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<SEC-DOCUMENT>0000788965-09-000008.txt : 20090326
<SEC-HEADER>0000788965-09-000008.hdr.sgml : 20090326
<ACCEPTANCE-DATETIME>20090325203109
ACCESSION NUMBER:		0000788965-09-000008
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20081231
FILED AS OF DATE:		20090326
DATE AS OF CHANGE:		20090325

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HALLADOR PETROLEUM CO
		CENTRAL INDEX KEY:			0000788965
		STANDARD INDUSTRIAL CLASSIFICATION:	CRUDE PETROLEUM & NATURAL GAS [1311]
		IRS NUMBER:				841014610
		STATE OF INCORPORATION:			CO
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-14731
		FILM NUMBER:		09705172

	BUSINESS ADDRESS:	
		STREET 1:		1660 LINCOLN ST STE 2700
		CITY:			DENVER
		STATE:			CO
		ZIP:			80264
		BUSINESS PHONE:		3038395505

	MAIL ADDRESS:	
		STREET 1:		1660 LINCOLN STREET
		STREET 2:		SUITE 2700
		CITY:			DENVER
		STATE:			CO
		ZIP:			80264

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KIMBARK OIL & GAS CO /CO/
		DATE OF NAME CHANGE:	19900102

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KIMBARK INC
		DATE OF NAME CHANGE:	19860624
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
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<FILENAME>form10k_2008.htm
<DESCRIPTION>DECEMBER 2008 FORM 10-K
<TEXT>
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STATES</font> </font>

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AND EXCHANGE COMMISSION</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Arial">Washington,
D. C. 20549</font></div>
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10-K</font></div>
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      UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934</font></div>
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      31, 2008</font></font></font></font></div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: arial">OR</font></div>
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      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
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    </font></td>
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      incorporation)</font></div>
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    </font></td>
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      Identification No.)</font></div>
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                <tr>
                  <td valign="top" width="51%" style="PADDING-BOTTOM: 2px">
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      Street, Suite 2700, Denver, Colorado</font></font></font></div>
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    </font></td>
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      Code)</font></div>
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    </font></td>
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    </font></td>
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    </font></td>
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                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: arial">Issuer's
      telephone number: 303.839.5504</font></div>
                  </td>
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      303.832.3013</font></div>
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registered pursuant to Section 12(b) of the Exchange
Act:&#160;&#160;NONE</font></div>
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registered pursuant to Section 12(g) of the Exchange Act: &#160;Common Stock,
$.01 par value </font></div>
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mark if the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act. </font><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Arial">Yes <font style="DISPLAY: inline;" face="Wingdings">o</font>&#160;&#160;No <font style="DISPLAY: inline;" face="Wingdings">x</font></font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: left">&#160;</div>
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registrant is not required to file reports pursuant to Section 13 or 15 (d) of
the Act. Yes <font style="DISPLAY: inline;" face="Wingdings">o</font>&#160;&#160;No <font style="DISPLAY: inline;" face="Wingdings">x</font></font></font></font></div>
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mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. </font><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Arial">Yes&#160;<font size="+0">x</font>&#160;&#160;&#160;No<font style="DISPLAY: inline;" face="Wingdings">o</font></font></font></div>
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of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. <font size="+0">x</font></font></font></font></div>
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mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.&#160;&#160;See the
definitions of "larger accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.</font></div>
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            <tr style="TEXT-ALIGN: left;">
              <td valign="top" width="58%" style="TEXT-ALIGN: left">
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mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act.) Yes <font style="DISPLAY: inline;" face="Wingdings">o</font>&#160;&#160;No <font style="DISPLAY: inline;" face="Wingdings">x</font></font></div>
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market value of the common stock held by non-affiliates on June 30, 2008, was
about $3.1 million based on the closing price reported that date by the OTC
Bulletin Board of $3.50 per share.</font></div>
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2009 we had 22,446,028 shares outstanding.</font></div>
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INCORPORATED BY REFERENCE:&#160;&#160;NONE</font><br>
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        </div><br></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">PART
1</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
1.&#160;&#160;&#160; BUSINESS.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">General Development of
Business</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Hallador Petroleum
Company (Hallador), a Colorado corporation, was organized by our predecessor in
1949.&#160;&#160;Over 90% of our stock is closely held; see Item 12 of this Form
10-K for a listing of our major shareholders.&#160;&#160;Our stock is thinly
traded on the OTC Bulletin Board.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our primary
operating property is the Carlisle coal mine located in western Indiana of which
we own an 80% interest.&#160;&#160;The Carlisle mine was in the development
stage through January 31, 2007.&#160;&#160;Commercial coal production began
February 5, 2007.&#160;&#160;&#160;We also have a 45% equity interest in Savoy
Energy, L.P., an oil and gas company which has operations in
Michigan.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
late 2006, we concluded to deemphasize our oil and gas operations and
concentrate our efforts in the coal business.&#160; In July 2007, we sold our
San Juan producing oil and gas properties and in October 2008 we sold
substantially all of our unproved oil and gas properties.&#160;&#160;Our
remaining oil and gas properties are not significant.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">With that in mind,
the following events have occurred during the last two years:</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Through a series of
transactions which began in 2006 and ended in July 2008, we now own an 80%
interest in Sunrise Coal, LLC (Sunrise).&#160;&#160;On July 31, 2006, we entered
into a partnership with Sunrise to develop the Carlisle mine.&#160;&#160;Sunrise
contributed all of their assets for a 40% interest and we agreed to a $20.5
million funding commitment (which we fulfilled during 2007) and guaranteed
Sunrise's bank debt for a 60% interest.&#160;&#160;Our funding commitment was
subsequently increased to $21.2 million and was fulfilled.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
July 2008 we purchased an additional 20% interest in Sunrise for about $12
million and such amount was allocated to mine development
costs.&#160;&#160;Through approximately 92% of the partnership's cash flow we
are to receive $22.9 million (our funding commitment of $21.2 million plus $1.7
million of acquired basis attributable to the interests sold by certain Sunrise
members) plus interest at 10%.&#160;&#160;&#160;Thereafter, cash flow will be
distributed 80% to us and 20% to the remaining original Sunrise
members.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Prior to the
purchase of the additional 20% interest, we consolidated 100% of the Sunrise
operations with a 13% minority interest.&#160;&#160;Subsequent to the purchase,
we are now using an 8% minority interest.&#160;&#160;Once we receive our $22.9
million plus interest at 10%, the minority interest will change to
20%.&#160;&#160;</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Carlisle
Mine</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
sell all of our coal to producers of electric power.&#160;&#160;&#160;Currently,
we have only one mine (Carlisle) and our top three customers purchased about 90%
of our 2008 coal production.&#160;&#160;First commercial production began
February 5, 2007 and we sold about one million tons during 2007 at an average
price of $28/ton.&#160;&#160;During 2008, we sold about 1.9 million tons at an
average price of about $36.39/ton.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Coal production for
2009 is estimated at 3 million tons and about 3.3 million tons in each of the
years 2010 and 2011.&#160;&#160;Recoverable reserves that are presently leased
are about 43.5 million tons.&#160;&#160;Additional unleased reserves that could
be mined in the future are about 12.5 million tons.&#160;&#160;There can be no
assurance that we will be able to obtain suitable lease
terms.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Sunrise currently
employs 230 people and will increase employment to 260 as production from a new
fourth unit begins in April 2009.&#160;&#160;The mine currently operates two
production shifts and one maintenance shift while coal is produced 270 days of
the year.&#160;&#160;The Carlisle mine is non-union.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Customers and
Backlog</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">As
of December&#160;31, 2008, we had a sales backlog of 15.3&#160;million tons of
coal and our coal supply agreements have remaining terms up to 6
years.&#160;&#160;For 2009 we are committed to sell 2.7 million
tons;&#160;&#160;for 2010 - 3 million tons; 2011 - 2.8 million tons and for 2012
and later - 6.8 million tons.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">These commitments
represent approximately 88%, 90% and 84% of our estimated production for 2009,
2010 and 2011, respectively, and represent about 1/3 of our recoverable
reserves.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
2008, 90% of our coal was sold to three electricity generating plants, all
located in Indiana, which is where we have our primary customer
base.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
expect to continue selling a significant portion of our coal under supply
agreements with terms of one year or longer. Our approach is to selectively
renew, or enter into new, coal supply contracts when we can do so at prices we
believe are favorable.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Typically,
customers enter into coal supply agreements to secure reliable sources of coal
at predictable prices while we seek stable sources of revenue to support the
investments required to open, expand and maintain or improve productivity at the
mines needed to supply these contracts. The terms of coal supply agreements
result from competitive bidding and extensive negotiations with customers.
Consequently, the terms of these contracts vary significantly in many respects
including price adjustment features, coal quality requirements, quantity
parameters, permitted sources of supply, treatment of environmental constraints,
extension options, force majeure, and termination and assignment
provisions.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">&#160;&#160;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our contracts
contain provisions to adjust the base price due to new statutes, ordinances or
regulations that impact our cost of performance. Additionally, our contracts
contain provisions that allow for the recovery of costs impacted by
modifications or changes in the interpretation or application of existing
statutes or regulations.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Quality and volumes
for the coal are stipulated in coal supply agreements, and in some limited
instances buyers have the option to vary annual or monthly volumes if necessary.
Variations to the quality and volumes of coal may lead to adjustments in the
contract price.&#160;&#160;Our coal supply agreements contain provisions
requiring us to deliver coal within certain ranges for specific coal
characteristics such as heat content (BTU), sulfur and ash content.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Suppliers</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The main types of
goods we purchase are mining equipment and replacement parts, steel-related
(including roof control) products, belting products, lubricants, fuel and tires.
Although we have many long, well-established relationships with our key
suppliers, we do not believe that we are dependent on any of our individual
suppliers other than for purchases of certain underground mining equipment. The
supplier base providing mining materials has been relatively consistent in
recent years, although there has been some consolidation. Purchases of certain
underground mining equipment are concentrated with one principle supplier;
however, supplier competition continues to develop.</font></div><br>
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</font></div>
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</font></div>
          </div>
        </div><br>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">U.S.&#160;Coal
Production</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The United States
is the second largest coal producer in the world, exceeded only by China. Coal
in the United States represents approximately 94% of the domestic fossil energy
reserves with over 200&#160;billion tons of recoverable coal, according to the
U.S.&#160;Geological Survey. The U.S.&#160;Department of Energy estimates that
current domestic recoverable coal reserves could supply enough electricity to
satisfy domestic demand for more than 200&#160;years. Coal production in the
United States has increased from 434&#160;million tons in 1960 to approximately
1.2&#160;billion tons in 2008 based on information provided by the Energy
Information Administration.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Illinois
Basin</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The Illinois Basin
includes Illinois, Indiana and western Kentucky and is a major coal production
center in the interior region of the United States. Coal from the Illinois Basin
varies in heat value and predominately has a high sulfur content. Despite its
high sulfur content, coal from the Illinois Basin can generally be used by
electric power generation facilities that have installed pollution control
devices, such as scrubbers, to reduce emissions. We anticipate that Illinois
Basin coal will play an increasingly vital role in the U.S.&#160;energy markets
in future periods.</font></div>
        </div>
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          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Safety and Environmental
Regulations</font></font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our operations,
like operations of other coal companies, are subject to regulation, primarily by
federal and state authorities, on matters such as: air quality standards;
reclamation and restoration activities involving our mining properties; mine
permits and other licensing requirements; water pollution; employee health and
safety; management of materials generated by mining operations; storage of
petroleum products; protection of wetlands and endangered plant and wildlife
protection.&#160;&#160;Many of these regulations require registration,
permitting, compliance, monitoring and self-reporting and may impose civil and
criminal penalties for non-compliance.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Additionally, the
electric generation industry is subject to extensive regulation regarding the
environmental impact of its power generation activities, which could affect
demand for our coal over time. The possibility exists that new legislation or
regulations may be adopted or that the enforcement of existing laws could become
more stringent, causing coal to become a less attractive fuel source and
reducing the percentage of electricity generated from coal. Future legislation
or regulation or more stringent enforcement of existing laws may have a
significant impact on our mining operations or our customers&#8217; ability to use
coal.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">While it is not
possible to accurately quantify the expenditures we incur to maintain compliance
with all applicable federal and state laws, those costs have been and are
expected to continue to be significant. Federal and state mining laws and
regulations require us to obtain surety bonds to guarantee performance or
payment of certain long-term obligations, including mine closure and reclamation
costs.</font></div>
        </div>
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        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Reclamation</font></font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Carlisle is a new
mine and is operating in compliance with all local, state, and federal
regulations.&#160;&#160;&#160;Since Carlisle is new, we have no old mine
properties to reclaim, other than the Howesville mine, which also was a new mine
and operated for only eight months before it was closed in June 2006 due to
safety concerns.&#160;&#160;&#160;During 2007, we finished Phase I of the
reclamation of the Howesville mine.&#160;&#160;To reach final reclamation we
must raise commercial crops for a period of five years.</font></div>
        </div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Mining Permits and
Approvals</font></font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Numerous
governmental permits or approvals are required for mining operations. When we
apply for these permits and approvals, we may be required to prepare and present
data to federal, state or local authorities data pertaining to the effect or
impact that any proposed production or processing of coal may have upon the
environment. The authorization, permitting and implementation requirements
imposed by any of these authorities may be costly and time consuming and may
delay commencement or continuation of mining operations. Regulations also
provide that a mining permit or modification can be delayed, refused or revoked
if an officer, director or a shareholder with a 10% or greater interest in the
entity is affiliated with another entity that has outstanding permit violations.
Thus, past or ongoing violations of federal and state mining laws could provide
a basis to revoke existing permits and to deny the issuance of additional
permits.</font></div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
order to obtain mining permits and approvals from state regulatory authorities,
mine operators must submit a reclamation plan for restoring, upon the completion
of mining operations, the mined property to its prior condition, productive use
or other permitted condition. Typically, we submit the necessary permit
applications several months or even years before we plan to begin mining a new
area. Some of our required permits are becoming increasingly more difficult and
expensive to obtain, and the application review processes are taking longer to
complete and becoming increasingly subject to challenge.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Under some
circumstances, substantial fines and penalties, including revocation or
suspension of mining permits, may be imposed under the laws described above.
