About EDGAR Online | Login
 
Enter your Email for a Free Trial:
The following is an excerpt from a 10KSB SEC Filing, filed by UNITED VANGUARD HOMES INC /DE on 5/31/2001.
Next Section Next Section Previous Section Previous Section
UNITED VANGUARD HOMES INC /DE - 10KSB - 20010531 - PART_I


                                     PART I


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

         THIS REPORT  CONTAINS  CERTAIN  FORWARD-LOOKING  STATEMENTS  WITHIN THE
MEANING OF SECTION 27A OF THE  SECURITIES  ACT OF 1933, AS AMENDED,  AND SECTION
21E OF THE SECURITIES EACT OF 1934, AS AMENDED, WHICH ARE INTENDED TO BE COVERED
BY THE SAFE HARBORS CREATED HEREBY. ALL FORWARD-LOOKING STATEMENTS INVOLVE RISKS
AND  UNCERTAINTY.  ALTHOUGH  UNITED  VANGUARD  HOMES,  INC.  BELIEVES  THAT  THE
ASSUMPTIONS  UNDERLYING  THE  FORWARD-LOOKING  STATEMENTS  CONTAINED  HEREIN ARE
REASONABLE, ANY OF THE ASSUMPTIONS COULD BE INACCURATE, AND THEREFORE, THERE CAN
BE NO ASSURANCE THAT THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS REPORT WILL
PROVE TO BE ACCURATE. IN LIGHT OF THE SIGNIFICANT  UNCERTAINTIES INHERENT IN THE
FORWARD-LOOKING  STATEMENTS  INCLUDED HEREIN,  THE INCLUSION OF SUCH INFORMATION
SHOULD NOT BE REGARDED AS A  REPRESENTATION  BY UVH OR ANY OTHER PERSON THAT THE
OBJECTIVES AND PLANS OF UVH WILL BE ACHIEVED.

GENERAL

         United  Vanguard  Homes,  Inc.  ("UVH"),  a Delaware  corporation,  was
originally  organized  on  September  26,  1988 ("Old  UVH") in order to combine
various  activities  relating to the  development,  ownership and  management of
senior  living  facilities  organized  and operated by Vanguard  Ventures,  Inc.
("Vanguard")  and its  principals  beginning in 1980. On March 30, 1993, Old UVH
merged into Coap Systems Inc. ("Coap"),  a relatively  inactive,  publicly-owned
subsidiary  of  Vanguard,  and  simultaneously  Coap  changed its name to United
Vanguard Homes, I Although UVH is subject to the information requirements of the
Securities  Exchange  Act of 1934,  there are only a few shares of UVH's  common
stock,  $.01 par value per share ("Common  Stock") in the public float and there
is no public market for the Common Stock. UVH is currently a major subsidiary of
Vanguard.

         UVH is an owner,  manager and  developer  of senior  living  facilities
which provide housing and various levels of care and services for the elderly.



                                                  Fiscal Year Ended March 31,
                                                  ---------------------------
                                                  2000                    1999
                                                  ----                    ----

Statement of Operations Data:

   Revenues:
         Resident services                       $4,843,000            $4,943,000
         Healthcare services                      2,849,000             2,766,000
         Management Fees                            111,000               152,000
         Development fees                         1,119,000             1,035,000
                                                  ---------           -----------

            Total revenues                       $8,922,000            $8,896,000
                                                 ==========            ==========



                                        2





         Senior living facilities provide a combination of housing, personalized
support and healthcare  services  generally  identified as  INDEPENDENT  LIVING,
ASSISTED LIVING and SKILLED NURSING.  INDEPENDENT LIVING facilities are designed
to enable  residents  to live  independently  yet remain free from the chores of
home  ownership  and  concerns  of  daily  life,  such as  transportation,  meal
preparation,  personal  security and  housekeeping.  ASSISTED LIVING  facilities
offer a  combination  of  housing  and  personal  care and  healthcare  services
designed to respond to the  individual  needs of those who require help with the
activities  of daily  living  but are not  sick or  bedridden.  SKILLED  NURSING
facilities are for those residents who require extensive care. A continuing care
retirement  community  (" provides  all three  levels of  services  (independent
living, assisted living and skilled nursing) in the same facility, whereas other
facilities, known as congregate care facilities, provide only independent living
and assisted living services.

         As residents of senior living facilities "age-in-place," they generally
require more assistance.  In each of UVH's currently owned and/or managed senior
living  facilities,   a  significant  shift  in  the  needs  of  residents  from
independent  living services to assisted living services has taken place, and to
accommodate  residents,  UVH is in the  initial  stages,  subject to  regulatory
approval, of converting a number of its independent living apartments in certain
of its properties to assisted living units.

