion Resources. Mr. Mikuta joined Dominion Resources in 1987. Prior to joining Dominion Resources, he was an internal auditor with Virginia Commonwealth University in Richmond, Virginia from 1980 - 1987 and an accountant with Coopers & Lybrand from 1977 - 1980. Mr. Mikuta earned a bachelor of science degree in accounting from the University of Richmond in 1977. He is a Certified Public Accountant (CPA) and Certified Financial Planner (CFP) in the state of Virginia and a member of the American Institute of Certified Public Accountants.
Donald T. Herrick, Jr., 53, is President of Goodman Segar Hogan, Inc. He is also President of Dominion Lands, Inc. and Vice President of Dominion Capital, Inc., both of which are wholly-owned subsidiaries of Dominion Resources, Inc. Mr. Herrick joined Dominion Resources in 1970. He earned a Bachelor of Business Administration degree from the University of Michigan in 1965 and an M.B.A. dministration from American University in 1969. Mr. Herrick has completed all course work towards the M.A.I. designation.
Julie R. Adie, 42, is a Vice President of Goodman Segar Hogan, Inc. and Senior Vice President of Goodman Segar Hogan Hoffler, L.P. ("GSHH"). She is responsible for investment management of a commercial real estate portfolio for the company's Asset Management Division. Prior to GSHH, Ms. Adie was an asset manager with Aetna Real Estate Investors from 1986 to 1988. Ms. Adie practiced as an attorney from 1978 through 1984 and is currently a member of the Virginia Bar Association. She holds a B.A. degree from Duke University, a Juris Doctor from the University of Virginia and an M.B.A. from Dartmouth College.
Certain Matters Involving Affiliates of QP80 Real Estate Services Inc. - ---------------------------------------------------------------------- On July 31, 1993, Shearson sold certain of its domestic retail brokerage and asset management businesses to Smith Barney, Harris Upham & Co. Incorporated ("Smith Barney"). Subsequent to the sale, Shearson changed its name to Lehman Brothers Inc. The transaction did not affect the ownership of the Partnership's General Partner. However, the assets acquired by Smith Barney included the name "Hutton." Consequently, Hutton Real Estate Services, Inc., a General Partner, changed its name to QP80 Real Estate Services Inc. Additionally, effective August 3, 1995, the Partnership changed its name to Qualified Properties 80, L.P., to delete any reference to "Hutton."
On August 1, 1993, GSH transferred all of its leasing, management and sales operations to Goodman Segar Hogan Hoffler, L.P., a Virginia limited partnership ("GSHH"). On that date, the leasing, management and sales operations of a portfolio of properties owned by the principals of Armada/Hoffler ("HK") were also obtained by GSHH. The General Partner of GSHH is Goodman Segar Hogan Hoffler, Inc., a Virginia corporation ("GSHH Inc."), which has a one percent interest in GSHH. The stockholders of GSHH Inc. are GSH with a sixty-two percent stock interest and H.K. Associates, L.P., an affiliate of HK, with a thirty-eight percent stock interest. The remaining interests in GSHH are limited partnership interests owned by GSH, HK and 23 employees of GSHH. The transaction did not affect the ownership of the General Partners.
Item 11.

Item 11. Executive Compensation
Neither of the General Partners nor any of their directors and officers received any compensation from the Partnership. See Item 13 "Certain Relationships and Related Transactions" below with respect to a description of certain transactions of the General Partners and their affiliates with the Partnership.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Beneficial Owners
As of December 31, 1996, one party was known by the Partnership to be the beneficial owner of more than five percent of the Units of the Partnership. The owner, Liquidity Fund, owns a total of 3,746 units or 7.31% of the Units in ten separate accounts. Liquidity Fund's address is 1900 Powell Street, Suite 730, Emeryville, California 94608-1817.
(b) Security Ownership of Management
The General Partners own 200 Units (134 by RE Services and 66 by HS Advisors), as required by the terms of the offering described in the Prospectus of Partnership, dated October 10, 1980 (the "Prospectus") contained in Amendment No. 2 to Registration Statement No. 2-67908 of Partnership, filed October 10, 1980.
(c) Changes in Control
None.
Item 13.

Item 13. Certain Relationships and Related Transactions
(a) Transactions with Management and Others.