Monetary sanctions and, in severe circumstances, criminal sanctions may be
imposed for failure to comply with these laws.&#160;&#160;Compliance with these
laws has increased the cost of coal mining for domestic coal
producers.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Mine Health and Safety
Laws</font></font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Stringent safety
and health standards have been imposed by federal legislation since Congress
adopted the Coal Mine Health and Safety Act of 1969. The Federal Mine Safety and
Health Act of 1977 significantly expanded the enforcement of safety and health
standards and imposed comprehensive safety and health standards on all aspects
of mining operations. In addition to federal regulatory programs, the state in
which we operate also has programs for mine safety and health regulation and
enforcement.&#160;&#160;In reaction to several mine accidents in recent years,
federal and state legislatures and regulatory authorities have increased
scrutiny of mine safety matters and passed more stringent laws governing mining.
For example, in 2006, Congress enacted the Mine Improvement and New Emergency
Response Act of 2006, which we refer to as the MINER Act. The MINER Act imposes
additional obligations on coal operators including, among other things, the
following:</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="middle" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="2%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#8226;&#160;</font></div>
                </td>
                <td align="left" valign="top" width="87%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">development
      of new emergency response plans that address post-accident communications,
      tracking of miners, breathable air, lifelines, training and communication
      with local emergency response personnel;</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="middle" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="2%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#8226;&#160;</font></div>
                </td>
                <td align="left" valign="top" width="87%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">establishment
      of additional requirements for mine rescue teams;</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="middle" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="2%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#8226;&#160;</font></div>
                </td>
                <td align="left" valign="top" width="87%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">notification
      of federal authorities in the event of certain events;</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="middle" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="2%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#8226;&#160;</font></div>
                </td>
                <td align="left" valign="top" width="87%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">increased
      penalties for violations of the applicable federal laws and
      regulations;&#160;and</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="middle" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="2%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#8226;&#160;</font></div>
                </td>
                <td align="left" valign="top" width="87%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">requirement
      that standards be implemented regarding the manner in which closed areas
      of underground mines are sealed.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
              <div id="GLFTR" style="WIDTH: 100%" align="left">
              </div>
            </div>
            <div id="PN" style="PAGE-BREAK-AFTER: always">
              <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">5</font></div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
                <hr style="COLOR: black" noshade size="2">
              </div>
            </div>
            <div id="HDR">
              <div id="GLHDR" style="WIDTH: 100%" align="right">
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Environmental</font></font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Legislators are
considering the passage of significant new laws, regulators are considering
using existing laws to limit greenhouse gas emissions, and other measures are
being imposed or offered with the ultimate goal of reducing greenhouse gas
emissions. For instance, in addition to the potential for the EPA to impose
regulations on carbon dioxide emissions as described above, we also anticipate
that Congress will evaluate greenhouse gas legislation in the
short-term.&#160;&#160;If successful, there could be reductions in or other
limitations on the amount of coal our customers could
utilize.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The permitting of
new coal-fueled power plants has also recently been contested by state
regulators and environmental organizations based on concerns relating to
greenhouse gas emissions. As a result, certain power generating companies may
reconsider short-term or long-term plans to build coal-fueled plants or may
elect to build capacity using alternative forms of electrical
generation.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Coal Mining
Methods</font></font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The geological
characteristics of coal reserves largely determine the coal mining method
employed. There are two primary methods of mining coal:&#160;&#160;surface
mining and underground mining.&#160;&#160;&#160;The Carlisle mine is an
underground mine, and is operated using room-and-pillar
mining.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Room-and-pillar
mining is effective for small blocks of thin coal seams. In room-and-pillar
mining, we cut a network of rooms into the coal seam, leaving a series of
pillars of coal to support the roof of the mine. We use continuous mining
equipment to cut the coal from the mining face and battery cars to transport the
coal to a conveyor belt for further transportation to the surface. The pillars
generated as part of this mining method can constitute up to 50% of the total
coal in a seam.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Coal
Preparation</font></font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Coal extracted from
Carlisle contains impurities, such as rock and sulfur impurities.&#160;&#160;We
use a coal preparation plant located at the mine to remove impurities from the
coal and to insure our product meets contract specifications.&#160;&#160;Our
coal preparation plant allows us to treat the coal we extract from Carlisle to
ensure a consistent quality.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Transportation</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
sell our coal FOB the mine.&#160;&#160;Most of our coal is transported by rail
and some by truck.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Competition</font></font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The coal industry
is intensely competitive.&#160;&#160;The most important factors on which we
compete are coal quality, transportation costs from the mine to the customer and
the reliability of supply. Most of our competitors are larger than us and have
greater financial resources and larger reserve bases.</font></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Additionally, coal
competes with other fuels, such as nuclear energy, natural gas, hydropower, and
petroleum for steam and electrical power generation. Costs and other factors,
such as safety and environmental considerations, relating to these alternative
fuels affect the overall demand for coal as a fuel.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
              <div id="GLFTR" style="WIDTH: 100%" align="left">
              </div>
            </div>
            <div id="PN" style="PAGE-BREAK-AFTER: always">
              <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">6</font></div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
                <hr style="COLOR: black" noshade size="2">
              </div>
            </div>
            <div id="HDR">
              <div id="GLHDR" style="WIDTH: 100%" align="right">
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Other</font>&#160;</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
have no significant patents, trademarks, licenses, franchises or
concessions.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Other than the coal
employees in Indiana, we have four full-time&#160;and two part-time employees in
Denver. When needed we also engage consultants, accountants and attorneys on a
fee basis.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our office is
located at 1660 Lincoln Street, Suite 2700, Denver, Colorado 80264, phone
303.839.5504, fax 303.832.3013.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Sunrise Coal's
corporate office is located at 1183 Canvasback Drive, Terre Haute, Indiana
47802, phone 812.299.2800, fax 812.299.2810. Terre Haute is approximately 70
miles west of Indianapolis, Indiana. Our website is <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">www.sunrisecoal.com.</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
1A.&#160;&#160;RISK FACTORS.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Smaller reporting
companies are not required to provide the information required by this
item.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
1B.&#160;&#160;UNRESOLVED STAFF COMMENTS.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Smaller reporting
companies are not required to provide the information required by this item;
however, there were none.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
              <div id="GLFTR" style="WIDTH: 100%" align="left">
              </div>
            </div>
            <div id="PN" style="PAGE-BREAK-AFTER: always">
              <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">7</font></div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
                <hr style="COLOR: black" noshade size="2">
              </div>
            </div>
            <div id="HDR">
              <div id="GLHDR" style="WIDTH: 100%" align="right">
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
2. PROPERTIES.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The Carlisle mine,
located near the town of Carlisle in Sullivan County, Indiana, is an underground
mine which became operational in January 2007; during 2006 the mine was under
development. The coal is accessed with a slope to a depth of 340'. The coal is
mined in the Indiana Coal V seam which is high volatile B bituminous
coal.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our current mine
plan indicates 13,500 acres of mineable coal with approximate 4' to 5' thickness
in the project area. Of the 13,500 acres, 11,900 are currently under lease to
Sunrise. The Indiana V seam has been extensively mined by underground and
surface methods in the general area and is the most economically significant
coal in Indiana.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Findings are based
on generally accepted engineering principles and professional experience in the
mining industry. All judgments are based on the facts that are available at this
time.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Coal Reserve
Estimates</font></font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
estimate that, as of December 31, 2008, we had total recoverable reserves of
approximately 43.5 million tons consisting of both proven and probable reserves.
&#8220;Reserves&#8221; are defined by the SEC Industry Guide 7 (Guide 7) as that part of a
mineral deposit, which could be economically and legally extracted or produced
at the time of the reserve determination. &#8220;Recoverable&#8221; reserves mean coal that
is economically recoverable using existing equipment and methods under federal
and state laws currently in effect. Approximately 29.5 million tons of reserves
are classified as proven reserves. &#8220;Proven (measured) reserves&#8221; are defined by
Guide 7 as reserves for which (a) quantity is computed from dimensions revealed
in outcrops, trenches, workings or drill holes; grade and/or quality are
computed from the results of detailed sampling and (b) the sites for inspection,
sampling and measurement are spaced so closely and the geologic character is so
well defined that size, shape, depth and mineral content of reserves are
well-established. The remaining approximately 14 million tons of our reserves
are classified as probable reserves. &#8220;Probable reserves&#8221; are defined by Guide 7
as reserves for which quantity and grade and/or quality are computed from
information similar to that used for proven (measured) reserves, but the sites
for inspection, sampling, and measurement are farther apart or are otherwise
less adequately spaced. The degree of assurance, although lower than that for
proven (measured) reserves, is high enough to assume continuity between points
of observation.&#160;&#160;Our reserve estimates were prepared by Samuel Elder,
Sunrise's mining engineer.&#160;&#160;Mr. Elder is a licensed Professional
Engineer in the State of Indiana and has over 20 years experience estimating
coal reserves.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The Mine Reserve
estimate for the 11,900 leased acres was made utilizing Carlson mining 2007
(software developed by Carlson Software). To convert volumes of coal to an
in-place tonnage, a weight of 80 pounds/cubic foot was used. To convert to
product tonnage, a 55% mine recovery and an average of 81% washed recovery (coal
only recovery, no out-of- seam dilution included) were used.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Example: In-place
tonnage x 55% x 81% = product tonnage.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Standards set forth
by the United States Geological Survey were used to place areas of the mine
reserves into the Proven (measured) and Probable (indicated) categories. Under
these standards, coal within 1,320' of a data point is considered to be proven,
and coal within 1,320' to 3,960' is placed in the Probable category. All
reserves are stated as a final saleable product.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">8</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right">
            </div><br></div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ADDITIONAL
DISCLOSURES</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 27pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">1.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The Carlisle
      mine currently has road frontage on State Highway 58, and is adjacent to
      the CSX railroad. The Carlisle mine has a double 100 car loop
      facility.&#160;&#160;The majority of our sales are shipped by rail and the
      remainder is trucked.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 27pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">2.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Currently
      only the Indiana V seam is planned to be mined, and all of the controlled
      tonnage is leased to Sunrise. Most leases have unlimited terms once mining
      has begun, and yearly payments or earned royalties are kept current.
