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<SEC-DOCUMENT>0001104659-03-009399.txt : 20030513
<SEC-HEADER>0001104659-03-009399.hdr.sgml : 20030513
<ACCEPTANCE-DATETIME>20030513142426
ACCESSION NUMBER:		0001104659-03-009399
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20030329
FILED AS OF DATE:		20030513

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			APPLIANCE RECYCLING CENTERS OF AMERICA INC /MN
		CENTRAL INDEX KEY:			0000862861
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES [5700]
		IRS NUMBER:				411454591
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			0103

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-19621
		FILM NUMBER:		03695106

	BUSINESS ADDRESS:	
		STREET 1:		7400 EXCELSIOR BLVD
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55426-4502
		BUSINESS PHONE:		6129309000

	MAIL ADDRESS:	
		STREET 1:		7400 EXCELSIOR BLVD
		CITY:			NINNEAPOLIS
		STATE:			MN
		ZIP:			554264517
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>j0665_10q.htm
<DESCRIPTION>10-Q
<TEXT>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">Form 10-Q</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">SECURITIES AND EXCHANGE COMMISSION</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">WASHINGTON,

D.C. 20549</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>





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<hr size="1" width="25%" noshade color="black" align="center">



</font></div>





<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<div align="center">



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

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  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="3" face="Wingdings" style="font-family:Wingdings;font-size:12.0pt;font-weight:bold;">&#253;</font></b><b><font size="3" style="font-size:12.0pt;font-weight:bold;"> QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)<br>

  OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></p>

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 </tr>

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  <td width="100%" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

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  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">For the quarterly period ended

  March 29, 2003</font></b></p>

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  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

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  <td width="100%" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">OR</font></b></p>

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  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

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  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="3" face="Wingdings" style="font-family:Wingdings;font-size:12.0pt;font-weight:bold;">o</font></b><b><font size="3" style="font-size:12.0pt;font-weight:bold;"> TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)<br>

  OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></p>

  </td>

 </tr>

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  <td width="100%" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Commission file number 0-19621</font></b></p>

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</table>



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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<div align="center">



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">APPLIANCE RECYCLING CENTERS of AMERICA, INC.</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.78%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Minnesota</font></b></p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.48%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.74%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">41-1454591</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.78%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(State or other jurisdiction of<br>

  incorporation or organization)</font></p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.48%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.74%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(I.R.S. Employer<br>

  Identification No.)</font></p>

  </td>

 </tr>

 <tr>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.78%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.48%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.74%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.78%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">7400 Excelsior Blvd.<br>

  Minneapolis, Minnesota 55426-4517</font></b></p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.48%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.74%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.78%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Address of principal executive<br>

  offices)</font></p>

  </td>

  <td width="2%" valign="top" style="padding:0in 0in 0in 0in;width:2.48%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.74%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">(952) 930-9000</font></b></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Registrant&#146;s telephone number, including area code)</font></p>

  </td>

 </tr>

</table>



</div>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Indicate by check mark

whether the registrant (1) has filed all reports required to be filed by

Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding

12 months, and (2) has been subject to such filing requirements for the past 90

days.&nbsp;&nbsp;Yes&nbsp;&nbsp;&nbsp;&nbsp;</font><font face="Wingdings" style="font-family:Wingdings;">&#253;</font>&#160;&#160;&#160; No&#160;

<font face="Wingdings" style="font-family:Wingdings;">o</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Indicate by check mark

whether the registrant is an accelerated filer (as defined in Rule 12B-2 of the

Exchange Act).&nbsp;&nbsp;Yes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font face="Wingdings" style="font-family:Wingdings;">o</font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;&nbsp;<font face="Wingdings" style="font-family:Wingdings;">&#253;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As of May 9, 2003, the

number of shares outstanding of the registrant&#146;s no par value Common Stock was

2,343,890 shares.</font></p>



<div style="border:none;border-bottom:double windowtext 9.0pt;padding:0in 0in 0in 0in;">



<p align="center" style="border:none;margin:0in 0in .0001pt;padding:0in;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



</div>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
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</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">APPLIANCE RECYCLING CENTERS of AMERICA, INC.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">&nbsp;</font></i></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Index</font></i></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="13%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:13.42%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">PART I.</font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">FINANCIAL

  INFORMATION</font></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Item 1:</font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Financial

  Statements:</font></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

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  <td width="13%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:13.42%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.3%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="80%" valign="top" style="padding:0in 0in 0in 0in;width:80.28%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#ConsolidatedBalanceSheets" title="Click to goto CONSOLIDATED BALANCE SHEETS">Consolidated Balance Sheets

  as of<br>

  March 29, 2003 and December 28, 2002</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="13%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:13.42%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.3%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="80%" valign="top" style="padding:0in 0in 0in 0in;width:80.28%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="13%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:13.42%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.3%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="80%" valign="top" style="padding:0in 0in 0in 0in;width:80.28%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#ConsolidatedStatementsOfOperations" title="Click to goto CONSOLIDATED STATEMENTS OF OPERATIONS">Consolidated

  Statements of Operations for the<br>

  Three Months Ended March 29, 2003 and March 30, 2002</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="13%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:13.42%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.3%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="80%" valign="top" style="padding:0in 0in 0in 0in;width:80.28%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

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  <td width="13%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:13.42%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.3%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="80%" valign="top" style="padding:0in 0in 0in 0in;width:80.28%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#ConsolidatedStatementsOfCashFlows" title="Click to goto CONSOLIDATED STATEMENTS OF CASH FLOWS">Consolidated

  Statements of Cash Flows for the<br>

  Three Months Ended March 29, 2003 and March 30, 2002</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="13%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:13.42%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.3%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="80%" valign="top" style="padding:0in 0in 0in 0in;width:80.28%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="13%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:13.42%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.3%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="80%" valign="top" style="padding:0in 0in 0in 0in;width:80.28%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#NotesToConsolidatedFinancialStatemen" title="Click to goto NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)">Notes

  to Consolidated Financial Statements</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2" title="Click to goto ITEM 2">Item 2:</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2" title="Click to goto ITEM 2">Management&#146;s Discussion and Analysis of

  Financial Condition and Results of Operations</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3" title="Click to goto ITEM 3">Item 3:</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3" title="Click to goto ITEM 3">Quantitative and Qualitative Disclosure about

  Market Risk</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4" title="Click to goto ITEM 4">Item 4:</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4" title="Click to goto ITEM 4">Controls and Procedures</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="13%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:13.42%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#PartIi_OtherInformation" title="Click to goto PART II. OTHER INFORMATION">PART II.</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#PartIi_OtherInformation" title="Click to goto PART II. OTHER INFORMATION">OTHER INFORMATION</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item1LegalProceedings" title="Click to goto ITEM 1 - LEGAL PROCEEDINGS">Item

  1:</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item1LegalProceedings" title="Click to goto ITEM 1 - LEGAL PROCEEDINGS">Legal

  Proceedings</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2ChangesInSecuritiesAndUseO" title="Click to goto ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS">Item

  2:</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2ChangesInSecuritiesAndUseO" title="Click to goto ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS">Changes

  in Securities and use of Proceeds</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3DefaultsUponSeniorSecurities" title="Click to goto ITEM 3 - DEFAULTS UPON SENIOR SECURITIES">Item 3:</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3DefaultsUponSeniorSecurities" title="Click to goto ITEM 3 - DEFAULTS UPON SENIOR SECURITIES">Defaults upon

  Senior Securities</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4SubmissionOfMattersToAVote" title="Click to goto ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS">Item

  4:</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4SubmissionOfMattersToAVote" title="Click to goto ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS">Submission

  of Matters to a Vote of Security Holders</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item5OtherInformation" title="Click to goto ITEM 5 - OTHER INFORMATION">Item