Incorporated by reference to Note 7 "Transactions with Related Parties" of the Notes to the Consolidated Financial Statements of the Partnership's Annual Report to Unitholders for the year ended December 31, 1996 filed as an exhibit under Item 14.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements:
Report of Independent Auditors (1)
Consolidated Balance Sheets - At December 31, 1996 and 1995 (1)
Consolidated Statements of Partners' Capital (Deficit) - For the years ended December 31, 1996, 1995 and 1994 (1)
Consolidated Statements of Operations - For the years ended December 31, 1996, 1995 and 1994 (1)
Consolidated Statements of Cash Flows - For the years ended December 31, 1996, 1995 and 1994 (1)
Notes to the Consolidated Financial Statements (1)
(1) Incorporated by reference to the Partnership's Annual Report to Unitholders for the year ended December 31, 1996, which is filed as an exhibit under Item 14.
(a)(2) Financial Statement Schedules:
Schedule III - Real Estate and Accumulated Depreciation
No other schedules are presented because the information is not applicable or is included in the consolidated financial statements or notes thereto.
(a)(3) See Exhibit Index contained herein.
(b) Reports on Form 8-K filed in the fourth quarter of 1996:
None
(c) See Exhibit Index contained herein.
EXHIBIT INDEX
Exhibit No.
(4)(A) Certificate and Agreement of Limited Partnership (included as, and incorporated by reference to, Exhibit A to the Prospectus of Registrant dated October 10, 1980 (the "Prospectus"), contained in Amendment No. 2 to Registration Statement (the "1980 Registration Statement"), No. 2-67908, of Registrant filed October 10, 1980).
(B) Subscription Agreement and Signature Page (included as, and incorporated by reference to, Exhibit B to the Prospectus).
(C) First Amendment to Certificate and Agreement of Limited Partnership of the Registrant, dated February 23, 1981 (included as, and incorporated by reference to, Exhibit 4(C) to the Registrant's Annual Report on Form 10-K filed March 31, 1982 (the "1981 Annual Report")).
(D) Third Amendment to Certificate and Agreement of Limited Partnership of the Registrant, dated January 28, 1982 (included as, and incorporated by reference to, Exhibit 4(D) to the 1981 Annual Report).
(10)(A) Purchase Agreement relating to Diamond Springs Warehouse Facility, between Hutton Real Estate Services I, Inc. and CPI Associates VII, and the exhibits thereto (included as, and incorporated by reference to, Exhibit 12(C) to the 1980 Registration Statement).
(B) Permanent loan commitment, as amended, relating to Stevens Creek Office Building, between Hutton Real Estate Services I, Inc. and CPI Associates VII, and the exhibits thereto (included as, and incorporated by reference to Exhibit 10 to the Registrant's Current Report (the "1982 Current Report") on Form 8-K filed May 17, 1982, and incorporated herein by reference).
(C) Purchase Agreement relating to UMIC Office Building, between UMIC Securities Corporation and 959 Ridgeway Associates, Ltd., and the exhibits thereto (included as, and incorporated by reference to, Exhibit 10(C) to the 1982 Annual Report).
(D) Purchase Agreement relating to the Ridgeway Office Building, between the Registrant and 889 Ridge Lake Boulevard Partnership, First Amendment to Purchase Agreement, and the exhibits thereto (included as, and incorporated by reference to, Exhibit 10 to the 1982 Current Report).
(E) Funding Commitment relating to the Swenson Business Park - Building A, between the Registrant and Carl N. Swenson Company, Inc., and the exhibits thereto (included as, and incorporated by reference to, Exhibit 10(E) to the Annual Report).
(13) Registrant's Annual Report to Unitholders for the year ended December 31, 1996.
(23) Consent of Independent Auditors.
(27) Financial Data Schedule.
(28) Portions of Prospectus of Registrant dated October 10, 1980 (included as, and incorporated by reference to, Exhibit (28) to the Registrant's Annual Report on Form 10-K filed March 30, 1988.)