         UVH's  growth  objective  is to  capitalize  on the  experience  of its
management  team in the senior  living  industry  and on the growing  demand for
senior living facilities as an increasingly  preferred lifestyle for the elderly
by (i)  providing a full range of  high-quality  personalized  resident care and
services;  (ii) pursuing  development  opportunities  for itself or on behalf of
others;  and  (iii)  acquiring  properties  in the open  market or  through  the
exercise of purchase options obtained in the development process.

         UVH believes that its business will benefit in the  foreseeable  future
from  significant  trends  affecting the long-term care  industry,  including an
increase  in the  demand for senior  care  resulting  from the aging of the U.S.
population,  efforts to contain  healthcare costs by both the public and private
sector and the  increasing  financial net worth of the senior  population  which
makes the senior living facility an available  option to a broader  market.  UVH
believes  that these trends will result in  increasing  demand for senior living
facilities  that generally  offer a more secure,  trou  environment and improved
quality of life.

BUSINESS STRATEGY

         GENERAL.  UVH's  business  strategy is based upon the experience of its
management  team in the senior  living  industry  and on the growing  demand for
senior  living  facilities  as an  increasingly  preferred  life  style  for the
elderly.  UVH intends to capitalize on these two factors by (i) providing a full
range of  high-quality  personalized  resident care and services;  (ii) pursuing
development opportunities for itself or on behalf of others; and (iii) acquiring
properties  in the open  market or through  the  exercise  of  purchase  options
obtained in the development process.



                                        3





         PERSONALIZED  RESIDENT  CARE AND  SERVICES.  UVH  believes  that income
qualified elderly would choose  residential CCRCs and assisted living facilities
over skilled  nursing  facilities  when given the choice.  UVH believes that the
elderly  would  choose the  residential  assisted  living  facility  alternative
because  of the  significant  quality  of  life  advantages  which  they  offer.
Consequently,  providing  a high  quality of life for its  residents  in a safe,
healthy and secure environment is the foundation of UVH's business strategy.

         In furtherance  of this strategy,  UVH has structured its senior living
facilities to offer residents a supportive, "home-like" setting and availability
of assistance with activities of daily living  ("ADLs").  Its facilities are, in
many respects,  similar to conventional  apartment living with enhanced services
allowing  residents  a more  independent  and social  lifestyle  than they would
receive in a skilled  nursing  facility or, in most cases,  at home. At the same
time,   support  is  provided  in  a  manner   sufficient  to  meet   residents'
requirements.  General  services in UVH's  residences  include the  provision of
three meals per day,  laundry,  housekeeping and maintenance.  Available support
services  include  personal and routine  nursing care,  social and  recreational
services and  transportation.  Personal care includes assistance with activities
such  as  bathing,   dressing,   personal  hygiene,  grooming,  and  eating  and
ambulating.  UVH also provides or makes available  routine nursing  services (in
addition to its skilled nursing facility services),  entertainment,  banking and
shopping.  Generally,  however,  UVH is able to tailor the changing needs of its
residents through the use of individual  service contracts and flexible staffing
patterns.

         DEVELOPMENT  OPPORTUNITIES.  Operating revenues and management fees are
generally  stable once a facility is fully  occupied.  At that point,  growth in
revenue of UVH becomes  dependent upon  development and management fees received
through the development and management of additional senior living facilities on
behalf of others. Consequently, the second part of UVH's business strategy is to
increase  the number of senior  living  facilities  it develops  and manages for
itself or on behalf of others,  in part through a strategy whereby UVH may enter
into an  agreement  with an  unaffiliated  third-party  entity,  which  may be a
not-for-profit  organization  exempt from federal itaxes under ss.  501(c)(3) of
the  Internal  Revenue  Code of 1986,  as amended  (the  "Code")  (a  "501(c)(3)
organization"),  to develop a senior living facility for such entity.  UVH would
generally attempt to obtain a management  agreement to operate the facility upon
its  completion as well as afair market value option to purchase the facility at
a future time. Through this type of transaction,  if the unaffiliated  entity is
adequately  financed,  UVH would not incur the  start-up  dcosts  and  operating
losses  typically  associated with the  development  and initial  operation of a
senior living  facility  because UVH would not be the owner.  However,  prior to
entering into such agreement,  UVH may incur certain initial expenses associated
with its site  selection  process.  UVH  would  earn a  development  fee for the
development of the senior living facility and a management fee for its operation
and might exercise its option,  if any, to purchase the senior living  facility.
The  unaffiliated  third-party  entity would benefit through the attainment of a
turnkey senior living facility.

         UVH's  development  program will initially  focus on site selection and
residence  size,  both of which UVH believes are essential to the success of its
development  projects.  In evaluating a prospective  development  site, UVH will
consider primarily the strength of the market demand and the ability to maximize
the efficiency of its management resources in a specific market or "cluster."