  5:</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item5OtherInformation" title="Click to goto ITEM 5 - OTHER INFORMATION">Other

  Information</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="8%" valign="top" style="padding:0in 0in 0in 0in;width:8.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item6ExhibitsAndReportsOnForm8" title="Click to goto ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K">Item 6:</a></font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:86.58%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item6ExhibitsAndReportsOnForm8" title="Click to goto ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K">Exhibits and

  Reports on Form 8-K</a></font></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Signatures" title="Click to goto SIGNATURES">SIGNATURES</a></font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='2',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
<br clear="all" style="page-break-before:always;">

</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Appliance Recycling

Centers of America, Inc. and Subsidiaries</font></p>



<p style="margin:0in 0in .0001pt;"><a name="ConsolidatedBalanceSheets"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CONSOLIDATED BALANCE SHEETS</font></a></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="1" cellspacing="0" cellpadding="0" width="100%" style="border:none;border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">(Unaudited)<br>

  March 29,<br>

  2003</font></b></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">December

  28,<br>

  2002</font></b></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ASSETS</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current Assets</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash

  equivalents</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,055,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,802,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts receivable,

  net of allowance of $26,000</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,749,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,129,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Inventories, net

  of reserves of $292,000 and $548,000, respectively</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,744,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,316,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Refundable

  income taxes</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">523,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">523,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Deferred income

  taxes</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">490,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">490,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other current

  assets</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">192,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">448,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total current assets</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12,753,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">13,708,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Property and Equipment, at cost</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Land</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,050,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,050,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Buildings and

  improvements</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,951,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,945,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Equipment</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,044,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,979,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="line-height:normal;margin:0in 0in .0001pt;page-break-after:auto;text-decoration:underline;"><font size="2" face="Times New Roman" style="font-size:1.0pt;text-decoration:none;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11,045,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10,974,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Less accumulated

  depreciation</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,880,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,763,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="line-height:normal;margin:0in 0in .0001pt;page-break-after:auto;text-decoration:underline;"><font size="2" face="Times New Roman" style="font-size:1.0pt;text-decoration:none;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net property and

  equipment</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6,165,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6,211,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="line-height:normal;margin:0in 0in .0001pt;page-break-after:auto;text-decoration:underline;"><font size="2" face="Times New Roman" style="font-size:1.0pt;text-decoration:none;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other Assets</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">303,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">320,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="line-height:normal;margin:0in 0in .0001pt;page-break-after:auto;text-decoration:underline;"><font size="2" face="Times New Roman" style="font-size:1.0pt;text-decoration:none;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total assets</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19,221,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">20,239,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">LIABILITIES

  AND SHAREHOLDERS&#146; EQUITY</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current Liabilities</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Line of credit</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,343,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,515,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current

  maturities of long-term obligations</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">226,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">259,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts payable</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,495,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,929,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accrued expenses

  (Note 2)</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,177,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,273,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Income taxes

  payable</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">308,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">729,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total current

  liabilities</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,549,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,705,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Long-Term Obligations, less current maturities</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,378,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,424,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Deferred Income Tax Liabilities</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">373,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">373,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="line-height:normal;margin:0in 0in .0001pt;page-break-after:auto;text-decoration:underline;"><font size="2" face="Times New Roman" style="font-size:1.0pt;text-decoration:none;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total

  liabilities</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,300,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,502,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="line-height:normal;margin:0in 0in .0001pt;page-break-after:auto;text-decoration:underline;"><font size="2" face="Times New Roman" style="font-size:1.0pt;text-decoration:none;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Shareholders&#146; Equity</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Common stock, no

  par value; authorized 10,000,000 shares; issued and outstanding 2,344,000 and

  2,324,000 shares, respectively</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11,368,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11,368,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accumulated deficit</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,447,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(5,631,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total

  shareholders&#146; equity</font></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,921,000</font></p>

  </td>

  <td width="2%" style="border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,737,000</font></p>

  </td>

  <td width="1%" style="border:none;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="line-height:normal;margin:0in 0in .0001pt;page-break-after:auto;text-decoration:underline;"><font size="2" face="Times New Roman" style="font-size:1.0pt;text-decoration:none;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total

  liabilities and shareholders&#146; equity</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19,221,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">20,239,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">See Notes to Consolidated Financial Statements.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='3',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
<br clear="all" style="page-break-before:always;">

</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Appliance Recycling

Centers of America, Inc. and Subsidiaries</font></p>



<p style="margin:0in 0in .0001pt;"><a name="ConsolidatedStatementsOfOperations"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CONSOLIDATED STATEMENTS

OF OPERATIONS</font></a></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Unaudited)</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="30%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:30.16%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three Months Ended</font></b></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">March 29,<br>

  2003</font></b></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">March 30,<br>

  2002</font></b></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Revenues</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Retail</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="12%" valign="bottom" style="padding:0in 0in 0in 0in;width:12.76%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,628,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="12%" valign="bottom" style="padding:0in 0in 0in 0in;width:12.76%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,337,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Recycling</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,315,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,100,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Byproduct</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">83,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">262,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total revenues</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10,026,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11,699,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cost of Revenues</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,596,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,725,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gross profit</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,430,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,974,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Selling, General and Administrative Expenses</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,508,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,319,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Operating income

  (loss)</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,078,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">655,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other Income (Expense)</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other income</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Interest expense</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(169,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(265,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Income (loss)

  before provision for income taxes</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,237,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">397,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Provision (Benefit) for Income Taxes</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(421,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">159,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net income

  (loss)</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.76%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(816,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.76%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">238,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.02%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic Earnings (Loss) per Common Share</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.76%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.35</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.76%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">0.10</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Diluted Earnings (Loss) per Common Share</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.76%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.35</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.76%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">0.07</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Weighted Average Number of Common Shares

  Outstanding:</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" style="padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,335,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,311,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="66%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:66.78%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Diluted</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.04%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,335,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:14.06%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,310,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">See Notes to Consolidated Financial Statements.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='4',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
<br clear="all" style="page-break-before:always;">

</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Appliance Recycling

Centers of America, Inc. and Subsidiaries</font></p>



<p style="margin:0in 0in .0001pt;"><a name="ConsolidatedStatementsOfCashFlows"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CONSOLIDATED STATEMENTS

OF CASH FLOWS</font></a></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Unaudited)</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three Months Ended</font></b></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">March 29,<br>

  2003</font></b></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">March 30,<br>

  2002</font></b></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash Flows from Operating Activities</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net income

  (loss)</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(816,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">238,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Adjustments to

  reconcile net income (loss) to net cash provided by (used in) operating

  activities:</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Depreciation and

  amortization</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">137,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">133,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accretion of

  long-term debt discount</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss on sale of

  property and equipment</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Changes in

  current assets and liabilities:</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Receivables</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(620,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">874,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Inventories</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">572,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(112,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other assets</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">273,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts payable</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(434,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">761,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accrued expenses</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(96,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(128,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Income taxes

  payable</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(421,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 60.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash

  provided by (used in) operating activities</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,400,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,788,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash Flows from Investing Activities</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Purchases of

  property and equipment</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(96,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(123,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash Flows from Financing Activities</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net borrowings

  (payments) under line of credit</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">828,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(408,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Payments on

  long-term obligations</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(79,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(105,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 60.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash provided

  by (used in) financing activities</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">749,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(513,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="line-height:normal;margin:0in 0in .0001pt;page-break-after:auto;text-decoration:underline;"><font size="2" face="Times New Roman" style="font-size:10.0pt;text-decoration:none;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Increase

  (decrease) in cash and cash equivalents</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(747,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,152,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and Cash Equivalents</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Beginning</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,802,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">506,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="line-height:normal;margin:0in 0in .0001pt;page-break-after:auto;text-decoration:underline;"><font size="2" face="Times New Roman" style="font-size:1.0pt;text-decoration:none;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Ending</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,055,000</font></p>