      Mineable coal thickness used is greater than four feet. The current
      Carlisle mine plan is broken into four areas&#8211; North Main &#8211; South Main &#8211;
      West Main &#8211; 2 South Main. Approximately 88% of the total mine plan is
      currently under lease ("controlled"). It is believed that all additional
      property that would be required to access all lease areas can be obtained
      but, if some properties cannot be leased, some modification of the current
      mine plan would be required. All coal should be mined within the terms of
      the leases. Leasing programs are continuing by Sunrise
    staff.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 27pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">3.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Mine
      construction began in 2006 and the first coal sales were in February
      2007.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 27pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">4.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The Carlisle
      mine has a dual use slope for the main coal conveyor, and the moving of
      supplies and personnel without a hoist. There are two 8' diameter shafts
      at the base of the slope for mine ventilation.&#160;&#160;Two additional
      shafts are under construction to facilitate the mine
      expansion.&#160;&#160;The slope is 18' wide with concrete and steel arch
      construction. All underground mining equipment is powered with electricity
      and underground compliant diesel.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 27pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">5.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Current
      production capabilities are 2.7 million tons per year. Additional
      equipment is planned to increase production to 3 million tons per year in
      2009. Total reserves in the current mine plan (both controlled and
      uncontrolled) indicates approximately 19 years production at 3 million
      tons per year. The mine plan is a basic room-and-pillar mine using a
      synchronized continuous miner section with no retreat mining. Plans are
      for 60'x80' pillars with 18' entries for our mains, and 60'x60' pillars
      with 20' entries in the rooms.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">&#160;</div>
        </div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 27pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">6.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The Carlisle
      mine has been in production since January 2007. The North Main, Sub Main
      #1, and the South Main have been developed with three units currently in
      production.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 27pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">7.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Quality
      specifications for saleable product are 13%-16% moisture; 10,900-11,400
      BTU; 8%-10% ash; and 5-6.5 LB SO<font style="FONT-SIZE: 12pt"><font style="FONT-SIZE: 85%; VERTICAL-ALIGN: sub">2.</font></font></font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 27pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">8.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The Carlisle
      mine has a 400 tons/hour raw feed wash plant. The wash plant is modular in
      construction and construction is currently underway to double the current
      capacity (anticipated completion date of April
  2009).</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 27pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">9.</font></div>
                </td>
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Mine dilution
      is assumed to be from 6% - 10% depending on seam
  height.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td style="WIDTH: 35px">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">10.</font></div>
                </td>
                <td width="1202">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Controlled
      and proven (measured) reserves are 29.5 million tons and controlled and
      probable (indicated) reserves are 14.0 million
  tons.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-WEIGHT: bold">ITEM 3.&#160;&#160;&#160; LEGAL
PROCEEDINGS.</font> &#160;None</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-WEIGHT: bold">ITEM 4.&#160;&#160;&#160; SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS. </font>None</font></div><br>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">9</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          </div>
        </div><br></div>
    </div>
    <div>
      <div align="center">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td>
                <div align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">PART
      II</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div align="center">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td>
                <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">ITEM
      5.&#160;&#160;&#160; MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
      STOCKHOLDER MATTERS </font></div>
                <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      AND ISSUER PURCHASES OF EQUITY
SECURITIES.</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our common stock is
traded on the OTC Bulletin Board under the symbol &#8220;HPCO.OB&#8221;.&#160; The following
table sets forth the high and low sales price for the periods
indicated:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <div align="center">
        <div align="center">
          <div align="center">
            <div align="center">
              <table cellpadding="0" cellspacing="0" width="100%">
                  <tr>
                    <td align="left" valign="bottom" width="65%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="middle" width="2%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">High</font></div>
                    </td>
                    <td align="left" valign="bottom" width="2%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td colspan="2" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Low</font></div>
                    </td>
                    <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">2009</font></div>
                    </td>
                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;
      (January 1 through March 24, 2009)</font></div>
                    </td>
                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
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                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
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                    <td align="right" valign="bottom" width="10%">
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    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">2008</font></div>
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                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;
      First quarter</font></div>
                    </td>
                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4.55</font></div>
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                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4.00</font></div>
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;
      Second quarter</font></div>
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                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4.50</font></div>
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                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.25</font></div>
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;
      Third quarter</font></div>
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                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">5.50</font></div>
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                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.25</font></div>
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;
      Fourth quarter</font></div>
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                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">5.50</font></div>
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                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2.50</font></div>
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">2007</font></div>
                    </td>
                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;
      First quarter</font></div>
                    </td>
                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.25</font></div>
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                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2.50</font></div>
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;
      Second quarter</font></div>
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                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.50</font></div>
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                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2.50</font></div>
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;
      Third quarter</font></div>
                    </td>
                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.25</font></div>
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                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2.85</font></div>
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
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                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="65%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;&#160;Fourth
      quarter</font></div>
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                    <td align="left" valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.55</font></div>
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                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="10%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2.75</font></div>
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                  </tr>
                  <tr>
                    <td valign="bottom" width="65%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
              </table>
            </div>
          </div>
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">During the last two
years no dividends were paid.&#160; We have no present intention to pay any
dividends in the foreseeable future.&#160;&#160;Our loan agreements restrict our
ability to pay dividends.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">At
March 24, 2009, we had about 400 shareholders of record of our common stock;
this number does not include the shareholders holding stock in "street
name."&#160;&#160;The last recorded sales price was $2.95.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Equity Compensation Plan
Information</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
have 550,000 options outstanding, at an exercise price of $2.30.&#160;&#160;The
issuance of our stock options were not approved by security
holders.&#160;&#160;We also have 170,000 restricted stock units that have been
granted to certain employees and 360,000 are available for future
issuance.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
6.&#160;&#160;&#160; SELECTED FINANCIAL DATA.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Smaller reporting
companies are not required to provide the information required by this
item.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">10</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div><br>
      <div>
        <div align="center">
          <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">ITEM
      7.&#160; &#160; MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS</font></div>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      &#160;OF OPERATION.</font></div>
                </td>
              </tr>
          </table>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Overview</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our consolidated
financial statements should be read in conjunction with this discussion.&#160;
Our primary operating property is the Carlisle coal mine located in western
Indiana of which we own an 80% interest.&#160;&#160;The Carlisle mine was in the
development stage through January 31, 2007.&#160;&#160;Commercial coal
production began February 5, 2007.&#160;&#160;&#160;We also have a 45% equity
interest in Savoy Energy, L.P., an oil and gas company which has operations in
Michigan.&#160; Over 90% of our stock is closely held; see Item 12 of this Form
10-K for a listing of our major shareholders.&#160;&#160;Our stock is thinly
traded on the OTC Bulletin Board.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
late 2006, we concluded to deemphasize our oil and gas operations and
concentrate our efforts in the coal business.&#160; In July 2007, we sold our
San Juan producing oil and gas properties and in October 2008 we sold
substantially all of our unproved oil and gas properties.&#160;&#160;Our
remaining oil and gas properties are not significant.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
have entered into significant equity transactions with the Yorktown Energy group
of partnerships (Yorktown) and other entities that invest with them.&#160;
Yorktown, our largest shareholder, owns about 55% of our common stock and
represents one of the five seats on our board.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Liquidity and Capital
Resources</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
December 2008, we entered into a new loan agreement with a bank consortium that
provides for a $40 million term loan and a $30 million revolving credit
facility.&#160;&#160;Through December 31, 2008, we have fully drawn down the $40
million term loan (which matures in 2012) and have $27 million available under
the revolver due to outstanding letters of credit of $3
million.&#160;&#160;Substantially all of Sunrise's assets were pledged under
this loan agreement and we are the guarantor.&#160;&#160;&#160;The loan
agreement requires customary covenants, required financial ratios and
restrictions on dividends or distributions.&#160;&#160;The current interest rate
is LIBOR (0.9%) plus 3.50% or 4.4%.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
connection with the old loan agreements, we entered into two interest rate swap
agreements swapping variable rates for fixed rates. The first swap agreement
covered $26 million in debt and commenced July 15, 2007 and matures on July 15,
2012. The second swap agreement covers $10 million and commenced December 28,
2007 and matures on December 28, 2011.&#160;&#160;The two swap agreements fix
our interest rate at about 8.3%. &#160;At December 31, 2008 and 2007, we
recorded the estimated fair value of the two swaps as a $2.29 million and $1.18
million liability, respectively.&#160;&#160;The increase of $1.11 million was
recorded as additional interest expense for 2008.&#160;&#160;Such amount in 2007
was about the same.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Accounting rules
require us to recognize all derivatives on the balance sheet at estimated fair
value. Derivatives that are not hedges must be adjusted to estimated fair value
through earnings. We have no derivatives designated as a hedge.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
plan to fund future mine expansion through a combination of draws from the $30
million revolver and cash from operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
have no material off-balance sheet arrangements.</font></div><br>
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</font></div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
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</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Results of
Operations&#160;</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">During 2008, we
sold about 1,933,000 tons of coal at an average selling price of about
$36.39/ton.&#160;&#160;January and February 2009 average prices were in the $45
range.&#160;&#160;During 2008, we had three major contracts with three utilities
that accounted for over 90% of our coal sales.&#160;&#160;Two of the contracts
run through 2013 and the third runs through 2012 with an option for two more
years.&#160;&#160;We anticipate our sales under these three contracts to range
from 2.7 million tons per year to 3.2 million tons per year.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Coal sales began in
February 2007 and for the year 2007 we sold 972,500 tons at an average price of
about $28/ton.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">During the last two
years, we have sold substantially all of our oil and gas properties at a
cumulative gain of about $3.8 million.&#160;&#160;We do not expect such gains in
the future.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The $2.3 million
equity loss from Savoy resulted primarily from Savoy taking a $2.6 million
impairment charge relating to their oil and gas
properties.&#160;&#160;&#160;Furthermore, the difference between the purchase
price and our pro rata share of Savoy's partners' capital&#160;&#160;was
amortized based on Savoy's units-of-production rate and amounted to about
$333,000 for 2008 and $279,000 for 2007.&#160;&#160;In addition, due to
deteriorating industry conditions, we took a $1.4 million impairment charge
relating to our investment in Savoy.&#160;&#160;We concluded that Savoy's
balance sheet, considering their impairments, reflected our best estimate of
Savoy's fair value.&#160;&#160;Accordingly, we compared our investment account
in Savoy to 45% of Savoy's equity accounts and the excess amounted to about $1.4
million.&#160;&#160;Consequently, we impaired our investment account by such
amount.&#160;&#160;Considering this impairment charge, we no longer have a
difference between the purchase price and our pro rata share of Savoy's
partners' capital.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The increase in
cost of coal sales and DD&amp;A was due to the significant increase in our coal
sales.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">During 2008 and
2007, we issued restricted stock units to our officers and
others.&#160;&#160;The expense for 2008 was about $1.7 million higher than in
2007 for such units.&#160;&#160;The additional increase in G&amp;A was due
primarily to the higher level of operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Interest expense
stayed about the same for both years.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">For most of our
history, we operated in a loss position and had significant net operating loss
carry forwards.&#160;&#160;At December 31, 2008, we have federal net operating
loss carry forwards of about $2.5 million and expect to utilize them in
2009.&#160;&#160;For 2008, we had pretax income of about $11.8 million and a tax
provision of about $2.9 million.&#160;&#160;We expect these income trends to
continue and estimate our effective tax rate to be in the 35% - 40% range for
the foreseeable future.&#160;&#160;We no longer deem it necessary to have a
deferred tax valuation allowance.</font></div><br>
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</font></div>
        </div>
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          </div>
        </div>
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</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Sale of Oil and Gas
Properties</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
early July 2007 we sold our interest in the San Juan properties for $2.3
million.&#160;&#160;We recognized a gain of about $1.7
million.&#160;&#160;During 2007, certain unproved properties were sold resulting
in a gain of about $200,000.&#160;&#160;In October 2008, we sold unproved
properties for about $2 million and recognized a gain of about $1.4
million.&#160;&#160;Other sales during 2008 resulted in gains of about
$400,000.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Other than our
equity investment in Savoy, our remaining oil and gas properties are not
significant and we will be making minimal disclosures, if any, regarding
them.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Critical Accounting Estimate
and Significant Accounting Policies</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
believe that the estimate of our coal reserves is our only critical accounting
estimate.&#160;&#160;Since the Carlisle mine has only been in production since
February 2007 we do not have a long history to rely on.&#160;&#160;The reserve
estimates are used in the DD&amp;A calculation, in our impairment test and in
our internal cash flow projections.&#160;&#160;If these estimates turn out to be
materially under or over-stated, then our DD&amp;A expense and impairment test
would be affected.&#160;&#160;&#160;In addition, if the reserves are materially
overstated then our liquidity would be adversely affected.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our significant
accounting policies are set forth in Note 1 to the Financial
Statements.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">New Accounting
Pronouncements</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Other than SFAS
160, none of the recent FASB pronouncements had, or will have any material
effect on us.&#160;&#160;In December 2007, the FASB issued SFAS No.&#160;160,
Noncontrolling Interests in Consolidated Financial Statements, an amendment of
Accounting Research Bulletin No.&#160;51. This statement requires an entity to
separately disclose non-controlling interests as a separate component of equity
in the balance sheet and clearly identify on the face of the income statement
net income related to non-controlling interests. This statement is effective for
financial statements issued for fiscal years beginning after December&#160;15,
2008. The adoption of this statement will change how we present our minority
interest with Sunrise but will not have a material affect on our financial
statements.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
7A.&#160; QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Smaller reporting
companies are not required to provide the information required by this
item.</font></div>
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td>
              <div align="left">
                <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
      8.&#160; FINANCIAL STATEMENTS AND SUPPLEMENTARY
  DATA.</font></div>
              </div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="81%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Report of
      Independent Registered Public Accounting Firm</font></div>
            </td>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">15</font></div>
            </td>
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    </font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="81%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="81%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Consolidated
      Balance Sheet</font></div>
            </td>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">16</font></div>
            </td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="81%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="81%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Consolidated
      Statement of Operations</font></div>
            </td>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">17</font></div>
            </td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="81%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="81%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Consolidated
      Statement of Cash Flows</font></div>
            </td>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">18</font></div>
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            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
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            <td align="left" valign="top" width="81%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
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            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">20</font></div>
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    </font></td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial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
160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
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companies are not required to provide supplementary data.</font></div><br>
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</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">14</font></div>
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</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">REPORT
OF INDEPENDENT REGISTERED</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">PUBLIC
ACCOUNTING FIRM</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">To
the Board of Directors and Stockholders</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Hallador Petroleum
Company</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Denver,
Colorado</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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have audited the accompanying consolidated balance sheet of Hallador Petroleum
Company and Subsidiaries as of December 31, 2007 and 2008 and the related
consolidated statements of operations, cash flows and stockholders' equity for
each of the years in the two year period ended December 31,
2008.&#160;&#160;&#160;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
audits.</font></div>
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conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company&#8217;s internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial condition of
Hallador Petroleum Company and Subsidiaries, as of December 31, 2007 and 2008
and the consolidated results of their operations and their cash flows for each
of the years in the two year period ended December 31, 2008, in conformity with
accounting principles generally accepted in the United States of
America.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">/s/ Ehrhardt Keefe
Steiner &amp; Hottman PC</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">March 25,
2009</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Denver,
Colorado</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">15</font></div>
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          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Consolidated
Balance Sheet</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">&#160;(in
thousands, except share data)</font></div>
    <div>
      <div align="left">
        <div align="left">
          <div align="left">
            <div align="left">
              <div align="left">
                <div align="left">
                  <div align="left">
                    <div align="left">
                      <div align="left">
                        <div align="left">
                          <div align="left">
                            <div align="left">
                              <div align="left">
                                <div align="left">
                                  <div align="left">
                                    <div align="left">
                                      <div align="left">
                                        <table cellpadding="0" cellspacing="0" width="100%">
                                            <tr>
                                              <td align="left" valign="bottom">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">ASSETS</font></div>
                                              </td>
                                              <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td colspan="6" valign="bottom">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">As of
      December 31,</font></div>
                                              </td>
                                              <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Current
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                                              </td>
                                              <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2008</font></font></font></div>
                                              </td>
                                              <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2007</font></font></font></div>
                                              </td>
                                              <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Cash and cash
      equivalents</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">21,013</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">6,978</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Certificate
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                                              </td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,800</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Federal
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                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,531</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Accounts
      receivable</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">6,113</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,361</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Coal
      inventory</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">776</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">92</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,928</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">861</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Total current
      assets</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">31,361</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">12,092</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Coal
      properties, at cost:</font></div>
                                              </td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Land,
      buildings and equipment</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">55,027</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">32,548</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Mine
      development</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">45,289</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">32,137</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">100,316</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">64,685</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Less -
      accumulated depreciation, depletion, and amortization</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(7,233
    </font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(2,743
    </font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">93,083</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">61,942</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Investment in
      Savoy</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">7,911</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">11,893</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other
      assets</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3,710</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,330</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">136,065</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">87,257</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">LIABILITIES
      AND STOCKHOLDERS' EQUITY</font></div>
                                              </td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Current
      liabilities:</font></div>
                                              </td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Current
      portion of bank debt</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,500</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,893</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Accounts
      payable and accrued liabilities</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">11,563</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">5,550</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">State income
      tax payable</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">605</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">310</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">620</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Total current
      liabilities</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">14,978</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">8,063</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Long-term
      liabilities:</font></div>
                                              </td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Bank debt,
      net of current portion</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">37,500</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">33,464</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Interest rate
      swaps, at estimated fair value</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,290</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,181</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Deferred
      income taxes</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,700</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Asset