                                        4





Accordingly,  UVH  intends to select  sites so that it can  strategically  place
three to five senior  living  facilities  within a 200-mile  radius,  creating a
regional cluster of senior living  facilities.  UVH believes that the clustering
concept will allow it to reduce costs by sharing certain  management,  marketing
and operational resources within the regional cluster. UVH intends to locate its
assisted living  facilities in  well-established  residential  neighborhoods  in
communities where the population typically ranges from 40,000 to 100,000 people.
The size of a typical  community for a CCRC would generally be somewhat  larger,
ranging  between  100,000  and  500,000  people.   UVH  intends  to  pursue  the
development of senior living  facilities in communities  that show a strong need
for senior living  services and a higher than average  percentage of middle-aged
or elderly individuals.  Other factors that are considered in the site selection
process include the level of competition,  the local labor market, the state and
local  legislative  and  regulatory  environment  and  the  presence  of  strong
community support for senior living facilities.

         Once  a  site  is  selected,  UVH  may  either  advance  funds  to  the
unaffiliated  third owner of the  facility,  which funds would be secured by the
assets of the unaffiliated  third-party entity acquired with the advanced funds,
principally  the land for the  proposed  facility,  or expend funds  itself,  on
behalf of the third  parties.  To the extent  such  advances  are not secured by
land, they will be reserved as uncollectible  until the unaffiliated  entity can
repay the advances.  While these  advances may at times consist of UVH's working
capital, UVH may also seek to arrange,  through Vanguard or other sources, short
term financing to satisfy the project's  initial funding  requirements.  UVH may
set up a special  purpose  wholly-owned  subsidiary  which would issue the debt,
which debt may then be convertible  into UVH's Common Stock. It is intended that
these  advances  would be repaid  from the  proceeds of  construction  financing
arranged by UVH on behalf of the  unaffiliated  third-party  entity.  UVH may be
restricted  from  recording  as a receivable  any  advances to the  unaffiliated
third-party  entity  under  certain  circumstances.  UVH  would  then,  pursuant
tproject  development  agreements,  act as the project  developer for what would
typically be a  development  fee of 7.5 percent of the  project's  soft and hard
costs. Once the project is completed, UVH may act as the manager of the facility
pursuant to a management agreement,  which would provide for a management fee of
between four and five percent of the facility's gross revenue,  depending on the
type of facility.

         ACQUISITION  OF  PROPERTIES.   In  addition  to  the   development  and
management  of senior  living  facilities  for third  parties,  UVH may  acquire
existing senior living  facilities.  These  acquisitions  may be effected either
through the exercise of a purchase option  obtained on properties  which UVH had
developed for third parties or through acquisitions in the open market.

         When a facility managed by UVH attains a level of  profitability  after
the payment of debt  service  and  management  fees  (usually  after  stabilized
occupancy  in excess of 90% and at times  lower  depending  on the level of debt
service)  and UVH has a purchase  option,  the  exercise of UVH's option will be
considered.



                                        5





SERVICES AND AMENITIES

         UVH's  senior   living   facilities   offer   residents  a  supportive,
"home-like"  setting and  availability  of assistance  with  assistance in daily
living (ADLs).  The independent and assisted living community is very similar in
many respects to conventional  apartment living with enhanced  services allowing
the residents to live  independently  but yet  socialize in a safe  environment.
Residents are individuals  who, for a variety of reasons,  cannot live alone but
do not  typically  need the 24-hour  skilled  medical  care  provided in skilled
nursing  facilities.  Services  provided or  available  to these  residents  are
designed to respond to their  individual  needs and to improve  their quality of
life. This  individualized  assistance is available 24 hours a day, to meet both
anticipated  and  unanticipated  needs.  General  services  in UVH's  residences
include  the  provision  of three  meals  per  day,  laundry,  housekeeping  and
maintenance.  Available  support services  provided by facility staff or outside
agencies  include  personal and routine  nursing care,  social and  recreational
services,  transportation and special services needed by the resident.  Personal
care includes  assistance with activities  such as bathing,  dressing,  personal
hygiene, grooming, as well as eating and ambulating assistance.  Routine nursing
services, which are made available and are provided according to the rindividual
need  and  state  regulatory   requirements,   include  assistance  with  taking
medication, scare and injections.  Organized activities are available for social
interaction and  entertainment.  Special  services  available  include  banking,
grocery  shopping  and pet care.  Although a typical  package of basic  services
provided to a resident includes meals, housekeeping,  laundry and personal care,
UVH does not have a standard service package for all residents.  Instead,  it is
able to  accommodate  the  changing  needs of its  residents  through the use of
individual service contracts and flexible staffing patterns.