  </td>

  <td width="2%" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,658,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Supplemental Disclosures of Cash Flow Information</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 30.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash payments

  for:</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Interest</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">169,000</font></p>

  </td>

  <td width="2%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">254,000</font></p>

  </td>

  <td width="1%" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 50.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Income taxes</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>

  </td>

  <td width="2%" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">147,000</font></p>

  </td>

  <td width="1%" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">See Notes to Consolidated Financial Statements.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='5',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
<br clear="all" style="page-break-before:always;">

</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Appliance Recycling

Centers of America, Inc. and Subsidiaries</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><a name="NotesToConsolidatedFinancialStatemen"><font size="2" face="Times New Roman" style="font-size:10.0pt;">NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS (UNAUDITED)</font></a></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Financial Statements</u> - In the opinion of management of the

Company, the accompanying unaudited consolidated financial statements contain

all adjustments (consisting of only normal, recurring accruals) necessary to

present fairly the financial position of the Company and its subsidiaries as of

March 29, 2003 and the results of operations and its cash flows for the

three-month periods ended March 29, 2003 and March 30, 2002.&#160; The results of operations for any interim

period are not necessarily indicative of the results for the year. These

interim consolidated financial statements should be read in conjunction with the

Company&#146;s annual consolidated financial statements and related notes in the

Company&#146;s Annual Report on Form 10-K for the year ended December 28, 2002.&#160; Certain information and footnote disclosures

included in the annual consolidated financial statements prepared in accordance

with accounting principles generally accepted in the United States of America

have been condensed or omitted.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">2.</font><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u><font style="letter-spacing:-.15pt;">Accrued Expenses</font></u></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Accrued expenses were as follows:</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="64%" style="border-collapse:collapse;margin-left:.8in;width:64.96%;">

 <tr>

  <td width="58%" valign="bottom" style="padding:0in 0in 0in 0in;width:58.52%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.88%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="17%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.26%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">March 29,<br>

  2003</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.88%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="17%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.24%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">December 28,<br>

  2002</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.24%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:58.52%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Compensation and benefits</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.88%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="15%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.26%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">829,000</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.88%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="15%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.22%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">813,000</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.24%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="bottom" style="padding:0in 0in 0in 0in;width:58.52%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Warranty expense</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.88%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="17%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:17.26%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">49,000</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.88%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="17%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:17.24%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">82,000</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.24%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:58.52%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Other</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.88%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="17%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.26%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">299,000</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.88%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="17%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.24%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">378,000</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.24%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="bottom" style="padding:0in 0in 0in 0in;width:58.52%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.88%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="15%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.26%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">1,177,000</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.88%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="15%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.24%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,273,000</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.24%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>Earnings

per Share</u></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic per share amounts are computed, generally, by

dividing net income or loss by the weighted-average number of common shares

outstanding.&#160; Diluted per share amounts

assume the conversion, exercise, or issuance of all potential common stock

instruments unless their effect is antidilutive, thereby reducing the loss or

increasing the income per common share.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Since the Company incurred a

loss for the three months ended March 29, 2003, the inclusion of potential

option and warrant common shares in the calculation of diluted loss per common

share would have been antidilutive.&#160;

Therefore, basic and diluted weighted-average shares and per share

amounts are the same.</font></p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">In arriving at diluted

weighted-average shares and per share amounts for the three months ended March

30, 2002, options and warrants with exercise prices below average market prices

for the fiscal quarter in which they were dilutive were included using the

treasury stock method.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">6</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='6',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
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</font>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">4.</font><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u><font style="letter-spacing:-.15pt;">Recently Issued Accounting Pronouncements</font></u></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">In January 2003, the FASB issued Statement No. 148, <i><font style="font-style:italic;">Accounting

for Stock-Based Compensation &#150; Transition and Disclosure</font></i>.&#160; This statement provides alternative methods

of transition for a voluntary change to the fair value-based method of

accounting for stock-based employee compensation.&#160; In addition, this statement also amends the disclosure requirements

of SFAS No. 123 to require more prominent and frequent disclosures in the

financial statements about the effects of stock-based compensation.&#160; The transitional guidance and annual

disclosure provisions of this statement were effective for the December 28,

2002, consolidated financial statements.&#160;

The interim reporting disclosure requirements are included in Note 5 to

the consolidated financial statements under the caption &#147;Stock-based

compensation.&#148;&#160; Because the Company

continues to account for employee stock-based compensation under APB Opinion

No. 25, Statement No. 148 had no effect on the Company&#146;s consolidated financial

statements.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In

January 2003, the FASB issued Interpretation No. 45 (&#147;FIN 45&#148;),<i><font style="font-style:italic;"> Guarantor&#146;s Accounting and Disclosure Requirements

for Guarantees, Including Indirect Guarantees of Indebtedness of Others</font></i>.&#160; FIN 45<i><font style="font-style:italic;">  </font></i>clarifies

that a guarantor is required to recognize, at the inception of a guarantee, a

liability for the fair value of the obligation undertaken in issuing certain

guarantees. It also<i><font style="font-style:italic;">  </font></i>elaborates on

the disclosures in FASB Statement No. 5, <i><font style="font-style:italic;">Accounting

for Contingencies,</font></i> which are to be made by a guarantor in its

interim and annual financial statements about its obligations under certain

guarantees that it has issued, even when the likelihood of making any payments

under the guarantees is remote. The consolidated financial statements have

incorporated the enhanced disclosure requirements of FIN 45, as presented in

Note 5 to the consolidated financial statements under the caption &#147;Product

warranty.&#148;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In

January 2003, the FASB issued Interpretation No. 46 (&#147;FIN 46&#148;), <i><font style="font-style:italic;">Consolidation of Variable Interest Entities.&#160; </font></i>This interpretation establishes

standards for identifying a variable interest entity and for determining under

what circumstances a variable interest entity should be consolidated with its

primary beneficiary.&#160; Until now, a

company generally has included another entity in its consolidated financial

statements only if it controlled the entity through voting interests.&#160; FIN 46 changes that by requiring a variable interest

entity to be consolidated by a company if that company is subject to a majority

of the risk of loss from the variable interest entity&#146;s activities or is

entitled to receive a majority of the entity&#146;s residual returns or both.&#160; The disclosure requirements of FIN 46

currently apply to the Company and the balance of the requirements will apply

to the Company as of the 3<sup>rd</sup> Quarter of 2003.&#160; The Company does not believe that the

adoption of this pronouncement will have a material effect on its consolidated

financial statements.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='7',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
<br clear="all" style="page-break-before:always;">

</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 62.2pt;text-indent:-62.2pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">5.</font><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u><font style="letter-spacing:-.15pt;">Critical Accounting

Policies</font></u></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company&#146;s significant accounting policies are

summarized below:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">Revenue</font></b><font style="letter-spacing:-.1pt;">  <b><font style="font-weight:bold;">recognition:</font></b>&#160; The Company recognizes revenue from

appliance sales in the period the appliances are sold. Revenue from appliance

recycling is recognized when a unit is collected and processed.&#160; Byproduct revenue is recognized upon

shipment.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">The Company defers revenue under certain appliance

extended warranty arrangements it services and recognizes the revenue over the

related terms of the warranty contracts.&#160;