Schedule III - Real Estate and Accumulated Depreciation December 31, 1996
Real estate assets held for disposition: ---------------------------------------------------- Commercial Property: Consolidated 959 889 Swenson Stevens Ventures: Ridgeway Ridgelake Business Park Creek Total ----------- ----------- ------------- ------------ ----- Location Memphis, TN Memphis, TN San Jose, CA San Jose, CA na
Construction date 1977 1980 1983 1981 na Acquisition date (1) 02-01-82 04-06-84 06-01-87 na
Life on which depreciation in latest income statement is computed (2) 1-25 yrs 1-25 yrs 1-25 yrs 1-25 yrs na
Encumbrances $ - $4,018,893 $ - $ - $4,018,893
Initial cost to Partnership: Land 424,954 923,411 603,480 1,691,002 3,642,847 Buildings and improvements 1,430,576 7,792,436 1,320,228 7,146,336 17,689,576
Costs capitalized subsequent to acquisition: Land, buildings and improvements 603,828 1,767,351 542,430 2,327,879 5,241,488
Retirements (3) - (685,417) (58,293) (1,044,645) (1,788,355)
Gross amount at which carried at close of period (4): Land $424,954 $923,411 $603,480 $1,691,002 $3,642,847 Buildings and improvements 2,034,404 8,874,370 1,804,365 8,429,570 21,142,709 $2,459,358 $9,797,781 $2,407,845 $10,120,572 $24,785,556
Accumulated depreciation (5) $1,349,314 $4,992,147 $ 910,399 $ 3,283,008 $10,534,868
(1) Joint Venture interest acquired March 11, 1981. Minority partner's interest acquired March 1, 1982. The Partnership is now sole owner of the property. (2) Tenant improvements are depreciated on a straight-line basis over lives of the respective leases. (3) Retirements are cumulative since acquisition. (4) For Federal income tax purposes, the basis of land, buildings and improvements is $25,264,881. (5) For Federal income tax purposes, the amount of accumulated depreciation is $17,527,213.
A reconciliation of the carrying amount of real estate and accumulated depreciation for the years ended December 31, 1996, 1995, and 1994 follows:
1996 1995 1994 Real estate investments: ---------- ---------- ---------- Beginning of year $25,423,462 $27,255,047 $27,294,760 Additions 151,608 680,193 607,547 Retirements (789,514) (310,659) (647,260) Dispositions - (2,201,119) - End of year $24,785,556 $25,423,462 $27,255,047
Accumulated depreciation: Beginning of year $10,186,201 $10,314,488 $ 9,555,114 Depreciation expense 1,138,181 1,275,580 1,406,634 Retirements (789,514 (310,659) (647,260) Dispositions - (1,093,208) - End of year $10,534,868 $10,186,201 $10,314,488
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.
QUALIFIED PROPERTIES 80, L.P.
Date: March 24, 1997 BY: HS Advisors, Ltd. General Partner
BY: Hogan Stanton Investments, Inc. General Partner
BY: /s/Mark P. Mikuta Name: Mark P. Mikuta Title: President
Date: March 24, 1997 BY: QP80 Real Estate Services Inc. General Partner
BY: /s/Kenneth L. Zakin Name: Kenneth L. Zakin Title: Director and President
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 in the capabilities and on the dates indicated.
QP80 REAL ESTATE SERVICES INC. A General Partner
Date: March 24, 1997 BY: /s/Kenneth L. Zakin Kenneth L. Zakin Director and President
Date: March 24, 1997 BY: /s/William Caulfield William Caulfield Vice President and Chief Financial Officer
Date: March 24, 1997 BY: /s/Moshe Braver Moshe Braver Vice President
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 in the capabilities and on the dates indicated.
HS ADVISORS, LTD. A General Partner
Date: March 24, 1997 BY: /s/Mark P. Mikuta Mark P. Mikuta President of Hogan Stanton Investment, Inc., as general partner of HS Advisors, Ltd.
Date: March 24, 1997 BY: /s/Donald T. Herrick, Jr. Donald T. Herrick, Jr. Vice President and Treasurer of Hogan Stanton Investment, Inc., as general partner of HS Advisors, Ltd.
Date: March 24, 1997 BY: /s/Julie R. Adie Julie R. Adie Vice President and Secretary of Hogan Stanton Investments, Inc. as general partner of HS Advisors, Ltd.


ITEM 1. BUSINESS
General
Food Concepts, Inc., the Company, formerly known as Granite, Ltd. and then Savon Coffee, Inc. was incorporated under the law of the State of Nevada on June 16, 1982.