         As UVH's  residents  age,  the  level of care  required  by  particular
residents is expected to increase.  UVH's  multi-tiered  rate  structure for the
services it provides is based upon  tacuity of, or level of services  needed by,
each resident.  Supplemental  and specialized  health and personal care services
for those residents requiring 24-hour  supervision or more extensive  assistance
with  ADLs  is  provided  to the  residents  by  third-party  providers  who are
reimbursed  directly by the resident or a third-party payor (such as Medicaid or
Medicare).  In the event that a resident's  acuity reaches a level such that UVH
is unable to meet such resident's needs, UVH maintains  relationships with local
hospitals  and  skilled  nursing  facilities  to  facilitate  a transfer  of the
resident.  A resident  oUVH's CCRCs would be transferred to the skilled  nursing
component at the facility, if there are available beds at such facility.

         Phoenix  Lifecare  Corp.,  a  501(c)(3)  organization,   provides  home
healthcare services to residents of Whittier and Whitcomb,  which are managed by
UVH.  Phoenix owns  Presidential  Care Corp. and Whittier  Towers,  Inc. and has
agreed to purchase the Hillside Terrace and Whitcomb Tower  facilities,  subject
to financing being obtained.

OPERATIONS

         The day-to-day operations of each senior living facility are managed by
an on-site  administrator  who is responsible  for the overall  operation of the
senior living facility, including


                                        6





quality of care,  marketing,  social  services and  financial  performance.  The
administrator is assisted by professional and non-professional  personnel,  some
of whom may be independent  providers or part-time personnel,  including nurses,
personal  service  assistants,  maintenance and dietary  personnel.  The routine
nursing  services  are  provided  by a nurse who is  typically  employed by UVH,
subject to state  regulatory  requirements.  The nursing hours vary depending on
the residents' needs. UVH consults with outside  providers,  such as pharmacists
and dieticians,  for purposes of medication review, menu planning and responding
to any special dietary needs of its residents.  Personal care, dietary services,
housekeeping  and laundry  services are performed  primarily by personal service
assistants  who are full-time  employees of UVH. At Whitcomb  Tower and Whittier
Towers,  which are not licensed to provide  personal  care or nursing  services,
such services are provided by Phoenix Lifecare Corp.

         UVH  provides   management  services  to  each  of  its  senior  living
facilities  which  include  the  development  of  operating  standards  and  the
provision of  recruiting,  training and accounting  services.  It is anticipated
that,  if UVH grows,  it will  establish  regional  offices  that will include a
regional  manager to oversee six to ten senior living  facilities.  The regional
manager  will be  responsible  for  monitoring  and  supervising  all aspects of
operations in the region,  including  reviewing and monitoring  compliance  with
corporate  policies and  procedures  and acting as a liaison  between the senior
living facilities and corporate headquarters.

         Presently,   senior  living  facility  personnel  are  supported  by  a
corporate staff based at UVH's  headquarters.  Corporate personnel work with the
on-site  administrator  with  respect  to the  establishment  of  senior  living
facility goals and strategies,  quality assurance oversight,  development of UVH
policies and procedures,  development and  implementation of new programs,  cash
management and treasury functions, human resource management and development.

         UVH's  executive  team has been  carefully  selected  based  upon  each
member's  knowledge and experience in the senior living field and related areas.
UVH has sought talented  self-starters  who are capable of handling many aspects
of the senior  living  business.  UVH believes  that  asuccessful  senior living
facility  is   operationally   related  to  the   hotel/hospitality   field  and
programmatically related to the residential/social model of healthcare.

MARKETING

         UVH's senior  living  facilities  provide  affordably  priced  housing,
personalized  support and healthcare  services and primarily target  private-pay
residents. By targeting senior living facility development projects primarily in
upper middle income  communities  and by maintaining  competitive  pricing,  UVH
believes  it will be able to achieve  high  occupancy  levels.  UVH has found an
effective  niche in the upper  middle  income  market  between  the high  income
prospect who can afford to obtain  services at home and the low income  prospect
who cannot afford to lin UVH's senior living facilities.

         The  marketing  of  independent  living  facilities  is done  through a
combination of media and direct mail  advertising,  referrals from residents and
various centers of influence (e.g., hospital


                                        7





administrators,   religious  leaders,  service  clubs,  attorneys,  accountants,
bankers,  etc.)  and  various  types of  social  functions  at a  senior  living
facility.  Marketing assisted living facilities is better  accomplished  through
networking with major referral  sources.  During the rent-up stage of a project,
the marketing staff would consist of a Director of Marketing, two sales persons,
and a secretary.  The senior living facility's  administrator  would also assist
with special events and market-oriented  social affairs. After the senior living
facility  is  substantially  rented,  the staff can be  reduced  to  asingle  or
part-time Marketing Director and secretary.

PAYING FOR SENIOR LIVING CARE

         The residents of CCRCs and assisted living facilities or their families
generally pay the cost of care from their own financial resources.  Depending on
the  nature of an  individual's  health  insurance  program  or  long-term  care
insurance  policy,  the  individual may receive  reimbursement  for the costs of
care.