On extended warranty arrangements sold by the Company but serviced by

others for a fixed portion of the warranty sales price, the Company recognizes

revenue for the net amount retained at the time of sale.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Shipping and handling charges to customers are included

in the revenues.&#160; Shipping and handling

costs incurred by the Company are included in cost of revenues.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">Product warranty:&#160; </font></b><font style="letter-spacing:-.1pt;">The Company provides a

warranty for the replacement or repair of certain defective units.&#160; The Company&#146;s standard warranty policy

requires the Company to repair or replace certain defective units at no cost to

its customers.&#160; The Company estimates

the costs that may be incurred under its warranty and records a liability

reserve in the amount of such costs at the time product revenue is

recognized.&#160; Factors that affect the

Company&#146;s warranty liability reserve for covered units include the number of

units sold, historical and anticipated rates of warranty claims on these units,

and the cost of these claims.&#160; The

Company periodically assesses the adequacy of its recorded warranty liability

reserve and adjusts the amounts as necessary.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Changes in the Company&#146;s warranty liability reserve are

as follows:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="58%" style="border-collapse:collapse;margin-left:.5in;width:58.0%;">

 <tr>

  <td width="49%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:49.76%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">(Unaudited)</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="22%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:22.44%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">March 29,<br>

  2003</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="22%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:22.42%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">March 30,<br>

  2002</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.54%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:49.76%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Balance, beginning</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.24%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="20%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:20.2%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">82,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.24%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="20%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:20.18%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">187,000</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.54%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="bottom" style="padding:0in 0in 0in 0in;width:49.76%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Standard accrual based on

  units sold</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="22%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:22.44%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">9,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

  <td width="22%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:22.42%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">59,000</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.54%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:49.76%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Actual costs incurred</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="22%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:22.44%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">(39,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">)</font></b></p>

  </td>

  <td width="22%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:22.42%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">(47,000</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.54%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="bottom" style="padding:0in 0in 0in 0in;width:49.76%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Periodic accrual adjustments</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="22%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:22.44%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">(3,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">)</font></b></p>

  </td>

  <td width="22%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:22.42%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">(79,000</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.54%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:49.76%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Balance, ending</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.5%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.24%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="20%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:20.2%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">49,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.5%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.24%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="20%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:20.2%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">120,000</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.54%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Trade receivables:</font></b>&#160; <font style="letter-spacing:-.1pt;">Trade receivables are carried at original invoice amount

less an estimate made for doubtful receivables based on a review of all

outstanding amounts on a monthly basis.&#160;

Management determines the allowance for doubtful accounts by regularly

evaluating individual customer receivables and considering a customer&#146;s

financial condition, credit history, and current economic conditions.&#160; Trade receivables are written off when

deemed uncollectible.&#160; Recoveries of

trade receivables previously written off are</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='8',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
<br clear="all" style="page-break-before:always;">

</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">recorded when received.&#160;

A trade receivable is considered to be past due if any portion of the

receivable balance is outstanding for more than 90 days.&#160; The reserve for doubtful accounts of $26,000

is considered by management to be adequate for any exposure to loss in the

Company&#146;s March 29, 2003 accounts receivable.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">Inventories:</font></b><font style="letter-spacing:-.1pt;">&#160;

Inventories, consisting principally of appliances, are stated at the

lower of cost, first-in, first-out (FIFO), or market.&#160; The Company provides estimated reserves for the realizability of

its appliance inventories, including adjustments to market, based on various

factors including the age of such inventory and management&#146;s assessment of the

need for such allowances.&#160; Management

looks at historical inventory agings and margin analysis in determining its

reserve estimate.&#160; The Company believes

the reserve of $292,000 as of March 29, 2003 is adequate.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">Property and equipment:</font></b><font style="letter-spacing:-.1pt;">&#160; Depreciation is computed using straight-line

and accelerated methods over the following estimated useful lives:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="44%" style="border-collapse:collapse;margin-left:.5in;width:44.98%;">

 <tr>

  <td width="60%" valign="bottom" style="padding:0in 0in 0in 0in;width:60.66%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="5%" valign="bottom" style="padding:0in 0in 0in 0in;width:5.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="31%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:31.5%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">Years</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.64%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="60%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:60.66%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Buildings and improvements</font></p>

  </td>

  <td width="5%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:5.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="31%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:31.5%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">18 - 30</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.64%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="60%" valign="bottom" style="padding:0in 0in 0in 0in;width:60.66%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Equipment</font></p>

  </td>

  <td width="5%" valign="bottom" style="padding:0in 0in 0in 0in;width:5.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="31%" valign="bottom" style="padding:0in 0in 0in 0in;width:31.5%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">3 - 8</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.64%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">The

Company did not identify any items that were impaired as of March 29, 2003.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">Income taxes:</font></b><font style="letter-spacing:-.1pt;">&#160; Deferred taxes are provided on an asset and

liability method whereby deferred tax assets are recognized for deductible

temporary differences and operating loss and tax credit carryforwards, and

deferred tax liabilities are recognized for taxable temporary differences.&#160; Temporary differences are the differences

between the reported amounts of assets and liabilities and their tax basis.

Deferred tax assets are reduced by a valuation allowance when, in the opinion

of management, it is more likely than not that some portion or all of the

deferred tax assets will not be realized.&#160;

Deferred tax assets and liabilities are adjusted for the effects of

changes in tax laws and rates on the date of enactment.&#160; Realization of deferred tax assets is dependent

upon sufficient future taxable income during the periods when deductible

temporary differences and carryforwards are expected to be available to reduce

taxable income.&#160; At March 29, 2003 a

valuation allowance of&nbsp;$2,998,000&nbsp;has been recorded against deferred

tax assets principally relating to net operating loss and tax credit

carryforwards the use of which is limited under Section 382 of the Internal

Revenue Code.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">Stock-based compensation:</font></b><font style="letter-spacing:-.1pt;">&#160; The Company regularly grants options to its

employees under various plans.&#160; As

permitted under accounting principles generally accepted in the United States

of America, these grants are accounted for following APB Opinion No. 25 and

related interpretations.&#160; Accordingly,

compensation cost would be recognized for those grants the exercise price of

which are less than the fair market value of the stock on the date of

grant.&#160; There was no compensation

expense recorded for employee grants for the three months ended March 29, 2003

and March 30, 2002.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='9',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
<br clear="all" style="page-break-before:always;">

</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">The Company also grants options and warrants to

nonemployees for goods and services and in connection with certain

agreements.&#160; These grants are accounted

for under FASB Statement No. 123 based on the grant date fair values.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Had compensation cost for all of the employee stock-based

compensation grants and warrants issued been determined based on the fair

values at the grant date consistent with the provisions of Statement No. 123,

the Company&#146;s net income (loss) and net income (loss) per basic and diluted

common share would have been as indicated below.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="89%" style="border-collapse:collapse;margin-left:.5in;width:89.98%;">

 <tr>

  <td width="67%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">Unaudited</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="13%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.38%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">March 29<br>

  2003</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="13%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.38%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">March 30<br>

  2002</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Net

  income (loss):</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="13%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:13.38%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

  <td width="13%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:13.38%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" style="padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">As

  reported</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="11%" valign="bottom" style="padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">(816,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">)</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="11%" valign="bottom" style="padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">238,000</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Deduct

  pro forma stock-based compensation</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="13%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.38%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">(10,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">)</font></b></p>

  </td>

  <td width="13%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.38%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">(14,000</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">)</font></p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" style="padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Pro

  forma</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="11%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">(826,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">)</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="11%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">224,000</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Basic

  earnings (loss) per share:</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="13%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:13.38%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="13%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:13.38%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" style="padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">As

  reported</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="11%" valign="bottom" style="padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">(0.35</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">)</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="11%" valign="bottom" style="padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">0.10</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Pro

  forma</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="11%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">(0.35</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">)</font></b></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="11%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">0.10</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" style="padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Diluted

  earnings (loss) per share:</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="13%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:13.38%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:1.0pt;font-weight:bold;">&nbsp;</font></b></p>

  </td>

  <td width="13%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:13.38%;">

  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">As

  reported</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="11%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">(0.35</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.22%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">)</font></b></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="11%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">0.07</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="67%" valign="bottom" style="padding:0in 0in 0in 0in;width:67.7%;">