      retirement obligations</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">686</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">646</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,345</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,346</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Total
      long-term liabilities</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">46,521</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">39,637</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Total
      liabilities</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">61,499</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">47,700</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Minority
      interest</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,683</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">384</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Stockholders'
      equity:</font></div>
                                              </td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Preferred
      stock, $.10 par value, 10,000,000 shares authorized; none
      issued</font></div>
                                              </td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Common stock,
      $.01 par value, 100,000,000 shares authorized; 22,446,028 and 16,362,528
      outstanding, respectively</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">224</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">163</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Additional
      paid-in capital</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">69,739</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">44,990</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Retained
      earnings (deficit)</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,920</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(5,980
    </font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Total
      stockholders' equity</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">72,883</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">39,173</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">136,065</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">87,257</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                            </tr>
                                        </table>
                                      </div>
                                    </div>
                                  </div>
                                </div>
                              </div>
                            </div>
                          </div>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">See accompanying
notes.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Consolidated
Statement of Operations</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">For the years ended
December 31,</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(in thousands,
except per share data)</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div align="center">
        <div align="center">
          <div align="center">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="center">
                      <div align="center">
                        <div align="center">
                          <div align="center">
                            <div align="center">
                              <div align="center">
                                <div align="center">
                                  <div align="center">
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                                          <div align="center">
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                                                <div align="center">
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                                                                                <div align="left">
                                                                                  <div align="center">
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                                                                                                  <table cellpadding="0" cellspacing="0" width="100%">
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                                                                                        <td align="right" valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2008</font></div>
                                                                                                        </td>
                                                                                                        <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2007</font></div>
                                                                                                        </td>
                                                                                                        <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Revenue:</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Coal
      sales</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">70,337</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">27,228</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Gain on sale
      of oil and gas properties</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,822</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,933</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Equity income
      (loss) &#8211; Savoy</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(2,320</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">35</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">359</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">533</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">70,198</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">29,729</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Costs and
      expenses:</font></div>
                                                                                                        </td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Cost of coal
      sales</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">40,413</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">21,866</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">DD&amp;A</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,630</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,420</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">G&amp;A</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">6,128</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,161</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Interest</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,029</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,113</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Impairment &#8211;
      Savoy</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,396</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">56,596</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">32,560</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Income (loss)
      before minority interest and income taxes</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">13,602</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(2,831</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Minority
      interest</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(1,776</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">416</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Income (loss)
      before income taxes</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">11,826</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(2,415</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Income
      taxes:</font></div>
                                                                                                        </td>
                                                                                                        <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Current</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,226</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Deferred</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,700</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td valign="bottom" width="76%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,926</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Net income
      (loss)</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">8,900</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(2,415</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Net income
      (loss) per share:</font></div>
                                                                                                        </td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Basic</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">.47</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(0.18</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Diluted</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">.46</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(0.18</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Weighted
      average shares outstanding:</font></div>
                                                                                                        </td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Basic</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">18,980</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">13,300</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                      <tr>
                                                                                                        <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px">
                                                                                                          <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Diluted</font></div>
                                                                                                        </td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">19,286</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                        <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">13,300</font></td>
                                                                                                        <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                                                                                      </tr>
                                                                                                  </table>
                                                                                                </div>
                                                                                              </div>
                                                                                            </div>
                                                                                          </div>
                                                                                        </div>
                                                                                      </div>
                                                                                    </div>
                                                                                  </div>
                                                                                </div>
                                                                              </div>
                                                                            </div>
                                                                          </div>
                                                                        </div>
                                                                      </div>
                                                                    </div>
                                                                  </div>
                                                                </div>
                                                              </div>
                                                            </div>
                                                          </div>
                                                        </div>
                                                      </div>
                                                    </div>
                                                  </div>
                                                </div>
                                              </div>
                                            </div>
                                          </div>
                                        </div>
                                      </div>
                                    </div>
                                  </div>
                                </div>
                              </div>
                            </div>
                          </div>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">See accompanying
notes.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">17</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Consolidated
Statement of Cash Flows</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">For the years ended
December 31,</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(in
thousands)</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div align="center">
        <div align="center">
          <div align="center">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="left">
                      <table cellpadding="0" cellspacing="0" width="100%">
                          <tr>
                            <td align="left" valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2008</font></div>
                            </td>
                            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2007</font></div>
                            </td>
                            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Operating
      activities:</font></div>
                            </td>
                            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Net income
      (loss)</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">8,900</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(2,415</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Deferred
      income taxes</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,700</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Minority
      interest</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,776</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(416
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Equity income
      (loss) &#8211; Savoy</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,320</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(35
</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Impairment &#8211;
      Savoy</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,396</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Gain on sale
      of oil and gas properties</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(1,822
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(1,933
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Depreciation,
      depletion, and amortization</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,630</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,420</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Change in
      fair value of interest rate swaps</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,109</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,181</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Stock-based
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                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,826</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,899</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">133</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">195</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Change in
      current assets and liabilities:</font></div>
                            </td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Accounts
      receivable</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(3,707
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(2,361
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Coal
      inventory</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(684
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(92
</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Income
      taxes</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(925
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Accounts
      payable and accrued liabilities</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,484</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,368</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                              <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(1,384
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)&#160;</font></td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(136
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                              <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Cash provided
      by (used in) operating activities</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">18,752</font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(325
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Investing
      activities:</font></div>
                            </td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Acquisition
      of additional 20% interest in Sunrise</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(11,772
      </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Capital
      expenditures for coal properties</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(21,898
      </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(17,244
      </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Sales of oil
      and gas properties</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,676</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,548</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Investment in
      Savoy</font></div>
                            </td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(6,020
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                            </td>
                            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(1,501
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                              <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Cash used in
      investing activities</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(30,994</font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(22,217
      </font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Financing
      activities:</font></div>
                            </td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Proceeds from
      bank debt</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">42,000</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10,140</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Payments of
      bank debt</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(37,357
      </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Proceeds from
      stock sales</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">21,984</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">11,050</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Capital
      contributions from Sunrise minority owners</font></div>
                            </td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">800</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Proceeds from
      exercise of stock options</font></div>
                            </td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">460</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(350
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(136
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                              <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Cash provided
      by financing activities</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">26,277</font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">22,314</font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Increase
      (decrease) in cash and cash equivalents</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">14,035</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(228
    </font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Cash and cash
      equivalents, beginning of year</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">6,978</font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">7,206</font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Cash and cash
      equivalents, end of year</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">21,013</font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">6,978</font></td>
                            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Cash paid for
      interest (net of amount capitalized - $176 and $148)</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,879</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,290</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Cash paid for
      income taxes</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,000</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Non-cash
      investing activity -accounts payable for coal properties</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3,032</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,136</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                          <tr>
                            <td align="left" valign="bottom" width="76%">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Acquisition
      of minority interest</font></div>
                            </td>
                            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">477</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          </tr>
                      </table>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">&#160;&#160;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">See accompanying
notes.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">18</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Consolidated
Statement of Stockholders' Equity</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(in
thousands)</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div align="center">
        <div align="center">
          <div align="center">
            <div align="left">
              <table cellpadding="0" cellspacing="0" width="100%">
                  <tr>
                    <td align="left" valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Common
      Stock</font></div>
                    </td>
                    <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Additional</font></div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Paid-In
      Capital</font></div>
                    </td>
                    <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Retained
      Earnings (Deficit)</font></div>
                    </td>
                    <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Total</font></div>
                    </td>
                    <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="52%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Balance
      December 31, 2006</font></div>
                    </td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">121</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">31,623</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(3,565</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">28,179</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="52%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="52%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Stock sale to
      Yorktown and others</font></div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(3,564,517
      shares)</font></div>
                    </td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">36</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">11,014</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">11,050</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="bottom" width="52%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
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                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
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                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
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                    <td align="left" valign="bottom" width="52%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
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                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
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                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
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                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
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                      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Net
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                    <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
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                  <tr>
                    <td align="left" valign="bottom" width="52%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
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                  <tr>
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                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Balance
      December 31, 2008</font></div>
                    </td>
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                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                    <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">224</font></td>
                    <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
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                    <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                    <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,920</font></td>
                    <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                    <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                    <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">72,883</font></td>
                    <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  </tr>
              </table>
            </div>
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">See accompanying
notes.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">19</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Summary
of Significant Accounting Policies</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Basis
of Presentation and Consolidation</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The consolidated
financial statements include the accounts of Hallador Petroleum Company (the
Company) and its majority-owned subsidiary Sunrise Coal, LLC
(Sunrise).&#160;&#160;All significant intercompany accounts and transactions
have been eliminated.&#160; We are engaged in the production of coal from a
shallow underground mine located in western Indiana.&#160;&#160;We also own a
45% equity interest in Savoy Energy L.P., a private oil and gas company which
has operations in Michigan.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
have entered into significant equity transactions with Yorktown and other
entities that invest with Yorktown.&#160; Yorktown currently owns about 55% of
our common stock and represents one of the five seats on our board.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Reclassification</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">To
maintain consistency and comparability, certain amounts in the 2007 financial
statements have been reclassified to conform to current year
presentation.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Inventories</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Coal and supplies
inventories are valued at the lower of average cost or market. Coal inventory
costs include labor, supplies, equipment costs and overhead.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Advance
Royalties</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Coal leases that
require minimum annual or advance payments and are recoverable from future
production are generally deferred and charged to expense as the coal is
subsequently produced.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Coal
Properties</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Coal properties are
recorded at cost. Interest costs applicable to major asset additions are
capitalized during the construction period. Expenditures that extend the useful
lives or increase the productivity of the assets are capitalized. The cost of
maintenance and repairs that do not extend the useful lives or increase the
productivity of the assets are expensed as incurred.&#160;&#160;Other than land
and underground mining equipment, coal properties are depreciated using the
units-of-production method over the estimated recoverable reserves. Underground
mining equipment is depreciated using estimated useful lives ranging from five
to twenty years.</font></div><br>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">20</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          </div>
        </div><br>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">If
facts and circumstances suggest that a long-lived asset may be impaired, the
carrying value is reviewed for recoverability. &#160;If this review indicates
that the carrying value of the asset will not be recoverable through estimated
undiscounted future net cash flows related to the asset over its remaining life,
then an impairment loss is recognized by reducing the carrying value of the
asset to its estimated fair value.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Mine
Development</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Costs of developing
new coal mines, including asset retirement obligation assets, or significantly
expanding the capacity of existing mines, are capitalized and amortized using
the units-of-production method over estimated recoverable (proved and probable)
reserves.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Asset
Retirement Obligations - Reclamation</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">At
the time they are incurred, legal obligations associated with the retirement of
long-lived assets are reflected at their estimated fair value, with a
corresponding charge to asset retirement obligation assets. Obligations are
typically incurred when we commence development of underground mines, and
include reclamation of support facilities, refuse areas and slurry
ponds.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Obligations are
reflected at the present value of their discounted cash flows.&#160;&#160;We
reflect accretion of the obligations for the period from the date they are
incurred through the date they are extinguished. The asset retirement obligation
assets are amortized using the units-of-production method over estimated
recoverable (proved and probable) reserves.&#160;&#160;We are using a 6%
discount rate.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Federal and state
laws require that mines be reclaimed to their previous condition in accordance
with specific standards and approved reclamation plans, as outlined in mining
permits.&#160;&#160;Activities include reclamation of pit and support acreage at
surface mines, sealing portals at underground mines, and reclamation of refuse
areas and slurry ponds.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
assess our ARO at least annually, and reflect revisions for permit changes, as
granted by state authorities, for revisions to the estimated reclamation costs,
and for revisions to the timing of those costs.</font></div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The following table
reflects the changes to our ARO:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <div align="right">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline">2008</font></font></div>
                </td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline">2007</font></font></div>
                </td>
                <td valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Balance
      beginning of period</font></div>
                </td>
                <td align="left" valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="top" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">646</font></div>
                </td>
                <td align="right" valign="top" width="5%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">912</font></div>
                </td>
                <td align="left" valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="45%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Accretion</font></div>
                </td>
                <td align="left" valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="top" width="7%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">40</font></div>
                </td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">38</font></div>