         Government  payments for assisted  living outside of a skilled  nursing
facility hbeen limited. Some state or local governments offer subsidies for rent
or services for low income elderly.  Others may provide subsidies in the form of
additional  payment  for those  who  receive  SSI  payments.  Medicaid  provides
reimbursement for certain financially or medically needy persons,  regardless of
age, and is funded  jointly by federal,  state and local  governments.  Medicaid
reimbursement  varies from state to state.  Only a limited number of states have
Medicaid  Waiver  programs  that allow  them to pay for  assisted  living  care.
Without a Medicaid  Waiver Program,  states can only use federal  Medicaid funds
for care in skilled nursing facilities.

GOVERNMENT REGULATION OF SENIOR LIVING FACILITIES

         In general,  senior  living  facilities  and  healthcare  services  are
subject to  egovernment  regulation.  The  senior  living  facilities  owned and
managed by UVH are subject to state regulation and licensing requirements and to
Certificates of Need (CON) or similar  statutes under which a proposed  operator
must  demonstrate  public need for skilled nursing beds or assisted living units
and satisfy other criteria.  The operators of those  facilities must also comply
with any cost reporting or other reporting  requirements imposed by the Medicaid
program as well as any reimbursement  limitations on amounts that may be charged
to the  program  or to  program  beneficiaries.  In order to  qualify as a state
licensed  facility and,  where  applicable,  qualify for Medicaid  reimbursement
and/or resident SSI supplemental  payments,  the senior living  facilities owned
and  managed by UVH must  comply  with  regulations  that  address,  among other
things,   staffing,    physical   design,   required   services   and   resident
characteristics.  Such  facilities  are also subject to various  local  building
codes and similar  ordinances,  including fire safety codes.  These requirements
vary from state to state and are monitored by varying state and local agencies.

         Currently,  assisted living facilities are not regulated as such by the
federal government.  Current state requirements for assisted living providers in
many states are  typically  less  stringent  than the  requirements  for skilled
nursing  facilities.  Management  anticipates that states that regulate assisted
living  facilities,  to the  extent  they do not  already  do so,  will  require
licensing as an assisted


                                        8





living  facility and will establish  varying  requirements  with respect to such
licensing.  The facilities that UVH intends to develop and manage will apply for
appropriate licensing.

         The facilities  owned and managed by UVH are subject to periodic survey
or inspection by  governmental  authorities.  From time to time, in the ordinary
course of business a facility  may be cited for one or more  deficiencies  which
are typically  addressed in a plan of  correction by the facility.  UVH believes
that  the  properties  managed  by it are in  substantial  compliance  with  all
applicable licensing, reimbursement and similar regulatory requirements.

         UVH and the facilities it manages are also subject to various state and
federal  "fraud  and  abuse"  laws,  including  "anti-kickback"  and  "physician
self-referral"  laws.  UVH  believes  that  properties  that it  manages  are in
material compliance with such laws and regulations.

         The laws, rules and regulations which govern UVH, its owned and managed
properties and other persons with whom UVH has  relationships are very broad and
are subject to continuing change and  interpretation.  Thus, it is possible that
certain of the past or present contractual arrangements or business practices of
UVH might be  challenged.  No assurance can be given that UVH or the  facilities
managed  by UVH will be able to  obtain  or  maintain  the  CONs,  licenses  and
approvals necessary to conduct their current or proposed businesses. Further, no
assurance can be given that federal, state and local laws, rules and regulations
will not be amended or interpreted so as to require UVH or a facility managed by
UVH to change its contracts or practices or to obtain additional CONs, approvals
or  licenses  to conduct  its  business  as now  conducted  or as proposed to be
conducted  or that  UVH or such  facility  will be  able to  obtain  such  CONs,
approvals  or  licenses.  The  failure  to obtain or  maintain  requisite  CONs,
licenses or approvals or to otherwise comply with existing or future laws, rules
and regulations or interpretations  thereof could have a material adverse effect
on UVH's results of operations and financial condition.

COMPETITION

         The long-term  care industry  generally is highly  competitive  and UVH
expects tthe assisted living business in particular will become more competitive
in the future.  UVH will be competing  with numerous other  companies  providing
similar  long-term  care  asuch  as home  health  agencies,  lifecare  at  home,
community-based  service programs,  congregate care communities and convalescent
centers.  Providers of senior living facilities compete for residents  primarily
on the basis of quality of care, price,  reputation,  physical appearance of the
facilities,  services  offered,  family  preferences,  physician  referrals  and
location.  Some of UVH's competitors are significantly larger than UVH and have,
or may obtain, greater resources than tof UVH.

EMPLOYEES

         At  March  31,  2000  UVH  had  approximately  287  employees  of  whom
approximately 131 were full-time employees.