The Company was founded to provide gourmet and specialty coffees to consumers. Food Concepts is a roaster, packer and seller of roasted coffees and produces over 70 flavored coffees. It distributes it's products through sales representatives advertising specialty companies and the United States Army. In addition, the Company sells orders obtained directly from customers such as restaurants, coffee houses and retailers.
The Company has approximately 700 accounts and a market that is very diversified.
The Company purchases its coffee beans through coffee importers and agents. The principal sources for such raw materials are South America, Central America and Africa as well as any other areas where coffee beans are grown and exported. It is the Company's opinion that sources of raw materials while their prices do fluctuate are plentiful on the world market.
Food Concepts owns the registered intellectual property right charters listed as follows:
"Coffee Lovers Six Pack" (registered mark number 151,553,926, said mark having been registered with United States Patent Office and the mark was issued on August 29, 1989 and is valid for 20 years).
"Coffee Lovers Coffee" (registered mark number 1,673566 registered in the United States Patent Office and issued on January 28, 1992 and valid for 10 years).
The above marks have been registered in applicable states where necessary.
ITEM 2.

ITEM 2. PROPERTIES
The Company presently leases 6800 square feet of warehouse and office space at 6601 Lyons Road, Suite C-12, Coconut Creek, Florida 33073. The term of said lease is for five years and two months commencing the 12th day of February, 1996. The rent for the first 26 months is fixed and the remaining 36 months is subject to a formula which is provided in the lease.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
Coffee House Holding Company has filed a law suit against Savon Coffee in the amount of $7,524 plus a percentage of gross profit for not fulfilling an agreement to purchase coffee exclusively from Coffee House Holding. The Company expects to be successful in this matter.
The Company has commenced an action in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida bearing docket number 96-09431-11 entitled Food Concepts, Inc. vs. Lasorda's Dug Out, Inc., a Florida corporation, et al. The Company is seeking damages in the amount of $200,000. The Company expects to be successful in this matter.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
On October 25, 1995 Granite, Ltd. the predecessor of Food Concepts, Inc. acquired all of the outstanding stock of Savon Coffee, Inc. for 20,000,000 shares of Granite common stock $.0001 par value which was subsequently reverse split one for ten leaving 2,000,000 shares $.001 par value which then constituted approximately 85.6 percent of the corporation Granite reserved or issued outstanding securities in consideration for the conveyance of all shares of Savon stock which then constituted 100 percent of Savon's authorized issued and outstanding securities. In conjunction therewith the Certificate of Incorporation of Granite was amended affecting a one for ten reverse split of the corporations common stock $.0001 par value (converting the 50,000,000 shares then authorized into 5,000,000 shares, $.001 par value, and the 3,327,300 then outstanding into 332,700 shares, $.0001 par value, followed by an increase in the resulting authorized capitalization of Granite from 5,000,000 shares, $.0001 par value to 20,000,000, $0001 par value. Subsequent thereto the name of the Company was changed from Granite, Ltd. to Savon Coffee, Inc. a Nevada corporation and said Savon subsequently had its name changed to Food Concepts, Inc. a Nevada corporation on March 26, 1996. The common stock and warrants are traded in the over the counter market on a National Association of Security Dealers Automatic Quotation System (NASDAQ). There is no other
established market for the Company's securities. The following table sets forth the range of high and low bid prices for the Company's common stock as quoted by NASDAQ. These quotations set forth below represent prices between dealers in securities and do not reflect retail markups, markdowns, or commissions and do not necessarily represent actual transactions.
As of June 30, 1996 there were in excess of 350 shareholders (based on the number of shareholders of record and an approximation of the number of beneficial owners of common stock). Holders of common stock are entitled to dividends when, as, and if declared by the Board of Directors out of funds legally available therefore. The Company has not paid any cash dividends on its common stock and, for the immediate future, intends to retain earnings, if any, to finance development and expansion of its business. Future dividends policy is subject to the discretion of the Board of Directors.
ITEM 6.

ITEM 7. MANAGEMENTS DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AS A RESULT OF OPERATIONS.