  <p style="margin:0in 0in .0001pt 20.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Pro

  forma</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="11%" valign="bottom" style="padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">(0.35</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.22%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">)</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="11%" valign="bottom" style="padding:0in 0in 0in 0in;width:11.94%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">0.07</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">The above pro forma effects on

net income (loss) and net income (loss) per basic and diluted common share are

not likely to be representative of the effects on reported net income (loss) or

net income (loss) per common share for future years because options vest over

several years and additional awards generally are made each year.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='10',FILE='C:\C2\rfossie\0665_3\t_1502651\j0665_10q.htm',USER='rfossie',CD='May 12 18:22 2003' -->
<br clear="all" style="page-break-before:always;">

</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 62.2pt;text-indent:-62.2pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">6.</font><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="letter-spacing:-.15pt;">Long-Term Obligations</font></p>



<p style="margin:0in 0in .0001pt 9.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Long-term obligations consisted

of the following:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="92%" style="border-collapse:collapse;margin-left:.5in;width:92.0%;">

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">(Unaudited)<br>

  March 29<br>2003</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">December 28,<br>

  2002</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">6.85%

  mortgage, due in monthly installments of $15,326, including interest, due

  January 2013, secured by land and building</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">1,981,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,000,000</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Adjustable

  rate mortgage based on the 30 day LIBOR rate plus 2.7%, adjusted yearly,

  monthly payments include interest and principal, and are based on a 20-year

  amortization, due October 2012, secured by land and building</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">3,420,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">3,452,000</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Other</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">203,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">231,000</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">5,604,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">5,683,000</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">Less

  current maturities</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">226</font></b><b><font style="font-weight:bold;letter-spacing:-.1pt;">,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">259,000</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">$</font></b></p>

  </td>

  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;letter-spacing:-.1pt;">5,378,000</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,424,000</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">The future annual maturities of

long-term obligations are as follows:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="40%" style="border-collapse:collapse;margin-left:.5in;width:40.0%;">

 <tr>

  <td width="55%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:55.52%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.1pt;">Fiscal year</font></b></p>

  </td>

  <td width="4%" valign="bottom" style="padding:0in 0in 0in 0in;width:4.7%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="36%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:36.4%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.38%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="55%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:55.52%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">2003</font></p>

  </td>

  <td width="4%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:4.7%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.42%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="33%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:33.98%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">180,000</font></p>

  </td>

  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:3.38%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="55%" valign="bottom" style="padding:0in 0in 0in 0in;width:55.52%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">2004</font></p>

  </td>

  <td width="4%" valign="bottom" style="padding:0in 0in 0in 0in;width:4.7%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="36%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:36.4%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">216,000</font></p>

  </td>

  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.38%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="55%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:55.52%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">2005</font></p>

  </td>

  <td width="4%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:4.7%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="36%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:36.4%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">206,000</font></p>

  </td>

  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:3.38%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="55%" valign="bottom" style="padding:0in 0in 0in 0in;width:55.52%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">2006</font></p>

  </td>

  <td width="4%" valign="bottom" style="padding:0in 0in 0in 0in;width:4.7%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="36%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:36.4%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">238,000</font></p>

  </td>

  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.38%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="55%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:55.52%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">2007</font></p>

  </td>

  <td width="4%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:4.7%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="36%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:36.4%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">196,000</font></p>

  </td>

  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:3.38%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="55%" valign="bottom" style="padding:0in 0in 0in 0in;width:55.52%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">2008

  and thereafter</font></p>

  </td>

  <td width="4%" valign="bottom" style="padding:0in 0in 0in 0in;width:4.7%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="36%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:36.4%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">4,568,000</font></p>

  </td>

  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.38%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.1pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="55%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:55.52%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:4.7%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.42%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.1pt;">$</font></p>

  </td>

  <td width="33%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:33.98%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,604,000</font></p>

  </td>

  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.38%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="15%" valign="top" style="padding:0in .7pt 0in .7pt;width:15.16%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">PART I:<a name="Item2">&#160;

  ITEM 2</a></font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:2.18%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="82%" valign="top" style="padding:0in .7pt 0in .7pt;width:82.66%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL

  CONDITION AND RESULTS OF OPERATIONS</font></p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The

following discussion and analysis provides information that management believes

is relevant to an assessment and understanding of the Company&#146;s level of

operations and financial condition.&#160;

This discussion should be read with the consolidated financial

statements appearing in Item 1.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">RESULTS OF OPERATIONS</font></u></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company generates revenues

from three sources:&#160; retail, recycling

and byproduct.&#160; Retail revenues are

sales of appliances, warranty and service revenue and delivery fees.&#160; Recycling revenues are fees charged for the

disposal of appliances. Byproduct revenues are sales of scrap metal and

reclaimed chlorofluorocarbons (&#147;CFC&#146;s&#148;) generated from processed

appliances.&#160; The Company is managed as a

unit and does not measure profit or loss separately for its three primary

revenue sources.&#160; Therefore, the Company

believes that it has one operating segment.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Total revenues for the three

months ended March 29, 2003 were $10,026,000 compared to $11,699,000 for the

three months ended March 30, 2002, a decrease of 14%.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Retail revenues accounted for

approximately 86% of revenues in the first quarter of 2003.&#160; Retail revenues for the three months ended

March 29, 2003 were $8,628,000 compared to $7,337,000 for the three months

ended March 30, 2002, an increase of 18%.&#160;

Same-store retail sales increased 19% (a sales comparison of six stores

that were open the entire first three months of both 2003 and 2002).&#160; The increase in retail revenues was

primarily due to an increase in sales of new in the box product due to

additional purchases of new product and the opening of one store in the first

quarter of 2003 compared to the same period in the previous year.&#160; Special buy appliances include manufacturer

closeouts, factory over-runs, floor samples, returned or exchanged items and

scratch and dent appliances.&#160; The

Company continues to purchase appliances from Whirlpool Corporation, Maytag Corporation,

GE Corporation and Frigidaire.&#160; There

are no minimum purchase requirements with any of these manufacturers.&#160; The Company believes purchases from these

four manufacturers will provide an adequate supply of high-quality appliances

for its retail outlets; however, there is a risk that one or more of these

sources could be lost.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Currently, the Company has eight

retail locations.&#160; The Company opened a

store in February 2003 in the Minneapolis/Saint Paul market.&#160; The Company plans to open one or two additional

stores later this year in existing markets.&#160;

The Company experiences seasonal fluctuations and expects retail sales

to be higher in the second and third calendar quarters than in the first and

fourth calendar quarters, reflecting consumer purchasing cycles.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Recycling revenues decreased to $1,315,000 in the

three months ended March 29, 2003 from $4,100,000 for the same period of 2002,

a decrease of 68%.&#160; The decrease in

recycling revenues is primarily due to an overall decrease in total recycling

volumes from all the various contracts in California.&#160; The Company recycled appliances during the first quarter of 2003

under an extension of the 2002 Statewide Residential Recycling Program which is

administered by Southern California Edison Company (&#147;Edison&#148;).&#160; Recycling services for this statewide

program include customers of Edison, Pacific Gas and Electric (&#147;PG&amp;E&#148;) and

San Diego Gas and Electric (&#147;SDG&amp;E&#148;).&#160;

The Company is responsible for advertising in the PG&amp;E and SDG&amp;E

areas only.&#160; Edison is responsible for

advertising in the Edison area.&#160; The

Company will continue operating under the extension of the 2002 program,

pending final action by Edison on the 2003 program.</font></p>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Byproduct revenues decreased to