                                        9








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

         The table below sets forth certain information regarding the properties
owned or managed by UVH :




                                                    Independent     Assisted   Skill        Occupancy (%)(a)
       Name and Location                              Living         Living     Nursing        2000         2001
       -------------------                     ---------------    --------     -------     -----------     ----
Hillside Terrace, Ann Arbor, MI (b)                    63             12(c)      23           86             87
Olds Manor, Grand Rapids, MI (b)                       113            39(c)      44           80             76
Presidential Place, Hollywood, FL (d)                                104                      NA             15
Whitcomb Tower, St. Joseph, MI (b)                     100            34                      83             87
Whittier Towers, Detroit, MI                           143(e)         50                      86(e)          NA (e)





PROPERTIES UNDER DEVELOPMENT:

Camelot Cove (f)(g)
North Bergen, NJ                                       270            30         60

Camelot Village (b)(f)                                               120
Hicksville, NY

Camelot Village (b)
Huntington, NY                                                       120

Orchard Terrace(b)(f)                                   64
Ann Arbor, MI



(a)  Percentage of units available for occupancy as of March 31, 2000 and 2001.

(b)  Owned by UVH.

(c)  These units currently licensed as Homes for the Aged.

(d)  Occupancy commenced in November 2000.

(e)  This  represents  units  available  for  occupancy  at March  31,  2000,  a
     reduction  from 205 units at March 31,  1999.  This  facility was closed in
     April 2001.

(f)  Subject to funding being secured.

(g)  Owned in part by UVH.


                                       10





         HILLSIDE  TERRACE.  Hillside  Terrace  is a CCRC  located in Ann Arbor,
Michigan, approximately 30 miles from Detroit. The facility is located 1.5 miles
from downtown Ann Arbor,  the main business  district and home to the University
of Michigan,  which  enables  residents to attend  nearby  cultural and athletic
events.  Hillside  Terrace  was  built in 1969 and was  renovated  in 1994.  The
facility  currently has 75 apartment  units and 23 nursing  beds,  and a 64-unit
expansion has been approved by the city of Ann Arbor.  This will  facilitate the
conversion of a majority of the existing  independent  living apartment units to
assisted living units.

         OLDS MANOR.  Olds Manor is a CCRC  located in Grand  Rapids,  Michigan.
Olds Manor was built as a hotel in the 1920s but was  renovated in the 1960s for
use as a retirement center and nursing facility.  Olds Manor borders the central
business  district of Grand  Rapids,  adjacent to the Post Office and across the
street from city and county administrative offices. UVH estimates ____ that Olds
Manor needs approximately $1 million for deferred maintenance.

         WHITCOMB TOWER.  Whitcomb Tower is an independent  living facility with
assisted  living  services,  as  required,  provided  by the  outside  home care
agencies of the residents'  choice,  located in downtown St.  Joseph,  Michigan,
which is on Lake  Michigan at the mouth of the St. Joseph  River.  St.  Joseph's
population,  approximately 80,000 residents,  and proximity to four cosmopolitan
cities,  make  Whitcomb  Tower  accessible to a large  population  and secondary
market.  St. Joseph is 85 miles from Chicago,  195 miles from Detroit,  80 miles
from Grand  Rapids,  Michigan  and 35 miles from South Bend,  Indiana.  Whitcomb
Tower,  formerly a hotel,  was built in 1928.  It was  renovated  in 1973 and in
1989.

         WHITTIER TOWERS.  Whittier Towers,  located in Detroit,  Michigan,  was
built in the 1920s and renovated in 1972 and 1989.  UVH estimates  that Whittier
Towers needs approximately $1.5 million for deferred  maintenance.  The Whittier
closed down operations in April 2001 and is in the process of being sold.

PROJECTS IN DEVELOPMENT

         To provide the  appropriate  level of  personal  care  efficiently  and
economically,  UVH intends to develop, subject to the availability of additional
capital resources, for itself or on behalf of others, or acquire assisted living
facilities  generally  ranging in size from 80 to 120 units. UVH has developed a
prototype assisted living facility. It is anticipated that the prototype aliving
facility  will be  built  on the  Properties  under  Development  listed  on the
preceding  page and other  qualified  sites  presently  being  negotiated.  Each
assisted  living facility will generally be built on a parcel of land ranging in
size from 3 to 10 acres and will contain  approximately 70,000 to 105,000 square
feet.  Approximately  40 percent of the building will be devoted to common areas
and amenities,  including reading rooms,  family or living rooms and other areas
designed to promote  social  interaction  among  residents.  These areas will be
located  primarily  in a basic  central  core  structure  which  is  essentially
repeatable in all of UVH's proposed facilities.  Modular wings of similar design
are  added  to the  central  core,  depending  upon  the  size of the  facility.
Tbuilding  is usually two or three  stories and of either steel frame or masonry
construction   built  to   institutional   healthcare   standards  but  strongly
residential in appearance. The interior layout is designed to


                                       11





promote a  "home-like"  environment,  efficient  delivery of  resident  care and
resident  independence.  Each residential unit will be between approximately 375
to 550 square feet and is expected to cost  approximately  $60,000 to $90,000 to
construct, depending upon construction costs which vary from state to state.