Liquidity and capital resources
OPERATIONS. The Company, Food Concepts, Inc., which evolved from Savon Coffee, Inc. was originally founded by its now president and vice president Herbert Glaubman and Francis Resnick respectively in August of 1986. The Company was originally located at 5197 Northwest 15th Street, Margate, Florida. The Company has maintained various locations from August 1986 through 1993 during which time the Company was a development stage enterprise funded primarily by the founders. On October 27, 1995 the Company by virtue of a reorganization agreement wherein Granite, Ltd., a publicly traded Nevada corporation, acquired Savon Coffee, Inc. which subsequently changed its name to Food Concepts, Inc. became a public company trading its stock on the OTC bulletin board.
The Company does not presently have any specific plan or arrangement for alternate financing and there is no assurance that any will be available to the Company.
ACQUISITIONS
On October 27, 1995, the Company acquired all of the issued and outstanding common stock of Savon Coffee, Inc. whose principal business consists of manufacture and direct sales distributing of Gourmet Coffee, for 20,000,000 shares (pre-split) of common stock.
On January 1, 1996, the Company acquired all of the issued and outstanding common stock of Palm Beach Gourmet Coffee, Inc., whose principal business is direct sales of Gourmet Coffee, in exchange for 50,000 shares of common stock of the Company.
ITEM 8.

ITEM 8. FINANCIAL DATA
FOOD CONCEPTS, INC. AND SUBSIDIARIES
AUDITED FINANCIAL STATEMENTS JUNE 30, 1996
FOOD CONCEPTS, INC. AND SUBSIDIARIES
Report of Certified Public Accountants on the Financial Statements 6
Financial Statements
Consolidated Balance Sheet 8 Consolidated Statement of Operations 9 Consolidated Statement of Shareholders, Equity 10 Consolidated Statement of Cash Flows 11 Notes to Consolidated Financial Statements 12 - 15
JOEL S. BAUM P.A.
CERTIFIED PUBLIC ACCOUNTANT MEMBER AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AICPA SEC. & PRIVATE COMPANIES DIVISION
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Food Concepts, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Food Concepts, Inc and Subsidiaries as of June 30, 1996 and the related consolidated statement of operations, stockholders, equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects the financial position of Food Concepts, Inc. and Subsidiaries as of June 30, 1996 and the results of its operations for the year then ended in conformity with generally accepted accounting principles.
/S/ JOEL BAUM JOEL BAUM P.A.
Coral Springs, Florida September 1, 1996 1515 University Drive, Coral Springs, Florida 33071 N. Broward (305) 752-1712, S. Broward (305) 344-6994
FOOD CONCEPTS, INC., AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET JUNE 30, 1996
FOOD CONCEPTS, INC. CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 1996
See Accompanying Notes to Consolidated Financial Statements.
FOOD CONCEPTS, INC. AND SUBSIDIARIES CONSOLIDATE STATEMENT OF SHAREHOLDERS' EQUITY JUNE 30, 1996
See Accompanying Notes to Consolidated Financial Statements-
FOOD CONCEPTS, INC. AND SUBSIDIARIES CONSOLIDATE STATEMENT OF CASE FLOWS JUNE 30, 1996
See Accompanying Notes to Consolidated Financial Statements.
FOOD CONCEPTS, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1996
NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Food Concepts, Inc. was organized under the laws of the State of Nevada on June 16, 1982. On October 27, 1995 the Company reorganized and acquired Savon Coffee, Inc. as a wholly owned subsidiary. On January 1, 1996, the Company acquired Palm Reach Gourmet Coffee, Inc. as a wholly owned subsidiary. The principal business of the Company is direct sales distributing of Gourmet Coffee, offering more than seventy coffee blends as well as gift coffee packages, private label coffee and special coffee roasting services.
B. Significant Accounting Policies
Basis of Accounting: The Company policy is to prepare its financial statements using the accrual basis of accounting in accordance with generally accepted accounting principles.
Inventory: Inventory is valued at the lower of cost or market determined by the weighted average method.
Property, Equipment and Depreciation: Property and equipment are recorded at cost. The company charges expenditures for additions or major replacements to the asset accounts. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets (5-10 years).
Income Taxes In February 1992, the Financial Accounting Standards Board issued Statement on Financial Accounting Standards 109 of "Accounting for Income Taxes." Under Statement 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Under Statement 109, 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.
Net Loss Per Common Share: Net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. For the year then ended June 30, 1996, the Company's common shares outstanding were 2,308,900.