$83,000 in the three months ended March 29, 2003 from $262,000 in the same

period of 2002.&#160; The decrease was

primarily due to a decrease in the volume of CFCs and scrap metal from the

California recycling operations.</font></p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Gross profit as a percentage of

total revenues decreased to 24.2% for the three months ended March 29, 2003

from 34.0% for the three months ended March 30, 2002.&#160; The decrease was primarily due to lower recycling revenues and

proportionately higher recycling costs related to the recycling programs and a

decrease in gross margin in sales of special buy appliances.&#160; Gross profit as a percentage of total

revenues for future periods can be affected favorably or unfavorably by

numerous factors, including the mix of retail products sold, the prices at

which product is purchased from the four manufacturers, the volume of

appliances recycled from the extension of the Edison contract and the price and

volume of byproduct revenues.&#160; The

Company believes that gross profit as a percentage of total revenues for the

year will be slightly higher than the gross profit as a percentage of total

revenues of the first quarter of 2003.</font></p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Selling, general and

administrative expenses for the three months ended March 29, 2003 increased by

$189,000 or 5.7% from the same period in 2002.&#160;

Selling expenses for the three months ended March 29, 2003 increased by

$305,000 or 16.4% from the same period in 2002.&#160; The increase in selling expenses was primarily due to the expense

for opening one store during the first quarter of 2003 offset by operating two

fewer stores in the first quarter of 2003 compared to the same period in the

previous year.&#160; General and

administrative expenses for the three months ended March 29, 2003 decreased by

$116,000 or 8.0% from the same period in 2002.&#160;

The decrease in general and administrative expense was primarily due to

a decrease in administrative costs as a result of an overall decrease in

recycling volumes.</font></p>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Interest expense was $169,000

for the three months ended March 29, 2003 compared to $265,000 for the same

period in 2002.&#160; The decrease was due to

a lower effective interest rate on outstanding debt for the three months ended

March 29, 2003 than in the same period in 2002.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">13</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company recorded a benefit

for income taxes of $421,000 for the three months ended March 29, 2003 compared

to a provision for income taxes of $159,000 for the three months ended March

30, 2002.&#160; This decrease was due to both

a pretax loss versus pre-tax income and a lower effective tax rate for the

three months ended March 29, 2003 compared to the same period in the prior

year.</font></p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:-.15pt;">The Company has net operating

loss carryovers and credit carryforwards of approximately $7 million at March

29, 2003, which may be available to reduce taxable income and in turn income

taxes payable in future years.&#160; However,

future utilization of these loss and credit carryforwards is subject to certain

significant limitations under provisions of the Internal Revenue Code including

limitations subject to Section 382, which relate to a 50 percent change in

control over a three-year period, and are further dependent upon the Company

maintaining profitable operations.&#160; The

Company believes that the issuance of Common Stock during 1999 resulted in an

&#147;ownership change&#148; under Section 382.&#160;

Accordingly, the</font>  <font style="letter-spacing:-.15pt;">Company&#146;s

ability to use net operating loss carryforwards generated prior to February

1999 may be limited to approximately $56,000 per year or less than $1 million

through 2018.</font></font></p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">At March 29, 2003, the Company

had recorded cumulative valuation allowances of approximately $2,998,000

against its net deferred tax assets due to the uncertainty of their

realization.&#160; The realization of

deferred tax assets is dependent upon sufficient future taxable income during

the periods when deductible temporary differences and carryforwards are

expected to become available to reduce taxable income.</font></p>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company recorded a net loss

of $816,000 or $.35 per basic and diluted share for the three months ended

March 29, 2003 compared to a net income of $238,000 or $.07 per diluted share

for the same period of 2002.&#160; The

decrease in the net income was due to a decrease in revenues combined with a

decrease in the gross profit percentage offset by a decrease in selling,

general and administrative expenses as a percentage of total revenues.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">LIQUIDITY AND CAPITAL RESOURCES</font></u></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">At March 29, 2003, the Company had working capital of

$4,204,000 compared to $5,003,000 at December 28, 2002.&#160; Cash and cash equivalents decreased to

$2,055,000 at March 29, 2003 from $2,802,000 at December 28, 2002.&#160; Net cash used in operating activities was

$1,400,000 for the three months ended March 29, 2003 compared to net cash

provided by operating activities of $1,788,000 in the same period of 2002.&#160; The cash used in operating activities for

the quarter was primarily due to a decrease in net income, accounts payable and

income taxes payable and an increase in accounts receivable offset by a

decrease in inventories.&#160; During the

three months ended March 29, 2003, receivables increased by $620,000 due to the

extension of the California recycling contract, payables decreased by $434,000

due to a decrease in inventory purchases and income taxes payable decreased by

$421,000 due to a pre-tax loss for the three months ended March 29, 2003.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company&#146;s capital

expenditures for the three months ended March 29, 2003 and March 30, 2002 were

approximately $96,000 and $123,000, respectively.&#160; The 2003 capital expenditures were primarily related to continued

software development and building improvements.&#160; The 2002 capital expenditures were primarily related to leasehold

improvements for the retail store opened in March 2002.</font></p>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">As of March 29, 2003, the

Company had a $10.0 million line of credit with a lender.&#160; The interest rate on the line as of March

29, 2003 was 5.5%.&#160; The amount of

borrowings available under the line of credit is based on a formula using

receivables and inventories.&#160; The line

of credit has a stated maturity date of August 30, 2004 and provides that the

lender may demand payment in full of the entire outstanding balance of the loan

at any time. The line of credit is secured by substantially all the Company&#146;s

assets and requires minimum monthly interest payments of $37,500 regardless of

the outstanding principal balance.&#160; The

lender also has an inventory repurchase agreement with Whirlpool Corporation

for purchases from Whirlpool only that secures the line of credit.&#160; The line requires that the Company meet

certain financial covenants, provides payment penalties for noncompliance and

prepayment, limits the amount of other debt the Company can incur, limits the

amount of spending on fixed assets and limits payments of dividends.&#160; At March 29, 2003, the Company had unused

borrowing capacity of $34,000.</font></p>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">A summary of the Company&#146;s

contractual cash obligations at March 29, 2003 is as follows:</font></p>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="93%" style="border-collapse:collapse;margin-left:.5in;width:93.0%;">

 <tr>

  <td width="28%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:28.82%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">(in thousands)</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="68%" colspan="20" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:68.26%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Payments

  due by period</font></b></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.92%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="28%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:28.82%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Contractual Cash Obligations</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="8%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.04%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Total</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:2.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="8%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.04%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">2003<br>

  2, 3, 4<br>

  Quarter</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:2.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="8%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.04%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">2004</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:2.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="8%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.04%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">2005</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:2.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="8%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.04%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">2006</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:2.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="8%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.04%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">2007</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:2.0%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

  <td width="8%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.02%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">2008</font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;">  <font style="letter-spacing:-.15pt;">and<br>

  thereafter</font></font></b></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.92%;">

  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="28%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:28.82%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Long-term

  debt, including interest</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">8,971</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">405</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">506</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">491</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">451</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">448</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:6.62%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">6,670</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.92%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="28%" valign="bottom" style="padding:0in 0in 0in 0in;width:28.82%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Operating

  leases</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" style="padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">5,628</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" style="padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">1,291</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" style="padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">1,551</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" style="padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">1,478</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" style="padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">795</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" style="padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">405</font></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" style="padding:0in 0in 0in 0in;width:6.62%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">108</font></p>

  </td>

  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.92%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr>

  <td width="28%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:28.82%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Total

  contractual cash obligations</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">14,599</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">1,696</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">2,057</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">1,969</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">1,246</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">853</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.4%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="6%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:6.64%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">6,778</font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.92%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">15</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company also has a

commercial commitment as described below:</font></p>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="90%" style="border-collapse:collapse;margin-left:.5in;width:90.0%;">

 <tr>

  <td width="35%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:35.92%;">

  <p style="margin:0in 0in .0001pt;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">Other Commercial Commitment</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.98%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="17%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.9%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">Total Amount<br>

  Committed</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.98%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="17%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.9%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">Outstanding at<br>