                </td>
                <td align="left" valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="45%">
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    </font></td>
                <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;(304</font></div>
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                <td align="left" valign="bottom" width="25%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 4px">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Balance end
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                <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 4px">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
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                <td align="right" valign="top" width="7%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">686</font></div>
                </td>
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                  <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
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                <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;646</font></div>
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    </font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
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        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><br></font>

        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Statement
of Cash Flows</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Cash equivalents
include investments, which includes mutual funds, with maturities when purchased
of three months or less.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">21</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right">
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Income
Taxes</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Income taxes are
provided based on the liability method of accounting pursuant to SFAS 109,
Accounting for Income Taxes.&#160; The provision for income taxes is based on
pretax financial income (loss).&#160; Deferred tax assets and liabilities are
recognized for the future expected tax consequences of temporary differences
between income tax and financial reporting and principally relate to differences
in the tax basis of assets and liabilities and their reported amounts, using
enacted tax rates in effect for the year in which differences are expected to
reverse.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Earnings
per Share</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
follow the provisions of SFAS 128, Earnings Per Share.&#160;&#160;&#160;For
2007, no additional shares were added in the calculation of diluted earnings per
share as they would be anti-dilutive.&#160;&#160;Diluted net income per share
for 2008 was calculated using 308,000 additional shares relating to our
restricted stock units.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Use
of Estimates in the Preparation of Financial Statements</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The preparation of
financial statements in conformity with generally accepted accounting principles
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting period.&#160; Actual amounts could differ from
those estimates.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Revenue
Recognition</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
recognize revenue from coal sales at the time risk of loss passes to the
customer at contracted amounts.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Long-term
Contracts</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">As
of December 31, 2008, we are committed to supply to four utilities about 15.3
million tons of coal during the next 4.5 years.&#160;&#160;These contracts
represent about 1/3 of our recoverable reserves.&#160;&#160;During 2008, three
of our utility customers accounted for 90% of our sales:&#160;&#160;one customer
accounted for 43%, the second for 31%, and the third customer for
17%.&#160;&#160;For 2007, one customer accounted for 55% and the other for
38%.&#160;&#160;We are paid every two to four weeks and do not expect any credit
losses.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Transportation</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Currently, we use
both truck and rail transportation.&#160;&#160;Disruption of these services due
to weather, mechanical issues, strikes, lockouts, bottlenecks and other events
may have a temporary adverse impact on shipments and, consequently, to coal
sales.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Stock
Based Compensation</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Effective January
1, 2006, we adopted the fair value recognition provisions of SFAS 123R, using
the modified prospective transition method.</font></div><br>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
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          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">22</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          </div>
        </div><br>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">New
Accounting Pronouncements</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Other than SFAS
160, none of the recent FASB pronouncements had, or will have any material
effect on us.&#160;&#160;In December 2007, the FASB issued SFAS No.&#160;160,
Noncontrolling Interests in Consolidated Financial Statements, an amendment of
Accounting Research Bulletin No.&#160;51. This statement requires an entity to
separately disclose non-controlling interests as a separate component of equity
in the balance sheet and clearly identify on the face of the income statement
net income related to non-controlling interests. This statement is effective for
financial statements issued for fiscal years beginning after December&#160;15,
2008. The adoption of this statement will change how we present our minority
interest with Sunrise but will not have a material affect on our financial
statements.</font></div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(2)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Income
Taxes (in thousands)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our income tax is
different than the expected amount computed using the applicable federal and
state statutory income tax rates.&#160;&#160;The reasons for and effects of such
differences are as follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <div align="right">
          <div align="right">
            <div align="right">
              <div align="right">
                <div align="right">
                  <div align="right">
                    <div align="right">
                      <div align="right">
                        <div align="left">
                          <table cellpadding="0" cellspacing="0" width="100%">
                              <tr>
                                <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                <td align="right" valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 14.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2008</font></div>
                                </td>
                                <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 14.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2007</font></div>
                                </td>
                                <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                              </tr>
                              <tr>
                                <td align="left" valign="bottom" width="76%">
                                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Expected
      amount after minority interest</font></div>
                                </td>
                                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,021</font></td>
                                <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(821</font></td>
                                <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                              </tr>
                              <tr>
                                <td align="left" valign="bottom" width="76%">
                                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">State income
      taxes, net of federal benefit</font></div>
                                </td>
                                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">573</font></td>
                                <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(70</font></td>
                                <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                              </tr>
                              <tr>
                                <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px">
                                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Change in
      valuation allowance</font></div>
                                </td>
                                <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(1,257</font></td>
                                <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">915</font></td>
                                <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                              </tr>
                              <tr>
                                <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                                </td>
                                <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(411</font></td>
                                <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                                <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(24</font></td>
                                <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                              </tr>
                              <tr>
                                <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                                <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,926</font></td>
                                <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                                <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                                <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">-</font></td>
                                <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                              </tr>
                          </table>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The deferred tax
assets and liabilities resulting from temporary differences between book and tax
basis are comprised of the following at December 31:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <div align="center">
          <div align="center">
            <div align="center">
              <div align="center">
                <div align="left">
                  <div align="left">
                    <table cellpadding="0" cellspacing="0" width="100%">
                        <tr>
                          <td align="left" valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                            <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2008</font></font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
                            <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2007</font></font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Long-term
      deferred tax assets:</font></div>
                          </td>
                          <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Federal NOL
      carry forwards</font></div>
                          </td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                          <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">945</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,734</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">AMT credit
      carry forwards</font></div>
                          </td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">690</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Stock-based
      compensation</font></div>
                          </td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,291</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">219</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Investment in
      Savoy</font></div>
                          </td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,153</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">567</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Other</font></div>
                          </td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,061</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">313</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Valuation
      allowance</font></div>
                          </td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(1,257</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Net long-term
      deferred tax assets</font></div>
                          </td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">6,140</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,576</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Long-term
      deferred tax liabilities:</font></div>
                          </td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Coal
      properties</font></div>
                          </td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(7,840</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(2,576</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">)</font></td>
                        </tr>
                        <tr>
                          <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Net deferred
      tax liability</font></div>
                          </td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                          <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,700</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></td>
                          <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">-</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                    </table>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">At
December 31, 2008, we have federal net operating loss carry forwards of about
$2.5 million and expect to utilize them in 2009.&#160;&#160;We also have
percentage depletion carry forwards of about $1 million which have no expiration
date and AMT credit carry forwards of about $690,000.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
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            </div>
          </div>
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            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">23</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
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            </div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
have&#160;analyzed our filing positions in all of the federal and state
jurisdictions where we are required to file income tax returns, as well as all
open tax years in these&#160;jurisdictions.&#160; We&#160;identified&#160;our
federal tax return and&#160;our Indiana&#160;state tax return as &#8220;major&#8221; tax
jurisdictions.&#160;&#160;None of our tax returns have been examined in the last
ten years. We believe that our income tax filing positions and deductions will
be sustained on audit and do not anticipate any adjustments that will result in
a material change to&#160;our consolidated financial position.&#160;
Therefore,&#160;no reserves&#160;for uncertain income tax positions&#160;have
been recorded.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(3)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Common
Stock, Restricted Stock and Stock Options</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Common
Stock</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">On
July 21, 2008, we sold 5.5 million shares of our common stock for $22 million
($4 per share) in a private placement transaction to existing
shareholders.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Restricted
Stock - 2008</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Effective April 8,
2008, the Board approved the Hallador Petroleum Company 2008 Restricted Stock
Unit Plan.&#160;&#160;On July 7, 2008 the plan was amended to increase the
authorized issuance of restricted stock units (RSUs) from 450,000 units to
1,350,000 units.&#160; Vesting occurs at the end of three years of
employment.&#160;&#160;Upon vesting, each RSU entitles the recipient to receive
one share of common stock.&#160;&#160;If the RSU recipient&#8217;s employment with us
or Sunrise ceases for any reason prior to vesting, the RSUs will be cancelled
and the recipient will no longer have any right to receive any shares of common
stock. Due to employee resignations during the year, 15,000 RSUs were forfeited
back to the plan.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">On
May 6, 2008, we awarded to certain Sunrise employees and owners a total of
185,000 RSUs which vest on April 1, 2011. The RSUs were valued at $4.25 per
share based on the closing price on that date.&#160;&#160;On May 14, 2008, we
accelerated vesting on 50,000 shares and recognized an expense of about
$212,000.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">On
July 7, 2008, we awarded to certain of our and Sunrise's key employees 820,000
RSUs, all of which vest on July 7, 2011.&#160;&#160;Of the 820,000 RSUs awarded,
Victor P. Stabio, our CEO received 450,000 units and Brent Bilsland, Sunrise's
President, received 300,000 units.&#160;&#160;These RSUs were valued at $3.55
per share based on the closing price on that date.&#160;&#160;During October
2008, we accelerated vesting on 815,000 RSUs, of which 450,000 were issued to
Victor Stabio and 300,000 were issued to Brent Bilsland, and the remaining
65,000 were issued to others.&#160;&#160;Our stock was selling in the $2.75 to
$2.85 range on the dates of acceleration.&#160;&#160;&#160;During the fourth
quarter 2008, we recognized an expense of about $2.9 million for these
RSUs.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Total amortization
expense during 2008 was about $420,000 relating to our RSUs.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">As
of December 31, 2008, we have 360,000 RSUs available for future issuance and
there are 170,000 RSUs outstanding which have not vested and have a value of
$510,000 based on a year end closing price of $3 per share.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">During 2008, of the
865,000 shares issued pursuant to the plan, 281,500 shares were relinquished
back to the Company as consideration for the income taxes due by the individuals
in the amount of $815,000.</font></div><br>
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</font></div>
          </div>
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            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">24</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          </div>
        </div><br>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Restricted
Stock - 2007</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">On
June 20, 2007, our Board authorized and granted the issuance of 600,000 shares
of restricted stock.&#160;&#160;Victor Stabio, our CEO, received 390,000 shares,
Brent Bilsland, Sunrise&#8217;s President, received 165,000 shares and two consultants
received 45,000 shares.&#160;&#160;The Board accelerated vesting on Mr. Stabio's
and Mr. Bilsland's shares on July 9, 2007 and August 9, 2007,
respectively.&#160;&#160;&#160;These shares were valued at
$3.25.&#160;&#160;During 2007, we took a charge of about $1.8 million for these
vested shares.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Of
the 390,000 shares granted to Mr. Stabio, 125,000 shares were relinquished back
to the Company as consideration for the income taxes due of
$356,000.&#160;&#160;Mr. Stabio also exercised 200,000 of his 400,000 options at
an exercise price of $2.30 per share.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Stock
Options</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
April 2005, we granted 750,000 options at an exercise price of
$2.30.&#160;&#160;These options fully vested in April 2008 and expire in April
2015.&#160;&#160;On July 9, 2007 Mr. Stabio, our CEO, exercised 200,000
options.&#160;&#160;No options were granted during 2008 and 2007.&#160;&#160;At
December 31, 2008, we had 550,000 outstanding stock options; such options had an
aggregate intrinsic value of about $385,000.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We estimated the
fair value of the option grant using the Black-Scholes option-pricing model,
with the following assumptions: (i) risk free interest rate of 4.24%; (ii)
expected life of 10 years; (iii) expected volatility of 120%; and (iv) expected
default rate of 5%, and (v) no dividend yield.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The compensation
expense related to the options was $120,000 for 2008 and $478,000 for 2007. The
impact on earnings per share was not material for 2008 and was $.04 for
2007.&#160;&#160;There will be no future compensation expense relating to these
options.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(4)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Sunrise
Coal Acquisition</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Through a series of
transactions which began in 2006 and ended in July 2008, we now own an 80%
interest in Sunrise Coal, LLC (Sunrise).&#160;&#160;On July 31, 2006, we entered
into a partnership with Sunrise to develop the Carlisle mine.&#160;&#160;Sunrise
contributed all of their assets for a 40% interest and we agreed to a $20.5
million funding commitment (which we fulfilled during 2007) and guaranteed
Sunrise's bank debt for a 60% interest.&#160;&#160;Our funding commitment was
subsequently increased to $21.2 million and was fulfilled.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
July 2008 we purchased an additional 20% interest in Sunrise for about $12
million and such amount was allocated to mine development
costs.&#160;&#160;Through approximately 92% of the partnership's cash flow we
are to receive $22.9 million (our funding commitment of $21.2 million plus $1.7
million of acquired basis attributable to the interests sold by certain Sunrise
members) plus interest at 10%.&#160;&#160;&#160;Thereafter, cash flow will be
distributed 80% to us and 20% to the remaining original Sunrise
members.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Prior to the
purchase of the additional 20% interest, we consolidated 100% of the Sunrise
operations with a 13% minority interest.&#160;&#160;Subsequent to the purchase,
we are now using an 8% minority interest.&#160;&#160;Once we receive our $22.9
million plus interest at 10%, the minority interest will change to
20%.&#160;&#160;</font></div>
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</font></div>
          </div>
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            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">25</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
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</font></div>
          </div>
        </div><br>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(5)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Notes
Payable</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
December 2008, we entered into a new loan agreement with a bank consortium that
provides for a $40 million term loan and a $30 million revolving credit
facility.&#160;&#160;At December 31, 2008, we have fully drawn down the $40
million term loan.&#160;&#160;We have outstanding letters of credit in the
amount of $3 million, which leaves $27 million available under the
revolver.&#160;&#160;Substantially all of Sunrise's assets were pledged under
this loan agreement and we are the guarantor.&#160;&#160;&#160;Debt maturities
are as follows:&#160;&#160;2009 - $2.5 million: 2010 - $10 million: 2011 - $10
million: 2012 - $17.5 million.&#160;&#160;The loan agreement requires customary
covenants, required financial ratios and restrictions on dividends or
distributions.&#160;&#160;Closing costs on this loan agreement was about $1.2
million and are being amortized using the effective interest method over its
term.&#160;&#160;The current interest rate is LIBOR (0.9%) plus 3.50% or
4.4%.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
connection with the old loan agreements, we entered into two interest rate swap
agreements swapping variable rates for fixed rates. The first swap agreement
covered $26 million in debt and commenced July 15, 2007 and matures on July 15,
2012. The second swap agreement covers $10 million and commenced December 28,
2007 and matures on December 28, 2011.&#160;&#160;The two swap agreements fix
our interest rate at about 8.3%. At December 31, 2008 and 2007, we recorded the
estimated fair value of the two swaps as a $2.29 million and $1.18 million
liability, respectively.&#160;&#160;The increase of $1.11 million was recorded
as additional interest expense for 2008.&#160;&#160;Such amount in 2007 was
about the same.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Accounting rules
require us to recognize all derivatives on the balance sheet at estimated fair
value. Derivatives that are not hedges must be adjusted to estimated fair value
through earnings. We have no derivatives designated as a
hedge.</font></div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(6)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Equity
Investment in Savoy</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">On
December 31, 2005, we acquired a 32% interest in Savoy Energy L.P., a private
company engaged in the oil and gas business primarily in the State of
Michigan.&#160; A value of $6.1 million was assigned for this
investment.&#160;&#160;&#160;On October 5, 2007, we invested an additional $6
million in Savoy which increased our ownership to 45%.&#160;&#160;We account for
our interest in Savoy using the equity method of accounting.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Below (in
thousands) are:&#160;&#160; (i) a condensed balance sheet at December 31, for
both years and (ii) a condensed statement of operations for the years ended
December 31, 2008 and 2007.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Condensed Balance
Sheet</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(unaudited)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <div align="center">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="37%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2008</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2007</font></div>
                </td>
                <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="37%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Current
      assets</font></div>
                </td>
                <td align="right" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10,639</font></div>
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                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
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                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">14,600</font></div>
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                <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="37%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">PP&amp;E,
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                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
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                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
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                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10,700</font></div>
                </td>
                <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="37%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
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                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">22,660</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">25,300</font></div>
                </td>
                <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="37%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="37%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Total
      liabilities</font></div>
                </td>
                <td align="right" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">5,120</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3,900</font></div>
                </td>
                <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="37%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Partners'
      capital</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">17,540</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">21,400</font></div>
                </td>
                <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="37%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">22,660</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">25,300</font></div>
                </td>
                <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
          </table>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">26</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Condensed Statement of
Operations</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(unaudited)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <div align="center">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2008</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="11%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2007</font></div>
                </td>
                <td valign="bottom" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Revenue</font></div>
                </td>
                <td align="left" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 11.2pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">8,340</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">6,220</font></div>
                </td>
                <td valign="bottom" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Expenses</font></div>
                </td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 5.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(12,747)</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(5,270)</font></div>
                </td>
                <td valign="bottom" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Net income
      (loss)</font></div>
                </td>
                <td align="left" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="10%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 5.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">(4,407)</font></div>
                </td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="bottom" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">950</font></div>
                </td>
                <td valign="bottom" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="bottom" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
          </table>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The $2.3 million
equity loss from Savoy resulted primarily from Savoy taking a $2.6 million
impairment charge relating to their oil and gas
properties.&#160;&#160;&#160;Furthermore, the difference between the purchase
price and our pro rata share of Savoy's partners' capital&#160;&#160;was
amortized based on Savoy's units-of-production rate and amounted to about
$333,000 for 2008 and $279,000 for 2007.&#160;&#160;In addition, due to
deteriorating industry conditions, we took a $1.4 million impairment charge
relating to our investment in Savoy.&#160;&#160;We concluded that Savoy's
balance sheet, considering their impairments, reflected our best estimate of
Savoy's fair value.&#160;&#160;Accordingly, we compared our investment account
in Savoy to 45% of Savoy's equity accounts and the excess amounted to about $1.4
million.&#160;&#160;Consequently, we impaired our investment account by such
amount.&#160;&#160;Considering this impairment charge, we no longer have a
difference between the purchase price and our pro rata share of Savoy's
partners' capital.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Arial">Unaudited</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our 45% equity
interest in Savoy's proved developed oil and gas reserves at December 31, 2008
were 58,000 barrels and 644,000 mcf, respectively.&#160;&#160;&#160;Our equity
interest in Savoy's standardized measure of discounted future net cash flows at
December 31, 2008 was about $2.5 million.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(7)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Sale
of Oil and Gas Properties</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
early July 2007 we sold our interest in the San Juan properties for $2.3
million.&#160;&#160;We recognized a gain of about $1.7 million.&#160;&#160;Other
sales during 2007 resulted in gains of about $200,000.&#160;&#160;In October
2008, we sold unproved properties for about $2 million and recognized a gain of
about $1.4 million.&#160;&#160;Other sales during 2008 resulted in gains of
about $400,000.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(8)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Employee
Benefits</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
have no defined benefit&#160;pension plans or any post-retirement benefit plans.