FOOD CONCEPTS, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1996
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
NOTE 3 - NOTES PAYABLE
NOTE 4 - MAJOR CUSTOMERS
Major customers include the Christmas Tree Shop and Anron Coffee & Tea, Inc.
NOTE 5 - LAWSUIT COFFEE HOLDING COMPANY
Coffee Holding Company has filed a lawsuit against Savon/Coffee in the amount of $7,524 plus a percentage of gross profit for not fulfilling an agreement to purchase coffee exclusively from Coffee Holding Company.
NOTE 6 - ACQUISITIONS
A. On October 27, 1995, the Company acquired all of the issued and outstanding common stock of Savon Coffee, Inc. whose principal business consists of manufacture and direct sales distributing of Gourmet coffee, for 20,000,000 shares (pre-split) of common stock. The acquisition was accounted for under the pooling of interest method and the acquired company activity for the full period reported on is included.
B. On January 1, 1996, the Company acquired all of the issued and outstanding common stock of Palm Reach Gourmet Coffee, Inc,, whose principal business is direct sales of Gourmet Coffee, in exchange for 50,000 shares of common stock of the Company. The acquisition was accounted for under the pooling of interests method. Under the pooling method the acquired company activity for the full period reported on is included.
FOOD CONCEPT, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996
NOTE 7 - LEASING ARRANGEMENTS
Operating Lease
The Company conducts it operation from facilities that are leased under a five year lease ending April 30, 2001. The lease calls for monthly rent payments starting in February, 1996 of $2,692.00 per month plus a pro-rata share of real property taxes. The Company also has various leases with various expiration dates,
Future Minimum Lease Payments
Future minimum lease payments for operating leases at June 30, 1996 are:
NOTE 8 - COMMITMENTS AND CONTINGENCIES
A Subsidiary of the Company has incurred approximately $5,210 plus interest and penalties of unpaid payroll tax liabilities to the Internal Revenue Service. A payment plan of $500 per month has been worked out with the government on the satisfaction of this outstanding liability. It is to begin September 15, 1996.
NOTE 9 - DEFERRED
As discussed in Note 1, the Company has applied the provision of Statement 109. The significant components of deferred income tax expense (benefit) for the year ended June 30, 1996:
Current Loss $ 149,162 Valuation Allowance (149,162) $ - 0 -
The valuation allowance has been estimated at 100%.
FOOD CONCEPTS, INC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION
Year Ended June 30. 1996
Taxes Paid $ 2,239 - Total Interest Paid 20,586 - Total
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Directors and Executive Officers
Directors of the Company hold office until the next annual meeting of Stockholders (which is expected to be held in July, 1997) and until their successors have been elected and shall qualify or until their death, resignation or removal from office. The officers of the Company are elected by the Board of Directors at the first meeting after each annual meeting of the Company's Stockholders, and hold office until their successors are chosen and qualified, or until their death, resignation or removal from office. The directors and officers of the Company are as follows:
The following information is provided with respect to the directors.
Officer-Directors do not presently receive compensation for serving on the Board. At present, there are no pension, profit sharing or other forms of deferred compensation presently available to any employee of the Company.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation paid by the Company during the fiscal year ended June 30, 1996 to all executive officers of the Company as a group and to all executive officers of the Company each of whose total cash compensation exceeded $60,000.00 for services in all capacities.
All executive officers are not covered by the Company's major medical insurance and disability plans. The officers of the Company presently have use of an automobile leased by the Company.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage, as of June 30, 1996 of the company's Common Shares owned of record and/or beneficially by each person owning more than 5% of such Common Shares, by each Director who owns any shares of the Company and by all officers and directors as a group.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
I. Financial Statements and Schedules
Report of Independent Certified Public Accountants.
Consolidated Financial Statements:
Balance Sheets Statements of Operations Statements of Changes in Stockholders Equity Statements of Cash Flow Notes to Financial Statements
II. Reports on Form 8-K:
One report on Form 8-K was filed during the second quarter of the fiscal year covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FOOD CONCEPTS, INC. FOOD CONCEPTS, INC.
BY: /S/ FRANCIS GLAUBMAN BY: /S/ HERBERT GLAUBMAN FRANCIS GLAUBMAN HERBERT GLAUBMAN
Dated: November 20, 1996 Dated: November 20, 1996