  3/29/03</font></b></p>

  </td>

  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.98%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="17%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.9%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;letter-spacing:-.15pt;">Date of<br>

  Expiration</font></b></p>

  </td>

  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.44%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="35%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:35.92%;">

  <p style="margin:0in 0in .0001pt 10.0pt;text-indent:-10.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Line of credit</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.98%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="16%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:16.46%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">10,000,000</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.98%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">$</font></p>

  </td>

  <td width="16%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:16.46%;">

  <p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">4,343,000</font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.98%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:17.9%;">

  <p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">August 30,2004</font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:1.0pt;letter-spacing:-.15pt;">&nbsp;</font></p>

  </td>

 </tr>

 <tr height="0">

  <td width="233" style="border:none;"></td>

  <td width="19" style="border:none;"></td>

  <td width="9" style="border:none;"></td>

  <td width="107" style="border:none;"></td>

  <td width="19" style="border:none;"></td>

  <td width="9" style="border:none;"></td>

  <td width="107" style="border:none;"></td>

  <td width="19" style="border:none;"></td>

  <td width="116" style="border:none;"></td>

  <td width="9" style="border:none;"></td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company believes that its cash balance,

availability under our line of credit, if needed, and anticipated cash flows

from operations will be adequate to fund its cash requirements for fiscal 2003.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company believes, based on the anticipated

revenues from the currently extended 2002 Statewide Residential Recycling

program contract, anticipated sales per retail store and its anticipated gross

profit, that its cash balance, anticipated funds generated from operations and

its current line of credit, will be sufficient to finance its operations and

capital expenditures through December 2003.&#160;

The Company&#146;s total capital requirements for 2003 will depend on, among

other things as discussed below, the recycling volumes generated from the

currently extended 2002 Statewide Residential Recycling Program in 2003 and the

number and size of retail stores operating during the fiscal year.&#160; Currently, the Company has three recycling

centers and eight retail stores in operation.&#160;

If revenues are lower than anticipated or expenses are higher than

anticipated, the Company may require additional capital to finance operations.

Sources of additional financing, if needed in the future, may include further

debt financing or the sale of equity (common or preferred stock) or other

securities.&#160; There can be no assurance

that such additional sources of financing will be available or available on

terms satisfactory to the Company or permitted by the Company&#146;s current

lenders.</font></p>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">FORWARD-LOOKING STATEMENTS</font></u></p>



<p style="margin:0in 0in .0001pt 31.8pt;text-indent:-31.8pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Statements contained in this

quarterly report regarding the Company&#146;s future operations, performance and

results, and anticipated liquidity are forward-looking and therefore are

subject to certain risks and uncertainties, including, but not limited to,

those discussed herein.&#160; Any

forward-looking information regarding the operations of the Company will be

affected primarily by the Company&#146;s continued ability to purchase product from

Whirlpool, Maytag, GE and Frigidaire at acceptable prices and the ability and

timing of Edison to deliver units under the currently extended 2002 Statewide

Residential Recycling Program contract currently pending final action by

Edison, with the Company.&#160; In addition,

any forward-looking information will also be affected by the ability of

individual retail stores to meet planned revenue levels, the rate of

sustainable growth in the number of retail stores, the speed at which

individual retail stores reach profitability, costs and expenses being realized

at higher than expected levels, the Company&#146;s ability to secure an adequate

supply of special buy appliances for resale and the continued availability of

the Company&#146;s current line of credit.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">16</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">PART I:&#160; <a name="Item3">ITEM 3</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; QUANTITATIVE

AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK</font></p>



<p style="margin:0in 0in .0001pt 1.5in;text-indent:-1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">MARKET RISK AND IMPACT OF INFLATION</font></u></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company does not believe there is any significant

risk related to interest rate fluctuations on the long-term debt with fixed

rates.&#160; However, there is interest rate

risk on the line of credit since its interest rate floats with prime and on

approximately $3,400,000 in long-term debt entered into in September 2002 since

its interest rate is based on the 30-day LIBOR rate.&#160; Also, the Company believes that inflation has not had a material

impact on the results of operations for the three-month period ended March 29,

2003.&#160; However, there can be no

assurance that future inflation will not have an adverse impact on the Company&#146;s

operating results and financial conditions.</font></p>



<p style="margin:0in 0in .0001pt .45in;text-indent:-.45in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">PART I.&#160; <a name="Item4">ITEM 4</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; CONTROLS AND PROCEDURES</font></p>



<p style="margin:0in 0in .0001pt .45in;text-indent:-.45in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Under

the supervision and with the participation of the Company&#146;s management,

including its principal executive officer and principal financial officer, the

Company has evaluated the effectiveness of the design and operation of its

disclosure controls and procedures within 90 days of the filing date of this

quarterly report, and, based on the evaluation, its principal executive officer

and principal financial officer have concluded that these controls and

procedures are effective.&#160; There were no

significant changes in the Company&#146;s internal controls or in other factors that

could significantly affect these controls subsequent to the date of their

evaluation.</font></p>



<p style="margin:0in 0in .0001pt 63.0pt;text-indent:-63.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Disclosure

controls and procedures are the Company&#146;s controls and other procedures that

are designed to ensure that information required to be disclosed by the Company

in the reports that it files or submits under the Exchange Act is recorded,

processed, summarized and reported, within the time periods specified in the

Securities and Exchange Commission&#146;s rules and forms.&#160; Disclosure controls and procedures include, without limitation,

controls and procedures designed to ensure that information required to be

disclosed by the Company in the reports that it files under the Exchange Act is

accumulated and communicated to its management, including its principal

executive officer and principal financial officer, as appropriate to allow

timely decisions regarding required disclosure.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><a name="PartIi_OtherInformation"><font size="2" face="Times New Roman" style="font-size:10.0pt;">PART II.</font></a><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>OTHER

INFORMATION</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><a name="Item1LegalProceedings"><font size="2" face="Times New Roman" style="font-size:10.0pt;">ITEM 1 -</font></a><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>LEGAL

PROCEEDINGS</u></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company and its subsidiaries are involved in various

legal proceedings arising in the normal course of business, none of which is expected

to result in any material loss to the Company or any of its subsidiaries.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><a name="Item2ChangesInSecuritiesAndUseO"><font size="2" face="Times New Roman" style="font-size:10.0pt;">ITEM 2</font></a><font size="1" style="font-size:3.0pt;">&#160;&#160; </font>-<font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u>CHANGES

IN SECURITIES AND USE OF PROCEEDS</u> - None</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><a name="Item3DefaultsUponSeniorSecurities"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">ITEM

3 -</font></a><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u><font style="letter-spacing:-.15pt;">DEFAULTS UPON SENIOR SECURITIES</font></u><font style="letter-spacing:-.15pt;"> - None</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><a name="Item4SubmissionOfMattersToAVote"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">ITEM

4</font></a><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160; </font><font style="letter-spacing:-.15pt;">-</font><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u><font style="letter-spacing:-.15pt;">SUBMISSION OF MATTERS TO A VOTE OF SECURITY

HOLDERS</font></u></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">On April 24, 2003, the Company

held its Annual Meeting of Shareholders.&#160;

At the meeting, Edward R. Cameron, Duane S. Carlson and&#160; Harry W. Spell were elected as directors for

2003.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><a name="Item5OtherInformation"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">ITEM 5</font></a><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160; </font><font style="letter-spacing:-.15pt;">-</font><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u><font style="letter-spacing:-.15pt;">OTHER INFORMATION</font></u><font style="letter-spacing:-.15pt;"> - None</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><a name="Item6ExhibitsAndReportsOnForm8"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">ITEM 6</font></a><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160; </font><font style="letter-spacing:-.15pt;">-</font><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><u><font style="letter-spacing:-.15pt;">EXHIBITS AND REPORTS ON FORM 8-K</font></u></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">(a)</font><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="letter-spacing:-.15pt;">Exhibits</font></p>