&#160;Our mine employees participate in a 401(k) Plan, where we match 100% of
the first 3% that an employee contributes, and a Deferred Bonus Plan based on
meeting certain production levels.&#160; We also offer health benefits to all
employees.&#160; Our costs for the 401(k) matching were about $190,000 and our
costs for health benefits were about $822,000.&#160; The costs for the Deferred
Bonus Plan, which was implemented in December 2008, were not material.&#160; Our
mine employees are also covered by workers compensation and such costs for 2008
were about $1.7 million.</font></div><br>
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</font></div>
          </div>
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            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">27</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">(9)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Fair
Value Measurements</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
adopted SFAS No.&#160;157, &#8220;Fair Value Measurements,&#8221; effective January&#160;1,
2008 for financial assets and liabilities measured on a recurring basis. SFAS
No.&#160;157 applies to all financial assets and liabilities that are being
measured and reported on a fair value basis.&#160;&#160;As defined in SFAS No.
157, fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date (exit price). SFAS No.&#160;157 requires disclosure that
establishes a framework for measuring fair value, and expands disclosure about
fair value measurements.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The statement
requires fair value measurements be classified and disclosed in one of the
following categories:</font></div>
      <div>
        <div align="left">
          <div align="left">
            <div align="left">
              <table cellpadding="0" cellspacing="0" width="100%">
                  <tr>
                    <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="8%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial; TEXT-DECORATION: underline"><font style="DISPLAY: inline">Level 1:</font></font></div>
                    </td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="78%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Unadjusted
      quoted prices in active markets that are accessible at the measurement
      date for identical, unrestricted assets or liabilities. We consider active
      markets as those in which transactions for the assets or liabilities occur
      in sufficient frequency and volume to provide pricing information on an
      ongoing basis.&#160;&#160;We have no Level 1
  instruments.</font></div>
                    </td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="8%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial; TEXT-DECORATION: underline"><font style="DISPLAY: inline">Level 2:</font></font></div>
                    </td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="78%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Quoted prices
      in markets that are not active, or inputs which are observable, either
      directly or indirectly, for substantially the full term of the asset or
      liability.&#160;&#160;We have no Level 2 instruments.</font></div>
                    </td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="8%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial; TEXT-DECORATION: underline"><font style="DISPLAY: inline">Level 3:</font></font></div>
                    </td>
                    <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                    <td align="left" valign="top" width="78%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Measured
      based on prices or valuation models that require inputs that are both
      significant to the fair value measurement and less observable from
      objective sources (i.e., supported by little or no market activity). Our
      Level 3 instruments&#160;are comprised of interest rate swaps.&#160;
      Although we utilize third party broker quotes to assess the reasonableness
      of our prices and valuation, we do not have sufficient corroborating
      market evidence to support classifying these liabilities as Level
      2.</font></div>
                    </td>
                  </tr>
              </table>
            </div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">&#160;&#160;&#160;&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">At
December 31, 2007, our interest rates swaps were a liability of $1.2 million and
at December 31, 2008 they were a liability of $2.3 million.&#160;&#160;The
difference of $1.1 million is included in interest expense.&#160;&#160;The
recorded value of our bank debt approximates fair value as it bears interest at
a floating rate.</font></div><br>
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</font></div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">28</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <div align="center">
          <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top">
                <td>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">ITEM
      9.&#160;&#160; CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL</font></div>
                  <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      &#160;DISCLOSURE.</font></div>
                </td>
              </tr>
          </table>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Not applicable<font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
9A(T).&#160;&#160;CONTROLS AND PROCEDURES.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Disclosure
Controls</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
maintain a system of disclosure controls and procedures that are designed for
the purposes of ensuring that information required to be disclosed in our SEC
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to our CEO as appropriate to allow timely decisions regarding
required disclosure.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">As
of the end of the period covered by this report, we carried out an evaluation,
under the supervision and with the participation of our CEO of the effectiveness
of the design and operation of our disclosure controls and procedures.&#160;
Based upon that evaluation, our CEO, who is also our CFO, concluded that our
disclosure controls and procedures are effective for the purposes discussed
above.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Internal Control Over
Financial Reporting (ICFR)</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
are responsible for establishing and maintaining adequate ICFR.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
assessed the effectiveness of our ICFR based on criteria for effective ICFR
described in Internal Control- Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Based on our
assessment, we concluded that we maintained effective ICFR as of December 31,
2008.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">There has been no
change in our internal control over financial reporting during the quarter ended
December 31, 2008 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">This annual report
does not include an attestation report from EKS&amp;H, our auditors, regarding
ICFR.&#160;&#160;Our report was not subject to attestation by EKS&amp;H pursuant
to temporary rules of the SEC that permits us to provide only our report in this
annual report.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
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</font></div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">29</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
9B.&#160;&#160; OTHER INFORMATION.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Effective January
1, 2008 Victor P. Stabio's,&#160;our CEO,&#160;annual salary was increased from
about $140,000 to $180,000 per year.&#160;&#160;&#160;Brent Bilsland's,
Sunrise's President, salary was increased from $90,000 to $130,000 effective
November 1, 2008 and Larry Martin's, Sunrise's CFO, salary was increased from
$100,000 to $103,000 effective April 1, 2008.&#160;&#160;We have no written
employment agreements with any of our officers.&#160;&#160;Bonuses, if any, are
paid on a discretionary basis.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
February 2009 in connection with a verbal relocation plan, we purchased from Mr.
Martin his personal residence, which is about 50 miles from the offices, for
about $185,000.&#160;&#160;Mr. Martin will continue to live in the house for
three months awaiting the completion of his new residence near the Terre Haute
offices.&#160;&#160;We plan to sell the house this summer.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div align="center">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td>
                <div align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">PART
      III</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div align="center">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td>
                <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">ITEM
      10.&#160;&#160; DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
      GOVERNANCE.</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">DAVID HARDIE, 58,
is the Chairman of the Board and has served as a director since July 1989.&#160;
He is the President of Hallador Investment Advisors Inc., which manages Hallador
Equity Fund, Hallador Fixed Income Fund, Hallador Alternative Assets Fund and
Hallador Balance Fund; he also is a General Partner of Hallador Venture Partners
LLC, the General Partner of Hallador Venture Fund II &amp; III.&#160; Mr. Hardie
is and serves as a director and partner of other private entities that are owned
by members of his family and is also a director of Sunrise Coal, LLC. Mr. Hardie
is a graduate of California Polytechnic University, San Luis
Obispo.&#160;&#160;He also attended the Owner/President Management program
offered by Harvard Business School.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">STEVEN HARDIE, 55,
has been a director since 1994.&#160;&#160;He and David Hardie are
brothers.&#160;&#160;For the last 24 years he has been a private investor.&#160;
He is the Vice- President of Hallador Investment Advisors, which manages
Hallador Equity Fund, Hallador Fixed Income&#160;Fund, Hallador Alternative
Assets Fund and Hallador Balance Fund. He also serves as a director and partner
of other private entities that are owned by members of his family.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">BRYAN H. LAWRENCE,
66, has been one of our directors since November 1995.&#160; He is a founder and
senior manager of Yorktown Partners LLC which manages investment partnerships
formerly affiliated with Dillon, Read &amp; Co. Inc., an investment-banking firm
(Dillon, Read).&#160; He had been employed with Dillon, Read since 1966, serving
most recently as a Managing Director until the merger of Dillon, Read with SBC
Warburg in September 1997.&#160; He also serves as a Director of Approach
Resources, Inc.,&#160;&#160;Star Gas Partners, L.P., Crosstex Energy, Inc. and
Crosstex Energy, L.P. (each a United States public company), Winstar Resources
Ltd. (a Canadian Public Company) and certain non-public companies in the energy
industry in which Yorktown partnership holds equity interests, one of which is
Sunrise Coal, LLC.&#160;&#160;Mr. Lawrence is a graduate of Hamilton College and
has a MBA from Columbia University.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">SHELDON B. LUBAR,
age&#160;79,&#160;was appointed to our board in July 2008.&#160; Mr. Lubar has
been Chairman of the Board of Lubar &amp; Co. Incorporated, a private investment
and management firm he founded, since 1977.&#160; Mr. Lubar also serves on the
board of&#160;Approach Resources, Inc., Crosstex Energy, Inc., Star Gas Partners
L.P. and Ellora Energy, Inc.&#160; Mr. Lubar holds a bachelor's degree in
business administration and a law degree from the University of
Wisconsin-Madison. He was awarded an honorary doctor of commercial science
degree from the University of Wisconsin-Milwaukee.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">30</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">VICTOR P. STABIO,
61, is our President, CEO, CFO and a director.&#160; He joined us in March 1991
as our President and CEO and has been active in the oil and gas business for the
past 32 years. Mr. Stabio is a director of Sunrise Coal, LLC and also a director
of Savoy Exploration, the general partner of Savoy Energy, LP.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">BRENT K. BILSLAND,
35, has been President and a director of Sunrise Coal, LLC since July 31, 2006.
&#160; Previously, Mr. Bilsland was Vice President of Knapper Corporation, a
family owned farming business from 1998 to 2004.&#160;&#160;Mr. Bilsland is a
graduate of Butler University located in Indianapolis, Indiana.&#160;&#160;Mr.
Bilsland is a 4% owner of Sunrise Coal, LLC.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">LARRY MARTIN, 43,
was appointed Chief Financial Officer of Sunrise Coal, LLC on January 29,
2008.&#160;&#160;Prior to his employment with Sunrise in October 2008, he worked
19 years for Clifton Gunderson (12th largest U.S. Public Accounting Firm) from
January 1989 to October 2008.&#160;&#160;Mr. Martin was a Senior Manager in Tax
for the previous 6 years and an Audit Senior Manager for the 5 preceding
years.&#160;&#160;&#160;Mr. Martin is a graduate from Indiana State University
and has his Bachelor of Science in Accounting.&#160;&#160;He received his C.P.A
in 1991.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial; TEXT-DECORATION: underline">Section
16(a) Beneficial Ownership Reporting Compliance</font></font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">All of our
directors and officers filed their Section 16 forms within the appropriate
deadlines.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our Code of Ethics
is filed as Exhibit 14 to this Form 10-K. &#160;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial; TEXT-DECORATION: underline">Audit
Committee Report</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our audit committee
oversees our financial reporting process on behalf of the board of directors.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In fulfilling its
oversight responsibilities, the audit committee reviewed and discussed with
management the audited financial statements contained in this
Form&#160;10-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our independent
registered public accounting firm, EKS&amp;H, is responsible for expressing an
opinion on the conformity of the audited financial statements with accounting
principles generally accepted in the United States of America. The audit
committee reviewed with EKS&amp;H the firm's judgment as to the quality, not
just the acceptability, of our accounting principles and such other matters as
are required to be discussed with the audit committee under generally accepted
auditing standards.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The audit committee
discussed with EKS&amp;H the matters required to be discussed by SAS 61
(Codification of Statement on Auditing Standards, AU &#167;&#160;380), as may be
modified or supplemented. The committee received written disclosures and the
letter from EKS&amp;H required by applicable requirements of the Public Company
Accounting Oversight Board regarding EKS&amp;H&#8217;s communications with the audit
committee concerning independence, and has discussed with EKS&amp;H its
independence.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Based on the
reviews and discussions referred to above, the audit committee recommended to
the board of directors that the audited financial statements be included in the
Form&#160;10-K for the year ended December&#160;31, 2008 for filing with the
SEC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">David Hardie,
Steven Hardie, Bryan Lawrence, Sheldon Lubar</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">31</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
11.&#160;&#160;EXECUTIVE COMPENSATION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="99%">
          <tr>
            <td valign="bottom" width="28%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Name and
      Principal Position</font></div>
              </div>
            </td>
            <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid; TEXT-ALIGN: center">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Year</font></div>
              </div>
            </td>
            <td valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid; TEXT-ALIGN: center">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Salary</font></div>
              </div>
            </td>
            <td valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid; TEXT-ALIGN: center">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Bonus</font></div>
              </div>
            </td>
            <td valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid; TEXT-ALIGN: center">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial">Stock Awards<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(1)</font></font></font></font></font></font></font></font></div>
              </div>
            </td>
            <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid; TEXT-ALIGN: center">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial">Option Awards<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(1)</font></font></font></font></font></font></font></font></div>
              </div>
            </td>
            <td valign="bottom" width="12%" style="BORDER-BOTTOM: black 2px solid; TEXT-ALIGN: center">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">All&#160;&#160;Other</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial">Compensation<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(2)</font></font></font></font></font></font></font></font></div>
              </div>
            </td>
            <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid; TEXT-ALIGN: center">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Total</font></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="28%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="bottom" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
          </tr>
          <tr>
            <td valign="top" width="28%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Victor P.