         Resident  units  in  UVH's  prototype   assisted  living  facility  are
functionally  arranged  in eight to  twelve  apartment  clusters  surrounding  a
"neighborhood"  living  area in  order  to  foster  social  interaction  between
residents.  UVH's  prototype may be configured  with several  dtypes of resident
units, including a mix of one- and two-bedroom suites and large studio or alcove
apartments.  All  units  have a small  kitchen  and  roll-in  showers  for  easy
wheelchair  access.  The ground  level  typically  contains a kitchen and common
dining area, administrative offices, exercise or physical therapy room, arts and
crafts, beauty salon, laundry room, a private dining room, library, living room,
and TV room.  Typically,  one  floor or one or two wings of a  facility  contain
resident  units  and  common  areas,   including   separate  dining  facilities,
specifically  designed to serve  residents  with  cognitive  impairments  (e.g.,
Alzheimer's disease) or other special needs.

         CCRCs will generally be built on a parcel of land ranging from 10 to 30
acres and will contain  from 150 to 200 units with an average  size  independent
living unit of between 900 and 1,000 square feet. The cost will average  between
$100,000 and $200,000 per independent  living uEach CCRC will be tailored to the
specific needs of each site selected.

         In order to  increase  the  number  of  senior  living  facilities  UVH
develops  and manages  for itself or on behalf of others,  UVH may enter into an
agreement with an affiliated or unaffiliated  third-party entity, which may be a
limited liability company or 501(c)(3) organization,  to develop a senior living
facility for such  entity.  UVH would  generally  attempt to obtain a management
agreement to operate the facility  upon its  completion as well as a fair market
value option to purchase  the  facility at a future  time.  Through this type of
transaction,  if the third-party  entity is adequately  financed,  UVH would not
incur the start-up  development costs and operating losses typically  associated
with the development and initial  operation of a senior living facility  because
UVH would not be the owner. However, prior to entering into such agreement,  UVH
may incur certain initial expenses  associated with its site selection  process.
UVH would earn a development  fee for the dof the senior  living  facility and a
management  fee for its  operation  and might  exercise  its option,  if any, to
purchase the senior  living  facility.  The  third-party  entity  would  benefit
through the attainment of a turnkey senior living facility. To date, neither UVH
nor any of the  501(c)(3)  organizations  involved  with  UVH has  received  any
inquiry or comment from any regulatory authority with respect to its contractual
arrangements with 501(c)(3) organizations.

MORTGAGE INDEBTEDNESS

     GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

         As of March 31, 2000,  Hillside  Terrace,  Inc.,  the owner of Hillside
Terrace,  which is managed by UVH,  was  indebted to  Great-West  Life & Annuity
Insurance Company ("GWL") in taggregate  principal amount of approximately  $2.2
million. Such indebtedness is secured by a first mortgage


                                       12





on Hillside Terrace. As of March 31, 2000, Whitcomb Tower Corporation, the owner
of Whitcomb Tower, which is managed by UVH, was indebted to GWL in the aggregate
principal amount of approximately $2 million.  Such indebtedness is secured by a
first mortgage on Whitcomb Tower.  The payment of principal and interest on each
of the foregoing first mortgages has bguaranteed by Vanguard. In addition, as of
March 31,  2000,  Whittier  Towers,  Inc.,  the owner of  Whittier  Towers,  was
indebted to GWL in the aggregate  principal  amount of approximately $4 million.
Such indebtedness is secured by a first mortgage on Whittier Towers. Each of the
foregoing  first  mortgages  is due  December  31, 2001 and bears  interest at 9
percent per annum. The first mortgage  encumbering Whittier Towers provides that
a default  under such loan is also a default  under both of the first  mortgages
encumbering Hillside Terrace and Whitcomb Tower.  Consequently,  a default under
the first mortgage  encumbering  Whittier Towers could result in the foreclosure
of Hillside  Terrace and Whitcomb Tower.  The  restrictions and cross collateral
provisions of Whittier  Towers mortgage will be eliminated if Whittier Towers is
sold and the GWL mortgage on the property satisfied.

         In the  event  that  any  of  Whittier  Towers,  Inc.,  Whitcomb  Tower
Corporation,  or Hillside Terrace,  Inc. sells, conveys,  transfers,  pledges or
further  encumbers its property wthe prior written  consent of GWL, then GWL has
the right to declare due and payable the entire balance of the unpaid  principal
with  accrued and unpaid  interest  due  thereon,  plus the  prepayment  premium
provided in the promissory note related to its mortgage.