<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">Exhibit 99.1 &#150; Certification Pursuant to Section 906 of

the Sarbanes-Oxley Act of 2002.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">(b)</font><font size="1" style="font-size:3.0pt;letter-spacing:-.15pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="letter-spacing:-.15pt;">Reports of Form 8-K</font></p>



<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company filed Form 8-K on January 14, 2003

announcing that it will open a 33,000 square foot ApplianceSmart outlet in

mid-February 2003 in Champlin, Minnesota, a northern suburb of the

Minneapolis/Saint Paul market.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company filed Form 8-K on January 24, 2003

announcing it has signed a national contract to become provider of reverse

logistics for GE.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company filed Form 8-K on

March 11, 2003 announcing its 2002 operating results.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt 1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;letter-spacing:-.15pt;">The Company filed Form 8-K on March 18, 2003 announcing

its corrected net loss for fourth quarter 2002.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">18</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>



<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><a name="Signatures"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">SIGNATURES</font></b></a></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Pursuant to the

requirements 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></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Appliance

  Recycling Centers of America, Inc.</font></u></p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Registrant</font></p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date:&#160; May 9, 2003</font></p>

  </td>

  <td width="34%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:34.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/Edward R.

  Cameron</font></p>

  </td>

  <td width="21%" valign="top" style="padding:0in 0in 0in 0in;width:21.3%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Edward R.

  Cameron</font></p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">President</font></p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date:&#160; May 9, 2003</font></p>

  </td>

  <td width="34%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:34.04%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/Linda Koenig</font></p>

  </td>

  <td width="21%" valign="top" style="padding:0in 0in 0in 0in;width:21.3%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Linda Koenig</font></p>

  </td>

 </tr>

 <tr>

  <td width="44%" valign="top" style="padding:0in 0in 0in 0in;width:44.68%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="55%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:55.32%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Vice President

  of Finance</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">FORM

10-Q CEO CERTIFICATION</font></u></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERTIFICATIONS:</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I, Edward R. Cameron,

certify that:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>I

have reviewed this quarterly report on Form 10-Q of Appliance Recycling Centers

of America, Inc.;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based

on my knowledge, this quarterly 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 are

made, not misleading with respect to the period covered by this quarterly

report;</p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based

on my knowledge, the financial statements, and other financial information

included in this quarterly report, fairly present in all material respects the

financial condition, results of operations and cash flows of the registrant as

of, and for, the periods presented in this quarterly report;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The

registrant&#146;s other certifying officers and I are responsible for establishing

and maintaining&#160; disclosure controls and

procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the

registrant and we have:</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>designed

such disclosure controls and procedures 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 quarterly report is being prepared;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>evaluated

the effectiveness of the registrant&#146;s disclosure controls and procedures as of

a date within 90 days prior to the filing date of this quarterly report (the

&#147;Evaluation Date&#148;); and</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>presented

in this quarterly report our conclusions about the effectiveness of the

disclosure controls and procedures based on our evaluation as of the Evaluation

Date;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The

registrant&#146;s other certifying officers and I have disclosed, based on our most

recent evaluation, to the registrant&#146;s auditors and the audit committee of

registrant&#146;s board of directors (or persons performing the equivalent

function):</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>all

significant deficiencies in the design or operation of internal controls which

could adversely affect the registrant&#146;s ability to record, process, summarize

and report financial data and have identified for the registrant&#146;s auditors any

material weaknesses in internal controls; and</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>any

fraud, whether or not material, that involves management or other employees who

have a significant role in the registrant&#146;s internal controls; and</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The

registrant&#146;s other certifying officers and I have indicated in this quarterly

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 our most recent evaluation, including any corrective actions with

regard to significant deficiencies and material weaknesses.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.9%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date:</font></p>

  </td>

  <td width="24%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:24.76%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160; May 9, 2003</font></p>

  </td>

  <td width="22%" valign="top" style="padding:0in 0in 0in 0in;width:22.74%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.0%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>

  </td>

  <td width="43%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:43.6%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/Edward R. Cameron</font></p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.9%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="47%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:47.5%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.0%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="43%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:43.6%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Edward R. Cameron,

  President</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">20</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">FORM 10-Q CFO CERTIFICATION</font></u></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERTIFICATIONS:</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I, Linda Koenig, certify

that:</font></p>



<p style="margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>I

have reviewed this quarterly report on Form 10-Q of Appliance Recycling Centers

of America, Inc.;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based

on my knowledge, this quarterly 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 are

made, not misleading with respect to the period covered by this quarterly

report;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Based

on my knowledge, the financial statements, and other financial information

included in this quarterly report, fairly present in all material respects the

financial condition, results of operations and cash flows of the registrant as

of, and for, the periods presented in this quarterly report;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The

registrant&#146;s other certifying officers and I are responsible for establishing

and maintaining&#160; disclosure controls and

procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the

registrant and we have:</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>designed

such disclosure controls and procedures 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 quarterly report is being prepared;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>evaluated

the effectiveness of the registrant&#146;s disclosure controls and procedures as of

a date within 90 days prior to the filing date of this quarterly report (the

&#147;Evaluation Date&#148;); and</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>presented

in this quarterly report our conclusions about the effectiveness of the

disclosure controls and procedures based on our evaluation as of the Evaluation

Date;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The

registrant&#146;s other certifying officers and I have disclosed, based on our most

recent evaluation, to the registrant&#146;s auditors and the audit committee of

registrant&#146;s board of directors (or persons performing the equivalent

function):</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>all

significant deficiencies in the design or operation of internal controls which could

adversely affect the registrant&#146;s ability to record, process, summarize and

report financial data and have identified for the registrant&#146;s auditors any

material weaknesses in internal controls; and</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>any

fraud, whether or not material, that involves management or other employees who

have a significant role in the registrant&#146;s internal controls; and</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The

registrant&#146;s other certifying officers and I have indicated in this quarterly

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 our most recent evaluation, including any corrective actions with

regard to significant deficiencies and material weaknesses.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.66%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date:</font></p>

  </td>

  <td width="24%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:24.64%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160; May 9, 2003</font></p>

  </td>

  <td width="22%" valign="top" style="padding:0in 0in 0in 0in;width:22.2%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.32%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>

  </td>

  <td width="45%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:45.18%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/Linda Koenig</font></p>

  </td>

 </tr>

 <tr>

  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.66%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="46%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:46.84%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.32%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="45%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:45.18%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Linda Koenig,

  Vice President of Finance</font></p>

  </td>

 </tr>

</table>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">21</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



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</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>j0665_ex99d1.htm
<DESCRIPTION>EX-99.1
<TEXT>
<html>

<head>

<title>  </title>

</head>

<body>

<div style="font-family:'Times New Roman';">

<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit 99.1</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">CERTIFICATION PURSUANT TO 18 U.S.C. 1350
ADOPTED</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The undersigned hereby certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to their knowledge, the Quarterly Report on
Form 10-Q for the quarter ended March 29, 2003 of Appliance Recycling Centers
of America, Inc. (the &#147;Company&#148;) fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
that the information contained in such periodic report fairly presents, in all
material respects, the financial condition and results of operations of the
Company as of, and for, the periods presented in such report.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Very truly yours,</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Edward R.
  Cameron</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="24%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:24.54%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/Edward R.
  Cameron</font></p>
  </td>
  <td width="75%" valign="top" style="padding:0in 0in 0in 0in;width:75.46%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">President</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Linda Koenig</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="24%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:24.54%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/Linda
  Koenig</font></p>
  </td>
  <td width="75%" valign="top" style="padding:0in 0in 0in 0in;width:75.46%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Vice
  President of Finance</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date May 9,
  2003</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">* A signed original of this
written statement required by Section 906 has been provided to the Company and
will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>


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