      Stabio, CEO</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">2008</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">2007</font></div>
              </div>
            </td>
            <td valign="top" width="8%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">$180,000</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;144,000</font></div>
              </div>
            </td>
            <td valign="top" width="8%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">$90,000</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;36,000</font></div>
              </div>
            </td>
            <td valign="top" width="11%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">$1,730,000&#160;&#160;&#160;&#160;&#160;
      </font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;1,217,000&#160;&#160;&#160;&#160;&#160;
      </font></div>
              </div>
            </td>
            <td valign="top" width="13%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">$&#160;&#160;64,000&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      </font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;255,000&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      </font></div>
              </div>
            </td>
            <td valign="top" width="12%" style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td align="left" valign="top" width="10%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">$2,064,000
      &#160; </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;1,652,000&#160;&#160;
      </font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="28%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Brent
      Bilsland, President - Sunrise</font></div>
              </div>
            </td>
            <td valign="top" width="10%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">2008</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">2007</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
              </div>
            </td>
            <td valign="top" width="8%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">96,000</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">90,000</font></div>
              </div>
            </td>
            <td valign="top" width="8%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">34,000</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">15,000</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
              </div>
            </td>
            <td valign="top" width="11%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;1,154,000&#160;&#160;&#160;&#160;&#160;
      </font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;536,000&#160;&#160;&#160;&#160;&#160;
      </font></div>
              </div>
            </td>
            <td valign="top" width="13%" style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="top" width="12%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">$3,000</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
      3,000</font></div>
              </div>
            </td>
            <td align="left" valign="top" width="10%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.8pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;1,287,000</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.8pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;644,000</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="28%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial">Larry Martin<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (3)</font></font></font></font></font></font></font></font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">CFO -
      Sunrise</font></div>
              </div>
            </td>
            <td valign="top" width="10%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">2008</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">2007</font></div>
              </div>
            </td>
            <td valign="top" width="8%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">102,000</font></div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;17,000</font></div>
              </div>
            </td>
            <td valign="top" width="8%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">10,000</font></div>
              </div>
            </td>
            <td valign="top" width="11%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;&#160;&#160;63,000&#160;&#160;&#160;&#160;&#160;
      </font></div>
              </div>
            </td>
            <td valign="top" width="13%" style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
    </font></td>
            <td valign="top" width="12%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;
      3,000</font></div>
              </div>
            </td>
            <td align="right" valign="top" width="10%" style="TEXT-ALIGN: right">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">178,000</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 4.8pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">&#160;&#160;17,000</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: right">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: left">-------------------------------------------------------------</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: left"><br>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(<font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">1)</font></font></font></div>
              </td>
              <td>
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">Represents
      the amount we recognized as an expense in our financial statements. Mr.
      Stabio and Mr. Bilsland each were granted restricted stock units in the
      summer of 2007, and soon thereafter, vesting was
      accelerated.&#160;&#160;During the summer of 2008, Messrs. Stabio,
      Bilsland and Martin were granted restricted stock units, and about three
      months later, vesting was
accelerated.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 24px">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(2)</font></font></font></font></font></div>
              </td>
              <td width="1213">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">Represents
      company contributions to the 401(k)
plan.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 23px">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(3)</font></font></font></font></font></div>
              </td>
              <td width="1214">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">Mr. Martin
      began employment in October
2007.</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
April 2005, we granted 750,000 options at an exercise price of $2.30 per share
to our employees of which 400,000 were issued to Mr. Stabio.&#160; On July 9,
2007 Mr. Stabio exercised 200,000 options at an exercise price of
$2.30.&#160;&#160;&#160;No options were granted or exercised in
2008.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">At
December 31, 2008, Mr. Stabio's in-the-money value of his exercisable options
(200,000) was about $140,000 and expire on April 15, 2015.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">None of these three
officers have any outstanding restricted stock units.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Effective January
1, 2008 Mr. Stabio's annual salary was increased from about $140,000 to $180,000
per year.&#160;&#160;&#160;Mr.&#160;Bilsland's salary was increased from $90,000
to $130,000 effective November&#160;1, 2008 and Mr.&#160;Martin's salary was
increased from $100,000 to $103,000 effective April 1, 2008.&#160;&#160;We have
no written employment agreements with any of our officers.&#160;&#160;Bonuses,
if any, are paid on a discretionary basis.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
February 2009 in connection with a verbal relocation plan, we purchased from Mr.
Martin his personal residence, which is about 50 miles from the offices, for
about $185,000.&#160;&#160;Mr. Martin will continue to live in the house for
three months awaiting the completion of his new residence near the Terre Haute
offices.&#160;&#160;We plan to sell the house this summer.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">32</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial; TEXT-DECORATION: underline">Compensation
of Directors</font></font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our directors
receive no compensation for their services.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div align="center">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td>
                <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">ITEM
      12.&#160;&#160; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT </font></div>
                <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      AND RELATED STOCKHOLDER
MATTERS.</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">This table shows
the number and percentage of common shares owned for each shareholder known by
us to beneficially own 5% or more of our stock as of March 24,
2009.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">
      <div style="DISPLAY: block; TEXT-INDENT: 0pt" align="center">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt" align="center">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt" align="center">
            <table cellpadding="0" cellspacing="0" width="100%">
                <tr>
                  <td valign="top" width="51%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">Name</font></div>
                  </td>
                  <td valign="top" width="12%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial; TEXT-DECORATION: underline"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">No. Shares
      </font></font></font></div>
                  </td>
                  <td valign="top" width="7%">&#160;</td>
                  <td valign="top" width="12%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial; TEXT-DECORATION: underline"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">% of Class
      </font></font></font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(1)</font></font></font></font></font></div>
                  </td>
                  <td valign="top" width="18%">&#160;</td>
                </tr>
                <tr>
                  <td valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="51%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Hardie Family Shares <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(2)</font></font></font></font></div>
                  </td>
                  <td align="right" valign="top" width="12%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,572,957</font></div>
                  </td>
                  <td align="right" valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  <td align="right" valign="top" width="12%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">20.37</font></div>
                  </td>
                  <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="51%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3000 S.
      Street, Suite 200</font></div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Sacramento,
      CA 95816</font></div>
                    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                  </td>
                  <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="51%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Yorktown Energy Partners<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(3)</font></font></font></font></div>
                  </td>
                  <td align="right" valign="top" width="12%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">12,257,256</font></div>
                  </td>
                  <td align="right" valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  <td align="right" valign="top" width="12%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">54.60</font></div>
                  </td>
                  <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="51%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">410 Park
      Avenue, 19<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">th</font>
      Floor</font></div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">New York, NY
      10022&#160;&#160;</font></div>
                  </td>
                  <td align="right" valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td align="right" valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  <td align="right" valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                </tr>
                <tr>
                  <td valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="51%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Lubar &amp;
      Associates</font></div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">700 North
      Water Street</font></div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Suite
      1200</font></div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Milwaukee, WI
      53202</font></div>
                  </td>
                  <td align="right" valign="top" width="12%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,038,685</font></div>
                  </td>
                  <td align="right" valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  <td align="right" valign="top" width="12%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">9.08</font></div>
                  </td>
                  <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                </tr>
                <tr>
                  <td valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                  <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                  <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                </tr>
            </table>
          </div>
        </div>
      </div>
    </div>
    <div>
      <div align="center">&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td>
              <div align="left">--------------------------------</div>
              <div align="left">&#160;</div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <div align="right">
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="right" valign="top" width="2%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="
DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(1)</font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></div>
              </td>
              <td align="left" valign="top" width="98%" style="TEXT-ALIGN: left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">The
      percentages of ownership are calculated based on a total of 22,446,028
      common shares outstanding.</font></div>
              </td>
            </tr>
            <tr>
              <td align="right" valign="top" width="2%" style="TEXT-ALIGN: left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="
DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(2)</font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></div>
              </td>
              <td align="left" valign="top" width="98%" style="TEXT-ALIGN: left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Includes
      3,426,601 shares owned by Hallador Alternative Assets Fund, 823,041 shares
      owned by Robert C. Hardie L.P., 298,315 shares owned by Hallador, Inc. and
      25,000 shares owned by Sandra Hardie (Steven Hardie's
      wife.)</font></div>
                </div>
              </td>
            </tr>
            <tr>
              <td align="right" valign="top" width="2%" style="TEXT-ALIGN: left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="
DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(3)</font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></div>
              </td>
              <td align="left" valign="top" width="98%" style="TEXT-ALIGN: left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial">Includes 6,557,166 shares
      owned by <font size="+0"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial">Yorktown Energy Partners, VI
      L.P.</font> and</font> 5,700,090 shares owned by Yorktown Energy Partners,
      VII L.P.</font></td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">33</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">This table shows
the number and percentage of common shares beneficially owned by each of our
directors and officers and by group at March 24, 2009.&#160;&#160;&#160;
Beneficial ownership of certain shares has been, or is being, specifically
disclaimed by certain directors in ownership reports filed with the
SEC.</font></div>
    <div>
      <div style="TEXT-ALIGN: left" align="center">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <div align="center">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <table cellpadding="0" cellspacing="0" width="100%">
                        <tr>
                          <td valign="top" width="51%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">Name</font></div>
                          </td>
                          <td valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">No.
      Shares</font></div>
                          </td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">%
      of Class <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(1)</font></font></div>
                          </td>
                          <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="top" width="51%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">David Hardie
      and Steven Hardie<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(2)</font></font></div>
                          </td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4,572,957</font></div>
                          </td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">20.37</font></div>
                          </td>
                          <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="top" width="51%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Bryan H.
      Lawrence<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(3)</font></font></div>
                          </td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">12,307,256</font></div>
                          </td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">54.83</font></div>
                          </td>
                          <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="top" width="51%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Sheldon
      Lubar<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (4)</font></font></div>
                          </td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2,038,685</font></div>
                          </td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">9.08</font></div>
                          </td>
                          <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="top" width="51%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Victor P.
      Stabio<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(5)</font></font></div>
                          </td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">1,033,413</font></div>
                          </td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">4.56</font></div>
                          </td>
                          <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="top" width="51%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Brent K.
      Bilsland <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(6)</font></font></div>
                          </td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;&#160;365,000</font></div>
                          </td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;1.63</font></div>
                          </td>
                          <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="top" width="51%" style="PADDING-BOTTOM: 2px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Larry
      Martin</font></div>
                          </td>
                          <td align="right" valign="top" width="12%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline">&#160;&#160;&#160;&#160;&#160;&#160;29,000</font></font></div>
                          </td>
                          <td valign="top" width="7%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline">&#160;&#160;0.13</font></font></div>
                          </td>
                          <td align="right" valign="top" width="18%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="top" width="51%" style="PADDING-BOTTOM: 4px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">All directors
      and executive officers as a group</font></div>
                          </td>
                          <td align="right" valign="top" width="12%" style="BORDER-BOTTOM: black 4px double">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline">20,346,311</font></font></div>
                          </td>
                          <td valign="top" width="7%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;
    </font></td>
                          <td align="right" valign="top" width="12%" style="BORDER-BOTTOM: black 4px double">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline">&#160;&#160;&#160;90.60</font></font></div>
                          </td>
                          <td align="right" valign="top" width="18%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                        </tr>
                    </table>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>---------------------------------------------------</div>
      </div>
      <div style="TEXT-ALIGN: left" align="center">&#160;</div>
      <div style="TEXT-ALIGN: left" align="center">&#160;</div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="right" valign="top" width="2%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(1)</font></font></font></font></font></div>
              </td>
              <td align="left" valign="top" width="98%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">The
      percentages of ownership are calculated based on a total of 22,446,028
      common shares outstanding.</font></div>
              </td>
            </tr>
            <tr>
              <td align="right" valign="top" width="2%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(2)</font></font></font></font></font></font></font></font></font></div>
              </td>
              <td align="left" valign="top" width="98%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Includes
      3,426,601 shares owned by Hallador Alternative Assets Fund, 823,041 shares
      owned by Robert C. Hardie L.P., 298,315 shares owned by Hallador, Inc. and
      25,000 shares owned by Sandra Hardie (Steven Hardie's
    wife.)</font></div>
              </td>
            </tr>
            <tr>
              <td align="right" valign="top" width="2%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(3)</font></font></font></font></font></font></font></font></font></div>
              </td>
              <td align="left" valign="top" width="98%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Mr.
      Lawrence&#8217;s address is 410 Park Avenue, 19<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">th</font>
      Floor, New York, NY 10022.&#160; Mr. Lawrence owns 50,000 shares
      directly.&#160;&#160;The remainder is held by Yorktown Energy Partners VI,
      L.P., and Yorktown Energy Partners VII, L.P., both affiliated with Mr.
      Lawrence.</font></div>
              </td>
            </tr>
            <tr>
              <td align="right" valign="top" width="2%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">&#160;(4)</font></font></font></font></font></font></font></font></font></div>
              </td>
              <td align="left" valign="top" width="98%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Includes
      shares owned by Lubar &amp; Associates.</font></div>
              </td>
            </tr>
            <tr>
              <td align="right" valign="top" width="2%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(5)</font></font></font></font></font></font></font></font></font></div>
              </td>
              <td align="left" valign="top" width="98%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">Includes
      781,193 shares held in trust and 200,000 options exercisable within 60
      days.&#160;&#160;It also includes 52,220 shares owned by his family
      members, over which he has no voting or dispositive power and as to which
      he disclaims beneficial ownership.</font></div>
              </td>
            </tr>
            <tr>
              <td align="right" valign="top" width="2%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(6)</font></font></font></font></font></font></font></font></font></div>
              </td>
              <td align="left" valign="top" width="98%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial">In addition to Mr. Bilsland
's
      ownership in us, he and other family members own an aggregate 12% interest
      in Sunrise Coal, LLC<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial">.</font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">34</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div align="center">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td>
                <div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: arial">ITEM
      13.&#160;&#160; CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
      DIRECTOR INDEPENDENCE.</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our Audit Committee
consists of all board members other than Mr. Stabio.&#160;&#160;Our Compensation
Committee consists of Messrs. David and Steven Hardie and Mr.
