David C. Hutchinson, et al. - Page 8




                                        - 8 -                                         
          Golf Course and the Clubhouse was not transferred out of escrow             
          to VCI.                                                                     
               Also because VCI had not sold the required number of                   
          memberships, pursuant to the Contract, during the balance of                
          1996, 1997, 1998, and until April 21, 1999, VRI managed and                 
          operated the Golf Course and the Clubhouse on behalf of VCI.  We            
          refer to this period of time (namely, the period of time after              
          completion of the Golf Course and the Clubhouse during which VRI            
          continued to manage and operate the Golf Course and the                     
          Clubhouse) as the “transition period”.                                      
               Under the Contract, during the transition period, VRI                  
          realized the profits and losses relating to operation of the Golf           
          Course and the Clubhouse.  The bylaws of VCI, however, limited              
          the amount of annual dues (as distinguished from membership fees)           
          that could be collected from Club members to pay for operation of           
          the Golf Course and the Clubhouse, and cumulative losses of                 
          approximately $994,393 were realized by VRI during the transition           
          period in connection with VRI’s operation of the Golf Course and            
          the Clubhouse.  The operational losses apparently were caused by            
          the fact that the member base in the Club was not yet large                 
          enough to generate sufficient dues and other revenue to cover the           
          operating expenses.                                                         










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