         Olds Manor,  Inc.  has agreed that prior to the date on which the loans
of GWL to Whittier  Towers,  Inc.,  Whitcomb  Tower  Corporation,  and  Hillside
Terrace,  Inc. are repaid in full, Olds Manor,  Inc. will not, without the prior
written  consent of GWL,  sell,  assign,  transfer,  or otherwise  dispose of or
encumber the Olds Manor retirement facility.

         Hillside Terrace,  Whittier Towers,  and Whitcomb Tower are required to
deposit all net operating  income from the mortgaged  properties  into a reserve
account,  which account is being used to fund property  improvements and certain
other  expenditures.  The  Reserve  Account  also  has  been  pledged  to GWL as
additional security for repayment of the GWL loans.

     OLD KENT BANK

         As of March 31, 2000,  Olds Manor,  Inc., a wholly-owned  subsidiary of
UVH and the owner of Olds Manor,  was  indebted to Old Kent Bank ("Old Kent") in
the aggregate  principal amount of $94,382.  Such  indebtedness was secured by a
first mortgage lien on Olds Manor. Tloan was paid in full in February 2001.

     OLDS MANOR MORTGAGE TRUST

         As of March 31,  2000,  Olds  Manor,  Inc.  was  indebted to Olds Manor
Mortgage Tin the  aggregate  principal  amount of $360,000.  Such  obligation is
secured by a mortgage on Olds Manor that is subordinate to the first mortgage on
Olds Manor held by Old Kent. The loan bears interest at prime plus 3 percent per
annum, is due in 2000, and is convertible into shares of UVH's Common


                                       13





Stock . UVH is the guarantor of the Olds Manor Mortgage Trust certificates.  The
Olds Manor Trust  mortgage has routine  covenants  respecting  payment of taxes,
insurance,  repairs,  etc.,  except  that Olds  Manor,  Inc.  cannot  permit any
increase of the  principal of the Old Kent  Mortgage  without the consent of the
trustee of the Olds Manor Mortgage Trust. The trustee is Carl G. Paffendorf, the
Chief Executive Officer of UVH.

     WHITCOMB MORTGAGE TRUST

         As of March 31,  2000,  Whitcomb  Tower  Corporation  was  indebted  to
Whitcomb  Mortgage  Trust in the aggregate  principal  amount of $850,000.  Such
obligation is secured by a mortgage on Whitcomb Tower that is subordinate to the
first  mortgage on  Whitcomb  Tower held by GWL.  The loan bears  interest at 12
percent per annum,  is  currently  due and is  convertible  into shares of UVH's
Common Stock. UVH is guarantor of the Whitcomb Mortgage Trust certificates.  The
Whitcomb Trust mortgage is subordinate to GWL's  mortgage.  Whitcomb Tower Trust
mortgage has routine covenants respecting payment of taxes, insurance,  repairs,
etc., except that Whitcomb Tower  Corporation  cannot permit any increase of the
principal  of the GWL  mortgage  without  the consent of the trustee of Whitcomb
Mortgage Trust. The trustee is Carl G. Paffendorf.

     CAMELOT/HICKSVILLE.

         At March 31, 2000 UVH's property in Hicksville, New York was encumbered
by a $750,000  mortgage  held by Rome Savings  Bank,  with interest only payable
monthly at 7.5 percent per annum,  due July 1, 2000.  The due date of this loan,
$675,000 in principal amount as of March 31, 2001, has been extended to April 1,
2002, with interest only payable monthly at 8.75 percent per annum.

     CAMELOT/HUNTINGTON.

         UVH's property in  Huntington,  New York is encumbered by a $23,000,000
mheld by the Bank of New  York,  issued to secure  an  industrial  revenue  bond
issue, which bonds are payable in installments due through 2031.

     MERCURY CAPITAL CORP.

         In February  2001  Mercury  Capital  Corp.  made a $1.2 million loan to
Hillside  Terrace,  Inc.,  Olds Manor,  Inc.,  Whitcomb Tower Corp. and Whittier
Towers,  Inc. The loan is secured by a first priority mortgage on the Olds Manor
property in Grand Rapids,  Michigan,  a smortgage on Whitcomb Tower,  and by the
stock of the four corporations that own the four Michigan  properties:  Hillside
Terrace, Olds Manor, Whitcomb Tower, and Whittier Towers. UVH has guaranteed the
loan.  The loan is due on March  1,  2002  with  certain  mandatory  prepayments
required if any of the four Michigan properties are sold.




Item 3.  Legal Proceedings. UVH is not a party to any material legal proceedings.





Item 4.  Submission of Matters to a Vote of Security Holders.  Not applicable.



                                       14







BROKERAGE PARTNERS