Lawrence.&#160;&#160;We have no nominating committee.&#160;&#160;None of our
committees have charters.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
do not have an audit committee financial expert serving on our audit
committee.&#160; We believe that the additional costs to recruit a financial
expert exceed the benefits, if any.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
had four board meetings and four audit committee meetings during 2008 and all
members attended at least 75% of the meetings.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">We
have entered into significant equity transactions with Yorktown and other
entities that invest with Yorktown.&#160; Yorktown, our largest shareholder,
owns about 55% of our common stock and represents one of the five seats on our
board.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
14.&#160;&#160; PRINCIPAL ACCOUNTANT FEES AND SERVICES.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">The fees incurred
for 2008 and 2007 were:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <div align="center">
        <div align="center">
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                <td align="left" valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="10%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2008</font></div>
                </td>
                <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="11%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">2007</font></div>
                </td>
                <td align="left" valign="top" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;</font></td>
                <td align="left" valign="top" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Audit
      Fees</font></font></font></div>
                </td>
                <td align="left" valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="top" width="10%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">141,500</font></div>
                </td>
                <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="top" width="11%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">150,500</font></div>
                </td>
                <td align="left" valign="top" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Tax
      fees</font></font></font></div>
                </td>
                <td align="left" valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td valign="top" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="right" valign="top" width="11%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">51,000</font></div>
                </td>
                <td align="left" valign="top" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td align="left" valign="top" width="39%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Total
      fees</font></font></font></div>
                </td>
                <td align="left" valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">141,500</font></div>
                </td>
                <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
                <td align="left" valign="top" width="3%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">$</font></div>
                </td>
                <td align="right" valign="top" width="11%" style="BORDER-BOTTOM: black 4px double">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">201,500</font></div>
                </td>
                <td align="left" valign="top" width="21%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">&#160;
    </font></td>
              </tr>
          </table>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial; TEXT-DECORATION: underline">Pre-approval
Policy</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">In
2003 the Audit Committee adopted a formal policy concerning approval of audit
and non-audit services to be provided by Ehrhardt Keefe Steiner &amp; Hottman PC
(EKSH).&#160; The policy requires that all services EKSH provides to us be
pre-approved by the Committee.&#160; The Committee approved all services
provided by EKSH during 2008 and 2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">35</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 12pt; COLOR: #000000; FONT-FAMILY: Arial">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">PART
IV</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">ITEM
15.&#160;&#160;&#160;EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">See Item 8. for an
index of our financial statements.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Because we are a
smaller reporting company we are not required to provide financial statement
schedules.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial">Our exhibit index
is as follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.1</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Restated Articles of
      Incorporation of Kimbark Oil and Gas Company, effective September 24,
      1987&#160; <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(1)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.2</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Articles of Amendment to
      Restated Articles of Incorporation of Kimbark Oil &amp; Gas Company,
      effective December 14, 1989, to effect change of name to Hallador
      Petroleum Company and to change the par value and number of authorized
      shares of common stock <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(1)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.3</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Amendment to Articles of
      Incorporation dated December 31, 1990 to effect the one-for-ten reverse
      stock split <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(2)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">3.4</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">By-laws of Hallador Petroleum
      Company, effective November 9, 1993 <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(4)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.1</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Purchase and Sale Agreement
      dated December 31, 2005 between Hallador Petroleum Company, as Purchase
      and Yorktown Energy Partners II, L.P., as Seller relating to the purchase
      and sale of limited partnership interests in Savoy Energy Limited
      Partnership<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (5)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.2</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Letter of Intent dated January
      5, 2006 between Hallador Petroleum Company and Sunrise Coal, LLC<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (6)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.3</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Subscription Agreement - by
      and between Hallador Petroleum Company and Yorktown Energy Partners VI,
      L.P., et al dated February 22, 2006.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (5)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.4</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Subscription Agreements - by
      and between Hallador Petroleum Company and Hallador Alternative Assets
      Fund LLC, et al dated February 14, 2006.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (6)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.5</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Continuing Guaranty, dated
      April 19, 2006, by Hallador Petroleum Company in favor of Old National
      Bank <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(9)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.6</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Collateral Assignment of
      Hallador Master Purchase/Sale Agreement, dated April 19, 2006, among
      Hallador Petroleum Company, Hallador Petroleum, LLLP, and Hallador
      Production Company and Old National Bank <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(9)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.7</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Reimbursement Agreement, dated
      April 19, 2006, between Hallador Petroleum Company and Sunrise Coal, LLC
      <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(9)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.8</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Membership Interest Purchase
      Agreement dated July 31, 2006 by and between Hallador Petroleum Company
      and Sunrise Coal, LLC. <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(10)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.9</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Subscription Agreements - by
      and between Hallador Petroleum Company and Yorktown Energy Partners VII,
      L.P., et al dated October 5, 2007<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (10)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.10</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Purchase and Sale Agreement
      dated effective as of October 5, 2007 between Hallador Petroleum Company,
      as Purchaser and Savoy Energy Limited Partnership, as Seller <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(12)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.11</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">First Amendment to Credit
      Agreement, Waiver and Ratification of Loan Documents dated June 28, 2007
      by and between Sunrise Coal, LLC, Hallador Petroleum Company and Old
      National Bank<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (12)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.12</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Amended and Restated
      Continuing Guaranty, dated as of June 28, 2007, between Hallador Petroleum
      Company, Sunrise Coal, LLC, and Old National Bank. <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(13)</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.13</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Hallador Petroleum Company
      Restricted Stock Unit Issuance Agreement dated as of June 28, 2007,
      between Hallador Petroleum Company and Victor P. Stabio<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(13)*</font></font></font></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.14</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Hallador Petroleum Company
      Restricted Stock Unit Issuance Agreement dated as of July 19, 2007,
      between Hallador Petroleum Company and Brent Bilsland<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(14)*</font></font></font></font></div>
            </td>
          </tr>
      </table>
      <div>&#160;</div>
      <div>
        <div>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Arial">36</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right">
            </div>
          </div>
        </div>
      </div>
      <div>&#160;</div>
      <div>
        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.15</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Hallador
      Petroleum Company 2008 Restricted Stock Unit Plan.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(15)*</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.16</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Form of
      Amended and Restated Purchase and Sale Agreement dated July 24, 2008 to
      purchase additional minority interest from Sunrise Coal, LLC's minority
      members <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(16)</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.17</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Form of
      Hallador Petroleum Company Restricted Stock Unit Issuance Agreement dated
      July 24, 2008<font style="DISPLAY: inline; FONT-FAMILY: arial">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(16)*</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.18</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Credit
      Agreement dated December&#160;12, 2008, by and among Sunrise Coal, LLC,
      Hallador Petroleum Company as a Guarantor, PNC Bank, National Association
      as administrative agent for the lenders, and the other lenders party
      thereto. <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(17)</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.19</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Continuing
      Agreement of Guaranty and Suretyship dated December&#160;12, 2008, by
      Hallador Petroleum Company in favor of PNC Bank, National Association
      <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(17)</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">10.20</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Amended and
      Restated Promissory Note dated December&#160;12, 2008, in the principal
      amount of $13,000,000, issued by Sunrise Coal, LLC in favor of Hallador
      Petroleum Company <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(17)</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">14</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">Code Of
      Ethics For Senior Financial Officers. <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(8)</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">21.1</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">List of
      Subsidiaries<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (2)</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">31</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">SOX 302
      Certification<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
      (18)</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="8%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">32</font></div>
                </td>
                <td align="left" valign="top" width="79%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial">SOX 906
      Certification <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(18)</font></font></div>
                </td>
              </tr>
          </table>
        </div>
      </div>
      <div>&#160;</div>
      <div align="left">
      </div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">---------------------------------------</font></font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 8pt; FONT-FAMILY: arial">(</font><font style="FONT-SIZE: 8pt; FONT-FAMILY: arial"><font style="FONT-SIZE: 8pt; FONT-FAMILY: arial">1)</font>&#160;&#160;Incorporated
      by reference (IBR) to the 1989 Form 10-K.</font></font></div>
            </td>
            <td align="left" valign="top" width="51%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(10) IBR to
      Form 8-K dated August 1, 2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(2)&#160; IBR
      to the 1990 Form 10-K.</font></div>
            </td>
            <td align="left" valign="top" width="51%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(11) IBR to
      Form 10-QSB dated September 30, 2007.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(3)&#160; IBR
      to the 1992 Form 10-KSB.</font></div>
            </td>
            <td align="left" valign="top" width="51%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(12) IBR to
      Form 10-QSB dated June 30, 2007.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(4)&#160; IBR
      to the 1993 Form 10-KSB.</font></div>
            </td>
            <td align="left" valign="top" width="51%">
              <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">&#160;&#160;&#160;
      (13) IBR to Form 8-K dated July 2, 2007.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(5) &#160;IBR
      to Form 8-K dated January 3, 2006.</font></div>
            </td>
            <td align="left" valign="top" width="51%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(14) IBR to
      Form 10-KSB dated December 31, 2007.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(6)&#160;&#160;IBR
      to Form 8-K dated January 6, 2006.</font></div>
            </td>
            <td align="left" valign="top" width="51%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(15) IBR to
      March 31, 2007 Form 10-Q.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(7)&#160;&#160;IBR
      to Form 8-K dated February 27, 2006.</font></div>
            </td>
            <td align="left" valign="top" width="51%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(16) IBR to
      Form 8-K dated July 24, 2008.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(8)&#160;&#160;IBR
      to the 2005 Form 10-KSB.</font></div>
            </td>
            <td align="left" valign="top" width="51%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: arial">(17) IBR to
      Form 8-K dated December 12, 2008.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="49%">
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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.</font></div>
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accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.</font></div>
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<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>exh31.htm
<DESCRIPTION>SOX 302 CERTIFICATION
<TEXT>
<html>
  <head>
    <title>exh31.htm</title>
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    <div style="MARGIN: 0in 0in 0pt"><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Arial">EXHIBIT
31</font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align="center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Arial">CERTIFICATION</font>
</font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">I, Victor P. Stabio, certify that:
</font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt">&#160;</div>
    <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">1. &#160;I have reviewed this Annual
Report on Form 10-K of Hallador Petroleum Company; </font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">2.&#160; Based on my knowledge, this
report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this report; </font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">3.&#160; Based on my knowledge, the
financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition and results of
operations of the issuer as of, and for, the periods presented in this report;
</font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">4.&#160; &#160;I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules&#160;13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have: </font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt 45pt; TEXT-INDENT: -0.25in; tab-stops: .75in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">(a)&#160; Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
report is being prepared; and </font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt 45pt; TEXT-INDENT: -0.25in; tab-stops: .75in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">(b)&#160; Designed such internal
control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles;</font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt 45pt; TEXT-INDENT: -0.25in; tab-stops: .75in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">(c)&#160; Evaluated the
effectiveness of the registrant&#8217;s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and </font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt 45pt; TEXT-INDENT: -0.25in; tab-stops: .75in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">(c)&#160; Disclosed in this report
any change in the registrant&#8217;s internal control over financial reporting that
occurred during the registrant&#8217;s most recent fiscal quarter (the registrant&#8217;s
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant&#8217;s
internal control over financial reporting. </font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">5.&#160; I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant&#8217;s auditors and the audit committee of the registrant&#8217;s board of
directors (or persons performing the equivalent functions): </font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt 45pt; TEXT-INDENT: -0.25in; tab-stops: .75in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">(a)&#160; All significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
the registrant&#8217;s ability to record, process, summarize and report financial
information; and have identified for the registrant's auditors any material
weakness in internal controls; and </font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt 45pt; TEXT-INDENT: -0.25in; tab-stops: .75in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">(b)&#160; Any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrant&#8217;s internal control; and</font></div>
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    <div style="MARGIN: 0in 0in 0pt 45pt; TEXT-INDENT: -0.25in; tab-stops: .75in"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">(c) I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.</font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Date: March&#160;25,
2009</font></div>
    <div>&#160;</div>
    <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: arial">/s/Victor P.
Stabio,&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">CEO and
CFO </font></div>
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<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>3
<FILENAME>exh32.htm
<DESCRIPTION>SOX 906 CERTIFICATION
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    <div style="MARGIN: 0in 0in 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font size="3" style="FONT-SIZE: 12pt; FONT-FAMILY: Arial">EXHIBIT
32</font></font></font></div>
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    <div><font size="3"><font size="3" style="FONT-SIZE: 12pt; FONT-FAMILY: Arial"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Arial">CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002</font></font></font></div>
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    <div style="MARGIN: 0in 0in 0pt"><font size="3" style="FONT-SIZE: 12pt; FONT-FAMILY: Arial">In connection with the Annual
Report of Hallador Petroleum Company (the "Company"), on Form 10-K for the year
ended December 31, 2008, as filed with the Securities and Exchange Commission on
the date hereof (the "Report"), the undersigned, in the capacities and dates
indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his
knowledge:</font></div>
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    <div style="MARGIN: 0in 0in 0pt 1in; TEXT-INDENT: -0.5in"><font size="3" style="FONT-SIZE: 12pt; FONT-FAMILY: Arial">(1)&#160;&#160;&#160;&#160;&#160;&#160; The Report fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and</font></div>
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    <div style="MARGIN: 0in 0in 0pt 1in; TEXT-INDENT: -0.5in"><font size="3" style="FONT-SIZE: 12pt; FONT-FAMILY: Arial">(2)
&#160;&#160;&#160;&#160;&#160; The information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.</font></div>
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              <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">Dated: March 25,
      2009</font></div>
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              <div style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">/s/VICTOR P.
      STABIO,&#160;</font><font style="FONT-SIZE: 12pt; FONT-FAMILY: arial">CEO
      and CFO</font></div>
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